Agriculture Committee on April 27th, 2021

[Tim Louis, Liberal, Kitchener—Conestoga, ON]

Thank you, Mr. Chair.

Thank you to all the witnesses for your testimony. This is very enlightening and very helpful, so I hope I have time to talk to everybody.

Ms. Ward from the National Farmers Union, we're talking here about easing the climate crisis by lowering the input uses and emissions, and how we can make that go a long way to boosting farm income because we know about the low margins. Farmers have that potential to remain productive and profitable at the same time even while they are reducing the use of purchased inputs.

However, as we have discussed today we know they can't do it alone. As the government, we need to partner and support and, in your words, incentivize farmers.

That's why I'm proud of one of the reasons our budget is allocating $10 million to help transition to clean energy from diesel farm fuel equipment, what we're talking about today, and that plan also mentioned to return $100 million in funds directly to the farmers through carbon pricing.

The partnership is so the farmers don't have to face that transition to lower emissions alone, and you mentioned that. I do appreciate reading your report “Tackling the Farm Crisis and the Climate Crisis” because one of the recommendations you had on the recommended policies was data collection. I wonder if you can help us, because you referred to on-farm energy use data being scarce or missing and more measurements of GHGs being needed to calibrate and verify the modelling.

To conduct these ongoing farm energy and emissions audits, what kinds of solutions would you suggest we can use so that we can take that data and move forward and work together?

[Katie Ward]

There is some interesting work being done right now through the living labs program at Agriculture and Agri-Food Canada. In the newest round of projects, they are looking at soil health and conservation and soil carbon sequestration, but it could be a very good avenue for looking at data collection that way.

I want to say that it was a Government of Saskatchewan program, potentially in the late 1980s or early 1990s, that did a fair amount of data collection concerning on-farm energy usage. In some cases, then, the data is out there, but it clearly needs some updating. I really think, though, that we need the assistance of both research scientists and agrologists, independent of any sort of incentive, to tell us that our answer is going to be to add more nitrogen or to add more of something else to help us do the right thing in a way that will help improve our net incomes on our farm.

[Tim Louis, Liberal, Kitchener—Conestoga, ON]

I appreciate that. The independent agrologist is another one of your recommendations, and it was great that you worked this in and mentioned it. Another one you mentioned briefly was the Canadian farm resilience agency to coordinate that research.

Can you tell me what you would promote and how we can coordinate that research into a low-emissions approach?

[Katie Ward]

Absolutely. If we have independent agrologists, they can help farmers adopt their best possible low-emission cropping and grazing systems. They can create and run demonstration farms—potentially even using the existing research station and experimental farm network that we still have, which is something all Canadians should be proud of—coordinate research into low-emissions approaches, offer independent soil testing for nitrogen and carbon and water infiltration and lots of other measures of soil health and fertility, and also help preserve and restore wetlands and trees.

There was the old prairie farm rehabilitation administration that was created back in the 1930s. One of the last aspects of the PFRA in existence was the tree farms out in the Prairies, which helped with reforestation issues and the biodiversity it helped to promote. If we can promote good soil health, we can retain more carbon and have fewer drought and water issues on our prairie soils in particular, which is where much of our agricultural emissions comes from, with the cropping systems that are in use on the Prairies.

[Tim Louis, Liberal, Kitchener—Conestoga, ON]

Thank you, Ms. Ward.

I have a minute left. I want to address the Canadian Horticultural Council—perhaps Mr. Coristine, because he's closest to me.

We talked about alternative and renewable fuel options while we're supporting farmers to make this transition. I wanted to speak about anaerobic digesters. Down in the Niagara region, Bayview Flowers is using anaerobic biodigesters to produce heat and electricity that is sold to the grid, which is enough electricity in their case for about 200 homes in a year.

Can you tell me about the potential for anaerobic digesters?

[Aaron Coristine]

Yes. In the sector, more research could be done, specifically for the greenhouse area. I think it probably provides some feasible opportunities for us to utilize and implement and to put it toward a co-op type of electricity grid whereby we use them to fuel and to charge.

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. Coristine, and thank you Mr. Louis.

Mr. Perron, you have the floor for two and a half minutes.

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

Thank you, Mr. Chair.

Mr. Coristine, last week we had a witness mention the idea of including a time limit in Bill C-206 as an incentive for governments to put programs in place and perhaps encourage industry to develop alternatives.

What do you think?

[Aaron Coristine]

These would be limits in terms of...?

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

I don't know. Let's say five years, and we could review it in five years.

Would that make sense or not?

[Aaron Coristine]

I think it depends on the context. Are we limiting carbon emissions to zero? Are we looking to reach Paris targets?

