Agriculture Committee on March 28th, 2022

[The Chair, Liberal, Kody Blois]

I call the meeting to order.

Welcome to the 11th meeting of the Standing Committee on Agriculture and Agri-Food.

I will begin with a few reminders.

Today's meeting is taking place in a hybrid format pursuant to a House order of November 25, 2021. The proceedings will be made available on the House of Commons website. For your information, the webcast will always show the person speaking rather than the entirety of the committee. Screenshots or taking photos of your screen is not permitted.

For members participating in person, keep in mind the Board of Internal Economy's guidelines for mask use and health protocols.

To our witnesses who are joining us virtually, this is not your first rodeo, as they say. I'm quite sure we've seen most of you here. In terms of interpretation, you have those availabilities on the screen. Please make sure that you do have your headset ready to go when we get started.

Pursuant to Standing Order 108(2) and the motion adopted by the committee on Monday, January 31, 2022, the committee is commencing its study of the environmental contribution of agriculture.

I would now like to welcome our witnesses for our first panel.

Joining us by video conference today we have, from the Agriculture Carbon Alliance, Dave Carey and Scott Ross, both of whom serve as co‐chair.

From the Canadian Federation of Agriculture, we have Keith Currie, who serves as first vice-president, and Frank Annau, director of environment and science policy.

We are also hearing from the representatives of the Union des producteurs agricoles, or UPA, Martin Caron, general president, and Daniel Bernier, agricultural research and policy advisor on the environment.

Each of you will have up to five minutes for opening remarks.

I would invite Mr. Carey or Mr. Ross to make a five-minute opening statement on behalf of Agriculture Carbon Alliance.

[Dave Carey, Co-Chair, Agriculture Carbon Alliance]

Thank you, Mr. Chair.

Thank you for the invitation to appear today on behalf of the Agriculture Carbon Alliance or ACA.

My name is Dave Carey. I serve as co-chair along with my colleague, Scott Ross, who I will be splitting my time with.

ACA is a first-of-its-kind coalition of 14 national farm organizations that unites every major commodity and collectively represents more than 190,000 farm businesses and $76 billion in farm market receipts in 2021. The ACA was established to ensure that Canadian farmers' sustainable practices are recognized through a policy environment that supports their livelihoods and leverages their role as climate solutions providers.

It is imperative that environmental policies are developed in collaboration with producers to ensure that the government understands their realities and that policies and programs can actually be implemented by producers to benefit the environment and ensure their businesses remain competitive.

We founded the ACA in 2021 because farm groups weren’t viewed by ECCC as relevant stakeholders, despite agri-environmental policy development being a significant focus of the department and the government as a whole.

We would request that a formal working group be struck between AAFC and ECCC, with representatives from primary agriculture, to work on pragmatic and practical policy development.

We share the government’s goal of a more sustainable agriculture sector, but are seeing a deterioration in stakeholder engagement. Resulting draft policies developed by regulators are not practical, reasonable or implementable by farmers and ranchers as they look to continue to produce low-cost, high-quality food for Canada and the world.

I will now pass it over to Scott Ross for the remaining time.

[Scott Ross, Co-Chair, Agriculture Carbon Alliance]

Thank you, Dave.

ACA also works proactively on behalf of Canadian agriculture to advocate for constructive and evidence-based environmental policies. To date, we have focused on three major priority areas.

Carbon offset protocols open to science-based measurement should incorporate flexibility to recognize incremental improvements in on-farm practices that have already taken place and will take place, while accommodating advancements in verification that would allow for more outcome-based measurements.

ACA welcomes the opportunity for targeted producer engagement on the enhanced soil organic carbon protocol. We also look forward to engaging on future protocols for livestock feed management, the avoided conversion of grasslands, 4R climate-smart offset protocols and livestock manure management.

We understand that the proposed offset protocols will not apply to farms that began those activities prior to 2017. However, we do not believe that this should serve as a barrier to recognizing early adopters for their contributions to the sector. Instead, protocols and support programs should also be developed for producers who were early adopters of best management practices. Protocols or direct payment for long-term carbon storage would help ensure that this critical ecosystem service is recognized for its vast contribution to on-farm environmental efforts.

