Agriculture Committee on Feb. 27th, 2020

[Marco Valicenti]

It is an area we want to continue to focus upon. We're looking at some challenges from a foreign direct investment perspective. To increase our investment opportunities domestically, we are looking at the supply chain and how to get primary production into the value-added space.

One example is through the use of superclusters, in particular a protein supercluster. How do we look at innovation and research and development to move some of the production from primary exports into the value-added space?

We're looking at it, then. from a couple of different angles, whether it be investment, whether it be science and innovation.

One area we're looking at—

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. Valicenti. I have to stop you here.

Mr. Lawrence, I understand you will be splitting your time with Ms. Rood. You have six minutes.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Thank you, Mr. Chairman.

I want to follow up with respect to the carbon tax.

To be clear, does your department know how much the carbon tax is costing the agriculture industry?

[Tom Rosser]

Yes, we have over time done some analysis on the estimates of the impact of pollution pricing on costs in the agricultural industry.

Recently there has been a focus on the cost associated with pollution pricing for grain drying, in an exceptionally wet harvest season in many parts of the country. We have done some analysis in that area.

Also, as members will no doubt be aware, Minister Bibeau has invited provinces and industry groups to share with us their analysis, and several have done so. This has been helpful in enriching our understanding of the situation.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Thank you. What is that number?

[Tom Rosser]

Our own internal analysis, as well as from those submitted to us by both industry and provinces, would suggest that it's a fairly small share of overall costs. Typically, I think grain drying represents about 1% of total costs for grain producers. This year it was probably running about double that, probably closer to 2% of total costs, for the cost of fuel for grain drying.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Are you aware of the work done by the Manitoba agricultural society that puts the number more at 12%? Do you think that number's wrong?

[Tom Rosser]

Mr. Chair, I remember that the Alberta government had submitted a number. Their estimate had the pollution pricing bid in place in Alberta in 2019. My recollection is that their estimate had the figure at about $2.7 million as the added cost from pollution pricing.

The grain sector in Alberta, I believe, has a total cost in the neighbourhood of about $5 billion. Some of the other analyses that we received from Saskatchewan and Manitoba tried to extrapolate pollution pricing at higher pollution pricing levels. They tried to estimate not just the direct cost associated with pollution pricing for producers but also the indirect costs. Some of those did, in fact, generate higher estimates.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

I'm sorry, but the time is short.

For the agriculture industry, is the carbon tax revenue neutral?

[Tom Rosser]

Mr. Chair, that's a hard question to answer because most of the analyses done, including our own, look at the cost, either direct or indirect, imposed on the industry. None of them, to my knowledge has looked at the recycling effects of those revenues remaining in the province, returned to citizens and/or put into programs that help small businesses, including agricultural producers, to lower their environmental impact. I'm not aware of any analysis that's looked at the entirety of that, so it's difficult to answer the member's question.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

I have one last question, I'm sure that you'll be willing to share those documents with the committee that show us the impact of the carbon tax on the agricultural society.

[Tom Rosser]

We do have some analysis, Mr. Chair, in the public domain. We'd be happy to share this. I believe that most of the groups that have done analysis on costs associated with grain drying have put their analysis in the public domain, but we'd be happy to compile that for the committee.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

I'll give the rest of my time to Lianne.

[Lianne Rood, Conservative, Lambton—Kent—Middlesex, ON]

Thank you, Mr. Chair.

You were talking about expenses on farms that saw their largest increases since 2008, and now we see expenses going up by over 13%. Do we know why there's such a dramatic increase and how much of that increase is due to the carbon tax?

[Tom Rosser]

Mr. Chair, we did see increases across the board in 2018. For the most part, those just reflect increases in costs of things like labour, fertilizers and fuel. These figures are from 2018, at least in terms of the federal backstop for pollution pricing. It was in place in 2018—although it might have included some provincial costs associated with provincial programs in place at the time.

Kara, do you have anything to add?

[Kara Beckles]

We did see overall energy prices increase. Prices for electricity, propane and natural gas all went up in 2018. There is a carbon price also associated with the energy price that went up that year.

[Lianne Rood, Conservative, Lambton—Kent—Middlesex, ON]

Do you expect that to increase even further now going into 2019?

[The Chair, Liberal, Pat Finnigan]

Unfortunately, we're out of time on that one. I meant to say that the second round was five minutes instead of six.

Mr. Drouin, you have the floor for five minutes.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

Thank you very much, Mr. Chair.

Let me remind you that the federal lever for carbon pricing was not yet in place in 2018. It was implemented on April 1, 2019. The numbers you have quoted probably reflect provincial numbers. Is that correct?

[Tom Rosser]

I think you're right in saying that the federal system wasn't in place in 2018. Oil, electricity, and fertilizer prices are set by the markets, and they can go up and down. There is volatility, and prices go up and down. There are a number of provincial pollution pricing programs, and I'm assuming that's reflected in the 2018 numbers.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

Thank you very much.

We are talking about increasing exports to $75 billion by 2024 or 2025—I can't remember the exact date.

On page 3 of your presentation, you have the percentage of GDP that each sector represents. Food services account for 1.6% of GDP, food retailers and wholesalers for 1.6%, food and beverage processing for 1.8%, and primary agriculture for 1.7%. I know that the major challenge facing people in these sectors is labour shortages.

Can you explain what is happening? Is there a coordination table working with the provinces to find a way to finally address this issue?

[Tom Rosser]

Thank you for your question, sir.

The Agri-Food Economic Strategy Table has made recommendations, both short-term and long-term, with respect to labour shortages.

The short-term recommendations are geared toward improving programs to allow foreign workers into the country to address the labour shortage. According to the table, the long-term solution is automation, which would reduce labour requirements. It suggested that we invest in automation, but also in training. We may need fewer people in our agri-food system, but they will need more training to ensure the growth of the sector.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

Last year or the year before, we had a program encouraging young people to work on farmland. Do we know the results of that program?

[Tom Rosser]

I'm not sure whether Mr. Valicenti can answer that. You're right, there is a program in place. We will follow up and see what information is available on the results of that program to date.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

In closing, I would like to briefly talk about the spent hen issue, because there are a number of chicken producers where I live. We have previously talked about DNA testing and I know that pilot projects have been conducted. Has that gone well?