Certainly it's the sooner, the better, because if we can work with government to implement all our initiatives and at least show our due diligence and that we are actively pursuing going as green as possible, then we won't get to 2030, when it's $170 per tonne. The sooner it's done, the more money we'll save, in terms of what we're going to pay. We would, however, need support from the government through grant money and subsidies of upfront costs to make this feasible.

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

All right. Thank you.

Ms. Ward, you were saying that Bill C-206 might not be necessary if the exemptions in the budget were effective.

Wouldn't producers rather have an exemption and not be dependent on receiving a cheque from the government, which could involve delays or very cumbersome administration?

I would like to hear from you, and I would ask Mr. Coristine to respond afterwards.

[Katie Ward]

It's an interesting conundrum that farmers find ourselves in. We have a financial bottom line running our businesses. We have to balance our upfront costs versus what we can sell our products for and manage a net income that's going to at least keep us in business.

That being said, as farmers we also know that, especially for, say, grain farmers out in the Prairies, there are nine crop seasons left to get us to our Paris targets, so we have to reduce emissions. Every industry does, but agriculture does as well. We have to do our part. We're part of this community, and we are in a really unique position as an industry in that the changes that are being caused by the climate crisis are already impacting us on our farms.

[The Chair, Liberal, Pat Finnigan]

Thank you, Ms. Ward.

Thank you, Mr. Perron.

Now we'll have Mr. MacGregor for two and a half minutes.

Go ahead, Mr. MacGregor.

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

Thank you so much, Mr. Chair.

Ms. Ward, in my two and a half minutes I'm going to ask you two questions and then give you the remainder of the time to answer.

First of all, in the existing act, we already have gasoline and diesel fuel that are exempt. They are “qualifying farming fuels”. Do you have any thoughts on those two fuels because, of course, they are used quite a bit in farming activities and it seems to me that Bill C-206 is just following that precedent and then allowing natural gas and propane.

Second of all, if you can also.... I think it's important. We keep on talking about the cost of the carbon tax, and I think you just briefly answered this, but can you also just illustrate what the costs are if we don't address climate change, because I have heard at this committee in the three years that I've been sitting at it that farmers are on the front lines of climate change. Can you just give us a sense of what the economic costs of doing nothing in tackling climate change are going to be for farmers?

[Katie Ward]

I'll touch on your first question briefly in terms of the impact of gas and diesel usage on our farms and ranches. It's our primary usage for our equipment, for our combines, our tractors and a lot of the other equipment that we use on our farms and our farm trucks, but there are interesting alternatives coming out. We have been holding an NFUniversity webinar series over the course of this winter and our most recent webinar was on electrification of farm equipment. There are some really interesting possibilities coming up, even aftermarket upgrades you can do to your diesel equipment that are going to allow you to use biodiesel without a whole bunch of the knock-on problems and challenges that come with it.

I think the real thing that we need to address...because innovation is going to catch up with us. Farmers are early adopters and we just need the incentives to jump on board with that. The EU is outspending us in terms of agri-environmental payments to farmers by multiple factors of 10, which really does disadvantage our Canadian farms.

The cost if we don't address the climate crisis is kind of incalculable. If you talk to crop scientists it's not just extra carbon and our longer growing seasons are going to mean we can grow more food. It's going to mean heat waves that are going to impinge on the growth capacity of our plants, droughts that are going to severely impact the rate of gain of our animals out on pasture, let alone the hail and windstorms, the tornados and all the other extreme weather.

I talk to young farmers who are just getting into farming right now and they've never known a simple, calm growing season. I'm one of the last.

[The Chair, Liberal, Pat Finnigan]

Thank you, Ms. Ward.

Thank you, Mr. MacGregor.

Just before I thank the panel, I want to switch my hat to that of a small commercial greenhouse grower. In my years of growing, 30 years ago we installed a biomass burning system. We've installed curtains to keep energy. We've removed our motorized fans to replace them with natural ventilation, because in a greenhouse that's your main cost.

If there had been rebates instead of incentives to help me move towards that, I don't know if I ever would have done it. I did it because it was money back in my pocket directly. I think that's how it needs to move forward for us to have the incentive to think ahead to what's new in energy conservation. That's my two cents as a greenhouse grower.

Now, I'll put back my hat as the chair and I will thank the panel for being with us today. From the Canadian Horticultural Council, Mr. Aaron Coristine and Linda Delli Santi, thanks so much for being here. Of course, Ms. Katie Ward from the National Farmers Union, thanks so much for being here. It's great.

We'll break for a very short time. Please go get your coffee or whatever and come back ASAP because we want to try to get a few minutes for business.

Thank you so much.

[The Chair, Liberal, Pat Finnigan]

We'll start with the presentation and the testimony.