On research and rebates, the climate action incentive fund returned a portion of revenue collected by the carbon tax for rebates and retrofits that reduce carbon emissions for small and medium-sized enterprises. Farms were the largest pool of applicants demonstrating their commitment to climate action. Unfortunately, CAIF has not been open for applications since 2019, and our members are looking for clarity on the future of this program.

The ACA also welcomes the opportunity for further engagement on the agricultural climate solutions program. The government should ensure that living lab sites are expanded to the west, for example, where mounting climate extremes are having profound impacts on producers.

In conclusion, farmers and ranchers continue to face rising costs for producing food, particularly inputs and transportation. These costs are compounded by the carbon surcharge. Farmers and ranchers are required to dry their grain, and heat or cool their barns and greenhouses in order to feed Canadians and drive our export market. These are the very activities needed to mitigate the impacts of climate change, including drought and extreme rainfall. With no alternative fuel sources available, these necessary practices are penalized by an increase in the price of carbon. As such, amendments must be made to the Greenhouse Gas Pollution Pricing Act to extend exemptions for qualified fuel to marketable natural gas and propane, and include machinery used for grain drying, irrigation and heating and cooling of livestock barns and greenhouses.

Farmers are environmentalists and have been improving their sustainability for decades through innovations and BMPs. With record fuel prices, there are already strong incentives to invest in fuel efficiency, but farmers need to have available capital to be able to make investments in improving their operations, which are often very expensive and can amount to hundreds of thousands of dollars.

By adopting policies that support competitiveness, the government will ensure that farmers can further invest in the sustainability of their operations, leveraging the sector's potential to lower emissions and sequester carbon. As such, ACA and our members are strong supporters of Bill C-234 and would encourage all members to support the bill and expedite its review at committee stage.

Thank you, all, for your time. We look forward to your questions.

[The Chair, Liberal, Kody Blois]

Thank you, Mr. Ross.

We're now going to move to Mr. Currie from the Canadian Federation of Agriculture for five minutes, please.

[Keith Currie, First Vice-President, Canadian Federation of Agriculture]

Thank you.

I'm Keith Currie. I'm the first vice-president of the Canadian Federation of Agriculture. We represent some 200,000 farmers, ranchers and farm families nationwide. I'm joined by Frank Annau, our director of environment and science policy.

We appreciate this opportunity to discuss how to continue the hard work of farmers on reducing emissions and improving soil health. Producers are stewards of the land, and manage significant carbon sinks that play a key role in soil health and the fight against climate change.

These sinks are maintained by a number of farm-driven practices that regenerate soil organic matter, which in turn improves carbon sequestration and long-term carbon storage in agricultural soils. These practices are wide ranging, but can include intercropping, cover cropping and rotational grazing, all of which are eligible for funding under the on-farm climate action fund.

With Canada being as large and as vast as it is, the success of these approaches can vary by region, and it is critical that initiatives, such as living laboratories, expand to western Canada, so that innovations in soil health can be refined in areas hit hard by recent flooding and drought.

Farmers are also well versed on the environmental and cost reduction benefits of efficiently managing critical inputs, such as fertilizers, fuels and pest control products.

As you may be aware, industry-led approaches, such as 4R nutrient stewardship, help producers select the right source of fertilizer to apply the right amount in the right place at the right time.

Research shows that correct implementation of this protocol results in a 15%-25% reduction in nitrous oxide emissions. These efforts can be greatly enhanced by precision agricultural technology, such as crop and soil sensors, that optimize the rate of fertilizer, pesticide and weed control application. This, combined with practices that regenerate soil organic matter, help prevent our overapplication of inputs, which protects soil biodiversity and improves soil health.

Precision ag technology also significantly improves fuel efficiency by using fleet analytics and auto-guidance systems, which reduces the number of passes needed for sprayers, tillage and harvesters. One U.S. study found that this would decrease fuel use by up to 6%, which is the equivalent of 18,000 flights. The same study stated that this fuel use could decrease a further 16% with a broader adoption of this technology.

In Canada, there are a number of barriers to this adoption, including the lack of reliable rural broadband Internet needed to run the equipment, and the fact that adoption rates drop significantly on farms that are under 500 acres in size, or that have an annual income of under $75,000. As such, it is recommended that government prioritize rural Internet and scaling down this technology in order to realize those fuel efficiencies.

