Agriculture Committee on April 27th, 2021

[The Chair, Liberal, Pat Finnigan]

Now we'll go to Mr. MacGregor for six minutes.

Go ahead, Mr. MacGregor.

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

Thank you so much, Chair.

Thank you to our witnesses for contributing to our discussion on Bill C-206 today.

I'll start with the Canadian Horticultural Council. Mr. Coristine, you mentioned a few things. You were going over the existing Greenhouse Gas Pollution Pricing Act, and you did correctly mention that the existing definition section on “eligible farming activity” goes through a few definitions there. However, when it comes down to “eligible farming machinery”, it specifically excludes “property that is used for the purpose of providing heating or cooling to a building or similar structure”.

We've already been informed that Bill C-206 is pretty narrow, and it may be beyond our ability to expand it. If C-206, as it's currently written, is not going to apply to greenhouses.... I'm worried we're using this as a proxy for a larger conversation about the carbon tax, but I really want to focus on C-206. If the bill passes, can you tell the committee, as it's currently written, by just changing the “qualifying farming fuel” definition, are there any tangible benefits that will apply to your industry?

[Aaron Coristine]

I think it will incentivize year-round growing. I think it will really maximize our ability to continue to build the sector and provide year-round access to food as the cost to produce it would decrease. Again, the taxes that would be paid as carbon increases would be extremely beneficial to the sector.

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

I have a follow-up question. You mentioned budget 2021. On page 174 it mentions Alberta, Saskatchewan, Manitoba and Ontario farmers who use natural gas and propane in their operations. It's estimated that in those four provinces, farmers would receive approximately “$100 million in the first year”.

Do you have an analysis of what your industry might achieve as a rebate from that measure?

[Aaron Coristine]

No. Those are some of the questions we've been trying to follow up on in terms of knowing exactly what the mechanisms of that program are. How will the rebates be administered? How will it be divided amongst the greenhouse sectors? We are seeking clarity for ourselves, I guess, on how that $100 million will be reallocated.

I do know that with the funds that are received, they will be put into investment and research to continue our efforts to become less carbon and fossil fuel dependent.

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

For sure. Thank you for that clarification.

Ms. Ward, thank you for being here on behalf of the National Farmers Union. It's always great to hear your point of view and to hear about the efforts being made in the agricultural community to really be one of our greatest tools against climate change.

I note that the NFU supports, broadly speaking, a rebate on the costs of drying fuels. The NFU has done a lot of research on the farm crisis and just the amount of debt load that farmers are carrying these days. Can you briefly tell us what that resulted from? You mentioned the high cost of inputs being really commonplace among modern farming operations these days.

[Katie Ward]

A lot of that debt comes from two sources, really, but primarily inputs. I mentioned our 2019 report entitled “Tackling the Farm Crisis and the Climate Crisis”. There's a really illustrative graph in there showing where the difference is between farm net income and farm revenues. It's primarily coming out of farm input costs. That generally tends to come out to approximately 95% of every food dollar. We're taking home about 5¢ or 6¢ out of every food dollar spent, on average, as farmers. The other big driver of prices is land. The price of farmland is growing by leaps and bounds. It has gone up massively in the last 10 years especially.

If we can find ways to incentivize farmers to reduce our input costs and maintain yields to the point where we can continue feeding our communities and driving our export of agriculture, but reducing especially our nitrogen fertilizer usage even by small percentages, it will have a big impact. Synthetic nitrogen fertilizers especially produce the three main greenhouse gases—at creation and use and runoff and off-gassing—throughout the system. That's a big one.

If we can incentivize things like cover cropping and other practices that will reduce the need for those inputs, we can do better for farmers' bottom lines and we can do a lot better for the environment. We can continue to do our part to help solve this climate crisis.

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

Thanks so much.

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. MacGregor and Ms. Ward.

We will start the second round with Mr. Epp.

You have five minutes. Go ahead.

[Dave Epp, Conservative, Chatham-Kent—Leamington, ON]

Thank you, Mr. Chair.

Thank you to the witnesses for being with us today.

I'll start with you, Mr. Coristine, from the greenhouse industry. If you are reaching us from the OGVG offices, you are a kilometre from my house. I believe we share an Internet provider. Please check on my place on your way home, because I'm in Ottawa this week.