For our second panel, I want to welcome, from the Canadian Canola Growers Association, Mr. Mike Ammeter, chair, and Mr. Dave Carey, vice-president, government and industry relations. From Dowler-Karn Limited we have Mr. Dan Kelly, chief financial officer. Welcome.

We'll start with a five-minute opening statement, and we'll go with the Canadian Canola Growers Association.

You have five minutes. You can split it or whichever way you want to deliver it. Go ahead.

[Mike Ammeter, Chair, Canadian Canola Growers Association]

Thank you.

My name is Mike Ammeter. I'm the chair of the Canadian Canola Growers Association. I farm at Sylvan Lake, Alberta, which is an hour and a half north of Calgary. I grow canola, pulses, wheat and barley on 1,400 acres. With me today is Dave Carey, CCGA's VP of government and industry relations.

CCGA is the national organization representing Canada's 43,000 canola farmers. Canola is Canada's most widely seeded crop, generating the largest farm cash receipts of any agricultural commodity, earning Canadian farmers over $10.2 billion in 2020. Canola farmers export over 90% of our crop. The industry we support contributes 207,000 jobs and $29.9 billion to Canada's economy every year.

Canola farmers are committed to a sustainable future and have established goals to support that commitment. By 2025, they will reduce their fuel usage by 18% per bushel, increase land use efficiency by 40% per bushel, sequester an additional five million tonnes of CO2, use 4R nutrient stewardship practices on 90% of canola production acres and continue to safeguard the more than 2,000 beneficial insects that call canola fields and surrounding habitat home.

CCGA is pleased to support Bill C-206. While we were pleased to see the budget include a commitment to return part of the funds collected from the price on carbon to farmers, we view this bill as a more direct and efficient way to provide farmers with an exemption for propane and natural gas used on farm for grain drying and irrigation.

For my farm, grain drying is important because it allows me to get my crop off the field when time is short at the end of the harvest season and the weather turns to rain and snow. Sometimes I cannot wait for my crop to dry in the field. When a crop sits in the field with excess moisture, it loses quality and volume, which in turn means I will have to sell it at a discount. If wet grain is put into storage, it can spoil in a matter of days.

In the last 15 years, my farm has experienced increased weather variability not seen since the 1960s. It has become more and more difficult to harvest my crops due to rain and snow, even at the end of the growing season. This means I have to run my natural gas grain dryer more often than not. That dryer is a piece of farming equipment that is central to my operation now. Since I purchased it, I have invested approximately $20,000 upgrading it to make it as energy efficient as possible. If there was a way for me to make my dryer more efficient yet, I would do so, but there isn't anything currently on the market that can help me reduce my drying costs.

I understand that the government's objective with the price on carbon is to change behaviour and to transition operations to an alternative fuel source. However, farmers do not have viable alternatives available to us.

Global competitiveness is critical to our industry. Canadian canola farmers are price-takers on a global market with no ability to pass additional costs on. These additional costs will impact our ability to remain competitive and will threaten the viability of our farming operations.

I appreciate the government's recent budget announcement that they will provide $50 million in funding for projects like retrofitting grain dryers. While these types of programs may be useful to farmers who have not already retrofitted their dryer, as I have done, this will not address the fact that our energy infrastructure in western Canada is carbon based. If there was a way to transition from carbon-based inputs, our industry would do so. Fuel is one of my largest input costs. To keep pace with international competitors, farmers are constantly looking to become more fuel and energy efficient, but in order to achieve the BTUs necessary to properly dry my grain, I require carbon-based energy.

There's been concern that Bill C-206 may not accomplish what it's intended to do. To ensure that it does, we recommend that fuel used in grain drying and irrigation be properly accounted for in the bill as exempt from the price on carbon.

CCGA remains optimistic about the future of Canada's canola farmers and their ability to continue to contribute positively to both a healthy environment and a healthy economy. Canadian agriculture should be viewed as a strategic partner in this dialogue. Canola farmers are committed to building on our environmental successes.

Thank you.

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. Ammeter. That was right on time.

We'll go to our next presenter, Mr. Kelly, from Dowler-Karn.

Go ahead, Mr. Kelly, for five minutes.

[Dan Kelly, Chief Financial Officer, Dowler-Karn Limited]

Thank you, Mr. Chair.

I would first like to acknowledge that I'm speaking from the traditional territory of the Anishinabe, Haudenosaunee, Ojibwa and Chippewa peoples. This territory is covered by the Upper Canada treaties.

I'm here today as the chief financial officer of Dowler-Karn Limited, a third-generation, family-owned company founded in 1943. We are distributors of gasoline, diesel and propane, serving our customers in southwestern Ontario for almost 80 years, with our head office in St. Thomas, Ontario. In particular, a significant portion of our customers are farmers, from small family farms to large operations, farming cash crops, livestock or a combination of both.

