Agriculture Committee on May 4th, 2021

[Kody Blois, Liberal, Kings—Hants, NS]

Mr. King, you mentioned the price mechanism. Other stakeholders have come before this committee and spoken about the importance of keeping a price mechanism in place, perhaps finding a way to be able to reimburse producers for some of the costs while maintaining a competitiveness to change behaviour where applicable.

You mentioned that the government plans to give further details of its plan that was in budget 2021, but we do know that about $100 million, as was mentioned by Mr. Parry, would go back to producers. How did we come up with the number of $100 million? I'm assuming it's relatively equitable with respect to what we feel producers actually pay in the backstop provinces in which it's in place.

[Phil King]

Yes, precisely. I can walk you through the $100-million figure. You start with the four provinces in which the backstop applies: Alberta, Saskatchewan, Manitoba and Ontario. Using data from Statistics Canada on farm operating expenditures, it's roughly $50 billion annually in those four provinces. About three-quarters of one percentage point, so less than one percentage point of that total of $50 billion comes from expenditures on natural gas and propane. It's about three-quarters of a percentage point, and about one-third of that, about 0.2% of total farm operating expenditures, is related to the carbon price. Again, that's on natural gas and propane. That's exactly where the $100-million figure comes from. Again, it's those four provinces, and it's at the current price of $40 per tonne.

[Kody Blois, Liberal, Kings—Hants, NS]

I appreciate that explanation. That's clear.

When we look across the country, we see that we have the price on pollution. In backstop provinces the actual amount collected is then returned on a per capita basis, per se, whereas if you're someone who's a higher polluter you might essentially have to pay more into the system than what you get back. If you're someone who paid less into the system, you get a cheque to reimburse and top you up.

I know it's early days, so, to the extent that you can tell me, how do you intend to be able to take that $100 million and distribute it back on a per capita basis to the actual farmers to ensure that we're incentivizing, and those farmers who are changing their behaviour are rewarded as such?

[Phil King]

Unfortunately, you're right. It is early days. It's too early to be specific about that. Those details are still being determined. I wouldn't say it would be a per capita basis, necessarily. That's one of several options and one of many dimensions across which you could return this funding.

The important point, perhaps, is that the fuel charge that is associated with natural gas and propane use totals about $100 million, and that's what has been committed to be returned to farmers in the four jurisdictions.

[Kody Blois, Liberal, Kings—Hants, NS]

Is it fair to say, though, Mr. King, given the fact that, yes, it is early days, that there will be a consideration on how to continue to incentivize farmers where applicable? We've had conversations on this committee about the fact that some of the technologies are not necessarily readily available, but where applicable, I assume there's going to be some type of mechanism to try to incentivize to change behaviour, to address the 10% of emissions that are tied to agriculture. Farmers are already doing great work, but I assume we want to help to continue to incentivize that behaviour.

[Phil King]

That's correct, and that's the intention of the two measures announced in the recent budget. One is to maintain the price signal, but returning the funds where it's not possible to adopt more efficient machinery or technology. The second aspect, which my colleague Matt spoke to, is the agri-tech fund that was announced, and the additional resources for that in the budget.

[Kody Blois, Liberal, Kings—Hants, NS]

I think that's the end of my time, unfortunately. I'd like to thank the witnesses.

[The Chair, Liberal, Pat Finnigan]

You're exactly on time. Thank you, Mr. Blois.

Mr. Perron now has the floor for six minutes.

Is Mr. Perron here or will Ms. Pauzé be speaking?

[Monique Pauzé, Bloc, Repentigny, QC]

I'll be speaking.

[The Chair, Liberal, Pat Finnigan]

You have the floor for six minutes, Ms. Pauzé.

[Monique Pauzé, Bloc, Repentigny, QC]

Thank you.

I want to start by saying that I sit on the Standing Committee on Environment and Sustainable Development. Honestly, I don't feel disoriented at all when I hear from you. It's fine.

My first question is for Mr. King.