[Aaron Coristine]

Will do.

[Dave Epp, Conservative, Chatham-Kent—Leamington, ON]

Okay.

I'm obviously from the area. I understand the industry fairly well. Can you give a sense of the scale of it for the rest of the people who on our screens here today? You have an 80% exemption right now, as the greenhouse sector, on the farm heating fuels. Can you put into perspective the 20% that the greenhouse industry is still paying the carbon tax on? Can you put some dollar amounts on that? I'm familiar with the scale, but many people might not be.

[Aaron Coristine]

You know, it's hard to say. It depends, I guess. We're trying to go to an annual production cycle now, so there is some variability, but hundreds of millions of dollars provincially are being paid in these carbon taxes. I can't even fathom how much money that is. I know from reading a piece of paper that this is what they cost to operate just in paying for their carbon consumption alone. It doesn't take into consideration labour, machinery or equipment.

With this exemption, especially as the carbon price increases, just think of the net overall impact that will have. Again, as we mentioned, it's an absolute value. If it goes up to $1.70 or however it goes, it's just that much more—and how much narrower the margins get.

[Dave Epp, Conservative, Chatham-Kent—Leamington, ON]

I will direct the next question to representatives of the greenhouse industry both from Ontario and from B.C.

Who do you compete with, because I think you compete in slightly different markets? What are your competitors paying for carbon pricing?

[Linda Delli Santi]

Are you wondering who we in B.C. compete with?

[Dave Epp, Conservative, Chatham-Kent—Leamington, ON]

That's correct. Where would your main competition outside Canada come from, and what is their carbon pricing regime? I will ask the same to Aaron as well.

[Linda Delli Santi]

The greenhouse sector is quite integrated in the United States and Canada. Most of the greenhouses in the United States are owned and operated by Canadian producers. They built that way to have annual production easily from all of their different operations.

Our biggest competitor would be from Mexico or from the Netherlands in different crops. For The Netherlands it's mainly in peppers, but in Mexico it's from all crops.

[Dave Epp, Conservative, Chatham-Kent—Leamington, ON]

Aaron.

[Aaron Coristine]

Yes, similar to that, as Linda mentioned, we compete heavily with Mexico. If you were to look at StatsCan, or for us OMAFRA's index, you will see our largest export and import counterparts. They are predominantly the U.S. and Mexico.

We need to make sure that how we operate and the decisions we make specifically for the greenhouse industry have an even broader economic impact in being able to remain competitive in the export market.

[Dave Epp, Conservative, Chatham-Kent—Leamington, ON]

I'm very familiar with the innovation that seems to be inherent in this industry. I have watched that industry burn coal, diesel fuel, biomass, almost anything for heat, depending on the markets.

We're talking about additional pressures on pricing for fossil fuels. What are the alternatives out there? Is clean electrical generation even a possibility right now? I'm not as familiar. When you look ahead, what do you see?

[Aaron Coristine]

For our long term—

[Linda Delli Santi]

I would like to speak as well.

One of the things that gets lost in this conversation is the fact that the greenhouse sector burns natural gas mainly to produce CO2. We need carbon dioxide during the day to feed the crops.

[Dave Epp, Conservative, Chatham-Kent—Leamington, ON]

I'm going to interrupt to talk about co-gen and tri-gen. I was going to work that into my next question, but if both of you want to respond right away, go ahead.

[Linda Delli Santi]

Co-gen or tri-gen are absolutely fabulous. It's not permitted in British Columbia because.... Well, it's permitted, but you can't sell the excess electricity to the grid. I know that Ontario has taken great advantage of that. We do recognize the value in B.C.

Our biggest thing for greenhouses is that if we produce the CO2 on site rather than trucking it in, it's a more efficient use. There are alternative fuels, for example, biomass, and many of my greenhouse members have biomass boilers, but unfortunately, you can't get CO2 off it economically. A lot of research has been done on it already. They tend to lean towards natural gas so they can get the CO2 they need.

[The Chair, Liberal, Pat Finnigan]

Thank you.

I'm sorry. We're out of time, Mr. Epp.

We will move on to Mr. Louis for five minutes.