I am also the past chair of the Canadian Propane Association. The CPA represents the entire supply chain for propane: extraction, refining, distribution, marketing and delivering to end-users across Canada. We represent over 400 member companies that participate in the propane industry, from large refiners to independent distributors that serve Canadian consumers.

Propane is a low carbon-intensive fuel. It generates up to 26% fewer GHGs than gasoline, and 98% less particulate matter than diesel fuel. Propane is an abundant, 100% Canadian fuel that has been energizing Canadians across the country for decades. It is clean, affordable and readily available and can provide solutions today in the discussions for Canada's clean energy future.

In the spring of 2019, Dowler-Karn registered as a distributor under the Greenhouse Gas Pollution Pricing Act and has charged, collected and remitted the federal fuel charge since its inception on April 1, 2019. In that time, we have collected and remitted $19.8 million in respect of the federal fuel charge. In particular, we have collected and remitted approximately $1.7 million in the federal fuel charge in respect of propane that's been used in farming. These amounts come directly from the bottom line of farmers.

The original regulations in the act recognized the uniqueness of the agriculture sector and provided relief from the federal fuel charge for farm fuels, specifically exempting gasoline and diesel fuel directly used in farming. Although gasoline and diesel fuel are necessary for planting and harvesting crops, propane is just as vital to a farming operation. However, propane has not been granted the same relief as high-carbon fuels such as gasoline and diesel.

In the most recent budget, the Minister of Finance announced some relief for farmers who are incurring the costs of the federal fuel charge for propane and natural gas. Although we applaud the government for recognizing the oversight, we have concerns with the proposal for a targeted rebate program.

Rather than providing a rebate to address the issue, we believe that propane should be afforded the same treatment as gasoline and diesel. Simply extending the exemption to propane would provide the following: an equitable treatment for a low carbon-intensive fuel as afforded to those that are much more carbon-intensive; relief for all propane used in farming operations, not just for drying crops; and removing the need for bureaucracy in managing the rebate program.

Currently, we charge the federal fuel charge at the time of invoice and then remit same to CRA at the end of the following month. We are reimbursed when the farmer pays his invoice, including the federal fuel charge. Should propane be exempt from the FFC, as is the case with gasoline and diesel, there would simply be no charge on the invoice. The farmer would issue a form L402 exemption to Dowler-Karn, which we would keep on file.

Should a rebate program be instituted, we would need to invoice the farmer, charging the FFC, which they would pay to us and we would remit. At some point in the future, the farmer would then be required to submit a rebate application, which would need to be reviewed, approved and processed by CRA, which would then issue payment to the farmer for the same FFC they paid at the time of purchase. The rebate would then be subject to audit. This much bureaucracy doesn't seem necessary when an exemption would meet the same goal.

Another issue facing farmers centres around the focus on propane for grain-drying purposes only. Propane used in farming extends beyond simply grain drying, as livestock and dairy farmers use propane to keep their livestock warm in winter. In fact, Dowler-Karn sells as much propane to heat barns for livestock as we sell for grain drying. Some regions of Canada may have greater needs for propane to dry crops, but the need for heating barns is just as critical. Imagine the impact on a poultry operation with hundreds of chickens if they couldn't keep the barns warm in the dead of winter.

In addition to barn heat, propane is also used for backup power generation, protecting farm operations against power outages.

We at Dowler-Karn and the CPA support the approach prescribed in Bill C-206, and believe it is the most efficient, cost-effective and reasonable approach. We applaud the government for recognizing the need to correct the regulation, but believe an exemption for a much cleaner, cheaper fuel is the more equitable approach.

I'd now be happy to take any questions.

Thank you, Mr. Chair.

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. Kelly.

We'll move to questions. To start our second round, we have Mr. Steinley for—

[Warren Steinley, Conservative, Regina—Lewvan, SK]

No, it's Mr. Lawrence first.

[The Chair, Liberal, Pat Finnigan]

I'm sorry.

Go ahead, Mr. Lawrence, for six minutes.

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

It's no problem. I've never been called such a wonderful gentleman in my life, so I appreciate the compliment.

I'll start with you, Mr. Kelly. I just want to give you an opportunity to expand on what you were talking about.

I think the movement to more efficiency and reduction of GHGs not only involves a cessation of the use of fossil fuels but also the choosing of cleaner fuels. If, for example, China switched all their coal production to natural gas or propane, we would see a much greater reduction in GHG than we would ever see if Canada went to net zero tomorrow. I was wondering if you could comment on that and propane's role in actually reducing greenhouse gases.