With respect to greenhouse gas reduction, the largest cattle methane reduction study was concluded in Alberta in 2020. It showed that methane emissions per cattle could be reduced by 30%-80% by including an additive call 3-NOP in different combinations of feed. The additive was developed by DSM technologies, which has applied for registration in various countries to bring the product to market in 2022.

Unfortunately, here at home, the product may not be on the market for years, because Health Canada has classified it as a veterinary drug. This puts livestock sustainability efforts in Canada behind countries that have registered the product as animal feed, including EU countries, China and Brazil. We recommend the government follow suit with our trade partners and competitors by ensuring 3-NOP reaches Canadian markets as soon as possible.

All of these solutions, while effective, come at a significant investment and cost to farmers. It is therefore essential that we ensure they have the cash in hand to invest in solutions, and participate in government cost-sharing where available. The cash is being significantly reduced by record high costs for inputs, such as fuel and fertilizer, brought on by Russia's invasion of Ukraine. These events put greater pressure on Canadian farmers to produce more than ever before to mitigate impacts from a world food shortage brought on by the war. We must ensure farmers have cash resources to rise to this occasion, and to do it sustainably.

The price on carbon acts as a market incentive to switch to lower-emission fuels and improve fuel efficiency. This signal is dwarfed by the blaring alarm of current gas prices. While gas and diesel are exempt from carbon surcharges on farm, natural gas and propane used for grain dryers and livestock heating and cooling systems are not. These activities are critical to mitigating severe climate impacts, such as extreme rainfall and drought.

We therefore recommend support for House Bill C-234. Removing the carbon price on these fuels will provide farms with additional cash to invest in the input efficiency needed to respond to record input prices and help Canadian farmers feed the world.

We thank you for your attention.

[The Chair, Liberal, Kody Blois]

Perfect. Thank you.

We now go to the Union des producteurs agricoles representatives.

Mr. Caron or Mr. Bernier, go ahead.

[Daniel Bernier, Advisor, Agricultural Research and Policy – Environment, Union des producteurs agricoles]

Thank you, Mr. Chair.

The president of the UPA does not seem to be at the meeting; he may have had connection issues. So I will make the presentation.

Five minutes to talk about such a broad topic is very little time. So I will stick to the basics.

I would like to begin by saying that environmental protection has been a priority for the UPA for about 30 years. The first agri-environmental strategy was adopted in 1994.

Despite three decades of progress in sound manure management, efficient fertilization, adoption of soil conservation practices and improving pesticide use, we are still facing many challenges. The phenomena causing those challenges are very complex and societal demands are somewhat conflicting.

Agriculture must meet the needs of a growing population in search of healthy and affordable food, produced with minimal inputs, such as fertilizer and pesticides, while reducing its footprint on ecosystems. So we must produce more, but less intensively, all at the lowest price.

That said, many actions can be taken to better protect the environment in the agricultural sector. One of the most significant ones is definitely soil health. Better soil health helps simultaneously address a number of issues: soil fertility improvement, reduced use of fertilizer and pesticides, greater resilience to the impacts of climate change, improved water quality and fighting climate change through carbon storage.

Improving soil health requires a number of good practices to be implemented, such as greater crop diversity in the rotation, introduction of green manure and cover crops, and necessary prevention of compaction.

Concerning the adoption of those practices, introducing less lucrative crops potentially reduces the short-term profitability, while soil health provides medium and long-term benefits. Based on the context specific to each business, the transition period can be difficult, even impossible, to get through.

That is why government has a role to play in supporting producers through that transition, by promoting rewards for the environmental goods and services those practices provide.

Concerning soil compacting, should be pointed out that, nowadays, given the size of farms and the labour shortage, many farmers opt for large machinery. That equipment's axle load often exceeds what experts recommend. Soil damage is insidious, but quite real. Producers still have to be educated about that.

I will provide an example. To avoid this problem, producers could choose two medium-sized tractors rather than one larger one, but that implies the use of a second driver. So the labour shortage may be a barrier to soil health.