You said that you were very familiar with the bill, because you wrote it.

So initially, in the first draft, there wasn't any exemption for propane and natural gas, but now there is one?

[Phil King]

I should clarify. I did not personally draft the GGPPA. We have a team of very capable legislative drafters at the Department of Finance.

There is no exemption in the bill for propane and natural gas use. If I understand your question correctly, the measure posed in the budget doesn't consider an exemption either. It considers taking some of the fuel charge proceeds that would be paid by farmers on their use of propane and natural gas, and then returning those funds back to farmers. There's no exemption. They would still pay the price, but they would get those funds back.

[Monique Pauzé, Bloc, Repentigny, QC]

Okay. Thank you for the clarification.

Mr. Lawrence said earlier that a change in technology could take five to ten years. However, we know that there's currently a climate emergency.

Mr. Parry, you said that clean energy was available and that there would be new technologies to reduce on-farm fuel use. Could you name a few?

[Matt Parry]

As I mentioned, one example that was discussed is the Triple Green process, using biomaterial to provide the energy for grain drying, as opposed to propane or natural gas. That's one example. The government is very much open to supporting the development and adoption of that and/or other technologies.

In response to the previous question, there was significant funding announced as part of the strengthened climate plan, and again noted in the budget, for the agricultural clean technology program. As announced in budget 2021, $50 million of that funding will be set aside to focus on new technologies related to grain drying. There is certainly a priority being put on technology in this area.

[Monique Pauzé, Bloc, Repentigny, QC]

I'll stop you there, Mr. Parry. I have limited time, as you know.

Europe has adopted some technologies that we're trying to implement here. Often, people start by wondering whether this will work, rather than looking at the experiences in other places.

Do you know of any technologies used in other places that could be easily implemented here?

[Matt Parry]

I'm not personally aware, but again, I could check with my colleagues in the department who are more familiar on the technology questions.

[Monique Pauzé, Bloc, Repentigny, QC]

I would like you to send the documents to the committee.

I now want to address the issue of exemptions.

Mr. King, do you think that farmers would prefer to get money back later or be exempted at source? I'm asking this question in light of a type of dependency on the government. Have you consulted with farmers to find out whether they would prefer to be exempt at source, rather than pay out money and receive money back later?

[Phil King]

No, we haven't consulted.

I think you probably would have heard that via the committee and via witnesses you have had. I can imagine that it's an argument for the farmers to make themselves, that they would probably prefer a complete exemption from this rather than the money coming back after the fact, but no, we haven't reached out to farmers from the Department of Finance.

I don't know if my colleagues have anything to add.

[Gervais Coulombe, Senior Director, Excise Taxation and Legislation, Sales Tax Division, Tax Policy Branch, Department of Finance]

Thank you, Mr. King. I do want to add a few things.

It's important to remember that, when the greenhouse gas pricing bill was introduced, consultations were held. Before that, in 2017, a technical paper was prepared. Throughout this process, there has been an awareness campaign and extensive consultation with Canadians, including farmers, of course.

The fuel charge, which is currently in effect in the four provinces concerned, doesn't apply to many emissions from the agricultural sector. Consider, for example, all biological emissions that come from herds. These emissions constitute a significant portion of total greenhouse gas emissions.

[Monique Pauzé, Bloc, Repentigny, QC]

Yes, exactly.

Do I have any time left, Mr. Chair?

[The Chair, Liberal, Pat Finnigan]

You have one second left.

[Monique Pauzé, Bloc, Repentigny, QC]

One second? So I'll say goodbye.

[The Chair, Liberal, Pat Finnigan]

You did a great job as Mr. Perron's replacement.

[Monique Pauzé, Bloc, Repentigny, QC]

Thank you.

[The Chair, Liberal, Pat Finnigan]

Before I go, could I ask all the witnesses to keep their cameras on, particularly if they're still around? If you don't mind, you can all leave your cameras on while you're here. Thank you.

Now, Mr. MacGregor, go ahead, for six minutes.