Agriculture Committee on April 20th, 2021

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Thank you, Mr. Chair.

Thanks to our witnesses for coming to speak with us about their situation. We're grateful for that.

I'll go first to Mr. Overbeek, whom I thank for accepting our invitation. You say that you haven't been granted an exemption in Quebec. We're all aware of that. We've even had discussions about this bill. We're trying to look at this objectively. You even touched on the subject of jurisdictions with Mr. Drouin.

Why are you nevertheless in favour of this bill?

Do you think Quebec may align itself with the rest of Canada? That's what you said earlier.

[Christian Overbeek]

Our hope is that the bill will apply to all of Canada, with the exception of areas where another system is in place, as in Quebec. If it ever applies across Canada as desired, we hope that farmers in Quebec are subject to the same principle of non-taxation or tax-rebating as our colleagues in the other Canadian provinces and territories.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

If I'm hearing you correctly, you're willing to be temporarily put at a disadvantage relative to other Canadian producers in the hope that some uniform regime is one day established. Is that correct?

[Christian Overbeek]

Yes, but we have to ensure that the temporary period doesn't turn into years and that it takes immediate effect across Quebec.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

That's the part we don't control at all. We've already discussed this together, and I understand you're nevertheless in favour of Bill C-206, based on that principle and provided it comes into force.

Some say there aren't any other options. What about biomethanization, biomass and geothermal facilities, for example? Have those kinds of options been explored? I know the costs are currently prohibitive.

[Christian Overbeek]

Tests have been done and research conducted. Some agricultural businesses have installed biomass heating systems, but those businesses need heat all year long, not just over short periods, as in the grain sector. In our sector, the fall grain drying and conditioning period is extremely short. So there's no way we can get a good return on a massive investment in biomass-based equipment.

The situation's somewhat the same if you use electric energy as a heat source. The technologies we know and are using right now are obviously natural gas and propane, mainly use for different commercial reasons.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

I see.

Have you imagined how the government might support you rather than tax you, reduce your profit margins or increase food prices? For example, you say it's hard to get a good return on investments in biomethanization.

Is it realistic to think the government might help you with that, or is the investment prohibitive?

[Christian Overbeek]

The investments are currently too big to be cost-effective for us. As you can understand, research is always a welcome way to come up with new technologies that help us reduce our fossil fuel consumption. I think that's a solution that could be implemented for grain farmers in the short or medium term.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

If the tax remains in force, what negative impact will it have on your farms in the medium term, Mr. Overbeek?

[Christian Overbeek]

We gave you some figures earlier. It's more than $2,000 for one Quebec model farm. That's based on the current carbon tax rate. We're somewhat familiar with the agreed upon rate at which the carbon tax will rise in future. It will increase our costs by a factor of seven or eight. That impact will amount to tens of thousands of dollars or more, solely as a result of the carbon tax. That will have a direct impact on the stability of our farms and, obviously, on their transferability to future generations.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Could that money conceivably be reinvested in the transition? Wouldn't that be equivalent?

What do you think of the possibility of the government returning that money directly to you once you begin the transition process?

[Christian Overbeek]

The government could assist us in the investments we make to reduce our fossil energy use. That might be a solution.

However, you have to consider the operating expenses of those new facilities. If those costs are greater than the costs associated with the use of fossil fuels, then we'll still be losing out, even with financial assistance. You also have to take into consideration the impact of annual operating costs on the competitiveness of our businesses.

[The Chair, Liberal, Pat Finnigan]

You have three seconds left, Mr. Perron.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

All right.

Thank you, Mr. Overbeek.

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. Perron.

We will now go to Mr. MacGregor for six minutes, please.

Go ahead, Mr. MacGregor.

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

Thank you so much, Chair.

Thank you to our witnesses for helping to guide this committee on this journey with Bill C-206.

It appears to me from reading budget 2021 that the government actually paid Mr. Lawrence a big compliment by devoting a good section to the costs of grain drying, with $100 million in refunds in that first year, and also by devoting $50 million specifically for more efficient grain dryers.

My first question is for the Grain Growers of Canada. I really want to dig down into what alternatives to propane and natural gas are available.

I've been looking on the Internet and there is a company called Triple Green Products that has a BioDryAir dryer, which uses crop residue as a fuel to help dry their grain. They're exempt from the carbon tax because they're using residue that comes from their own farm. Is this a viable technology? Is this the kind of place we want to start investing that $50 million in trying to find that efficiency? If we leave the carbon tax aside, farmers are still paying a lot of money just for the propane and natural gas itself. I just want to find out from you where this technology will go in five to 10 years from now.

[Jonothan Hodson]

I've heard about the biomass. As a producer, the concept has been talked about for a long time. At this point, to get it on a farm-type scale that's economical...it just hasn't been shown to be there. Technology is going to change. I can't predict whether this is something that's going to be economically viable on a farm scale five or 10 years down the road. I don't know where that's at at this point.

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

Okay.

With the $100 million announced in budget 2021, are you still firmly committed to having Bill C-206 passed by this Parliament?

[Jonothan Hodson]

Yes, I am.

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

The Supreme Court of Canada recently upheld the constitutionality of the federal carbon tax. I believe that has provided some impetus to provincial governments to start formulating their own carbon pricing schemes. Is that going to make your job harder? Have you already had conversations with provincial governments on trying to use what Bill C-206 is trying to achieve federally to apply to possible future provincial models in some of the prairie provinces?

[Jonothan Hodson]

I admit I have not. I will pass that on to Erin to see if she has any knowledge of that. I run my farm and there's enough going on there.

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

Okay.

Erin, please go ahead.

[Erin Gowriluk]

Thanks for the question, Mr. MacGregor.

With respect to any carbon tax, and in this discussion in particular, it's really about whether the bill is meeting its intended objective, which is to ultimately incentivize practice change. With this tax, we want to encourage, for example, farmers to use alternatives to fossil fuels to dry their grain. With no viable alternative at this point, I think your suggestion is a very good one.

What investments can we make to ensure there is an alternative in the future? I think it would be something that farmers would widely adopt if it were commercially available as an affordable alternative. Let's make those investments in the future. Let's use this bill, and an exemption to bridge that gap until such time as we have those alternatives, to ensure that while there isn't an alternative, farmers are not being punished for doing something they have no choice but to do.

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

Great. Thank you for that.

For my final question, I'll maybe turn to the Canadian Federation of Agriculture, Mr. Annau.

Getting beyond the debate that exists over the carbon tax, what other ways can we try to improvise and maybe develop smart policy? We could reward farmers for climate friendly initiatives, place them on the pedestal for the good practices they're already doing, devise some system where they actually get financial credit for those practices and rewarded for climate friendly initiatives, such as their efforts in sequestering carbon in the soil?

[Frank Annau]

Yes. Even specific to switching from natural gas and propane in the context of grain drying.

There is potential, for example, with existing mechanisms. I alluded to the clean fuel standard that will be applying regulations scheduled for natural gas and propane in 2023. There is the potential that this will increase the price of these fuels.

Under the actual clean fuel standard, as you probably know, there's a credit category that will provide credits to end-point users, such as farmers, for switching away from fuels such as natural gas and propane to potentially more emissions friendly fuel sources that are less carbon intensive.

That's one example of a potential mechanism that could serve very well.

I think our only real concern is that in the interim, as these processes are getting under way, farmers may still be subject to extreme weather that could drive up the costs of grain drying as that transition is occurring.

As I said, even without the actual carbon tax, it could be that the clean fuel standard in and of itself provides that incentive for the switch, along with the actual programming available that provides support.

I'll also refer further questions to Keith Currie, who is our vice-president of the CFA.