Agriculture Committee on May 4th, 2021

[Phil King]

Again, just to reiterate, I can give you my view. It's up to the CRA to determine finally and once and for all if it is included. However, my view is that it's not.

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

It's funny you should say that, actually. Are you aware that the CRA, in the Income Tax Act, has a definition of “farming”?

[Phil King]

Yes.

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

Did you know that it includes grain drying? The ultimate arbitrator has already ruled.

I will read to you, underneath the definitions of section 248, a farm activity will include processing that is “necessary to turn the harvested product into a saleable product”.

When grain is wet, it is not saleable. It has to be done.

Mr. King, do you understand how silly this sounds right now?

[Phil King]

I don't see your point, Mr. Lawrence. If this was to go forward, you want to make it as clear as possible. To make it as clear as possible, you can modify it.

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

It is clear. The CRA has ruled. They say, and I read to you, under section 248, farming is to include activity “necessary to turn the harvested product into a saleable product”. That's exactly what grain drying is.

[Phil King]

Then, if the CRA has spoken, you have your answer. As I said, it's the CRA that determines this, so it's not for me to say.

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

Thank you.

I'll give the rest of my time to Mr. Epp, Chair.

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

Thank you, Mr. Lawrence.

Mr. Parry, I believe you said in your testimony that agricultural greenhouse gas emissions have been stable since 2005. What does that tell you about the rising production from agriculture since then? With rising greenhouse gas emissions from virtually every other segment of our society, what does that tell you about the innovation and environmental stewardship of the agricultural community?

[Matt Parry]

It states that the sector has made significant progress in reducing the emissions intensity of production and in producing agricultural products more sustainably, with a lower greenhouse gas emissions content. It speaks to the innovative capacity and performance of the agricultural sector in Canada.

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

I think it would be fair to state that it's been done in the context of the absence of a punitive tax.

[Matt Parry]

The progress has been achieved over a number of years that predate the current carbon pollution pricing system. That's true.

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

Thank you.

Earlier in the testimony we touched on sequestration over that time period. How is that being recognized or being contemplated moving forward in this budget?

[Matt Parry]

I would note two elements to that. One would be the program I mentioned previously, the agricultural climate solutions program, which is focused specifically on carbon sequestration. As well, there was a subsequent announcement in budget 2021 that talked about an additional $200 million that would be devoted to on-farm action over two years. It would be about—

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

I was referring to all the sequestration since 2005 or earlier, not moving forward. It was more rhetorical. Thank you.

I have one last question, for Mr. King.

Is there any confusion in your mind with regard to wind fans—innovations that Ontario and B.C. farmers have put into orchards and into vineyards—as far as those being an eligible piece of farm equipment?

[The Chair, Liberal, Pat Finnigan]

Give a quick answer, Mr. King, please.

[Phil King]

That's something I'd have to look at. I can't answer on the spot like that. It needs due consideration.

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. King.

Thank you, Mr. Epp.

Mr. Ellis, you have five minutes. Go ahead.

[Neil Ellis, Liberal, Bay of Quinte, ON]

Thank you.

Many great questions have been asked today, so I don't know how many questions I'll have.

I'd like to thank everybody for attending today. I see that most of you are working from home. It's been a great year, and you guys have been successful working from home.

I think my question would be for Mr. Parry, and you kind of touched on it already. What tools can the federal and provincial governments put in place to facilitate a transition to a greener agriculture?

[Matt Parry]

There are a number of things the government can do in terms of working, for example, collaboratively with the sector, with scientists. The department has a program called the living laboratories initiative, which is about working together with farmers in the fields and with scientists to develop beneficial management practices that are very much geared to the local circumstances and conditions in the different regions of Canada. I think that will be a particularly important area of work to promote going forward.

There's been discussion earlier today about the benefits and progress that have been made through cover cropping and no-till farming, for example. Continuing to work with the agricultural community, scientists and other local partners, I think, is a particularly important area. As well, I mentioned earlier about clean technology and advancing the development and adoption of clean technology.

[Judy Meltzer, Director General, Carbon Markets Bureau, Environmental Protection Branch, Department of the Environment]

Maybe I can just jump in.

As Matt mentioned, it's a mixture of incentives and investments. One of the ways in which we're looking to create economic opportunities by sequestering carbon, for example, in the agricultural sector is through the development of a federal GHG offset system. It's currently under development. We have draft regulations. This is going to provide an economic incentive to reduce or remove carbon in activities that aren't carbon priced, including in sectors such as agriculture and forestry.

One of the protocols we're going to be looking to develop first is an enhanced soil organic carbon protocol, so that we can create a financial incentive for farmers and recognize some of their innovative work, and as a complement to carbon pricing. I just want to mention that as just one example of an incentive that we're developing.

[Neil Ellis, Liberal, Bay of Quinte, ON]

Thank you.

I believe this would also be for Mr. Parry.

One of the witnesses—and I'm not sure which witness, as we've had a great number of witnesses—testified that there was a program. I don't know if it was a provincial or a federal program. I'm wondering if you would know that, that there was a program to update grain dryers. This program that she spoke about must have been a few years back. I just don't know if you know anything about the program that was out there.

[Matt Parry]

I believe it was referring to a program that the Alberta government had to retrofit grain dryers. I believe it might have been Ms. Ross, from Farmers for Climate Solutions, who might have discussed that with the committee previously. I believe that was the program in question.

[Neil Ellis, Liberal, Bay of Quinte, ON]

You mentioned retrofitting. Do you have any numbers on retrofitting grain dryers and of how more efficient they can get? I guess, from this program that she spoke of, there must be some inefficiency in older grain dryers.

[Matt Parry]

Yes, that's my understanding as well. I believe that that Alberta program was successful in supporting a number of retrofits. I'd have to get back to you with the specifics of that and the improvements that were achieved through it.