When it comes to pesticides, we must focus on integrated pest management, producer training, as well as the availability and cost-effectiveness of alternative solutions. Once again, the government has an important role to play by providing funding for finding solutions and for knowledge transfer. It must also promote the accessibility of alternative solutions whose cost is generally higher. So better risk sharing is necessary.

Finally, I will discuss a crucial issue of our time—greenhouse gas reduction. In Canada, agricultural emissions account for 8.1% of greenhouse gases. Although we can agree that we can reduce the intensity of emissions on a per-unit production basis by changing our practices, we have to keep in mind that we will not be able to eliminate them completely.

Agricultural emissions are unique because they stem from biological processes. Livestock farming activities, manure management, crop land, and land fertilization and liming produce greenhouse gases.

Not all tonnes of greenhouse gases emitted are created equal. Feeding the population is a core activity. The greenhouse gases that result from it are an inevitable consideration. In contrast, emissions stemming from air travel for vacation are not essential. We must set our priorities.

Although the agricultural sector is an emitter of greenhouse gases, it is also potentially a carbon sink. Agricultural soils can store carbon as organic matter.

In closing, I want to point out that the UPA, as a recipient of Agriculture and Agri-Food Canada's on‑farm climate action fund, will develop a program that will help reward Quebec farmers who adopt beneficial management practices in terms of cover crops and nitrogen management, which help reduce greenhouse gas emissions.

Thank you.

[The Chair, Liberal, Kody Blois]

Thank you, Mr. Bernier.

I welcome Mr. Caron who, as we can see, is dealing with technical issues. I also want to welcome Mr. Hardie, who is replacing Mr. Turnbull.

We will now go to questions.

Mr. Barlow, go ahead for six minutes.

[John Barlow, Conservative, Foothills, AB]

Thank you very much, Mr. Chair.

Thank you to our witnesses for being here today and providing us with some excellent information.

I want to start with the Agriculture Carbon Alliance. I think it's such a great organization, to see some of our agriculture stakeholders working together to be proactive when it comes to our agriculture sector and the role it will play in stewardship of our environment. It's certainly an opportunity to highlight some of the incredible things that agriculture has already done. Kudos to this group for getting together and forming this alliance.

I don't know who wants to answer from the ACA, but you mentioned your support for Bill C-234. I know my colleagues across the way will talk about Bill C-8 and the carbon rebate, but we've already seen the report from the Parliamentary Budget Officer that the rebate does not reduce emissions and also is not revenue neutral. In fact, when we see the numbers of $1.70 per $1,000 of eligible expenses, it is only a fraction of what producers will be spending in terms of their carbon taxes.

Why is it important to have that full exemption from the carbon tax, which would be provided under Bill C-234, compared to the rebate program that's being proposed in Bill C-8?

[Scott Ross]

I can start here, Dave, and if you like, you can build on it.

In answer to your question, the starting point for us is about accessibility of viable alternatives. In the absence of having somewhere to direct how you are approaching fuel emissions reduction, if there isn't a technology available to your farm, it speaks to the lack of efficacy of Bill C-8 and its ability to reduce emissions.

When we look at an exemption, from our perspective, it's responding to the need for an approach that is tailored to individual farm operations. We're an incredibly diverse sector, and each farm has individualized needs that they best understand. By making that capital available to the farmer to inform their own sustainability investments, it ensures that they can make the most effective decisions possible in that regard.

[Dave Carey]

I would quickly add that I think there is the acknowledgement that the rebate does not make farmers and ranchers whole from the cost of carbon, which will go up on April 1.

I also want to point out there's a growing amount of evidence, both qualitative and quantitative, that reducing farmers' or ranchers' working capital throughout the year, with the hope of a rebate at the end, is actually a disincentive to making investments on farm to increase their competitiveness and environmental sustainability.

In our respect, the current carbon pricing around natural gas and propane has a reverse impact when it comes to farmers and ranchers, because that working capital is what they would use to invest.

[John Barlow, Conservative, Foothills, AB]

Thanks for adding that.

Certainly when you claim that on your taxes and get paid back, you'd be paying for those expenses for perhaps 18 months before you got that rebate, whatever the rebate would be.

Mr. Currie, would you mind taking a crack at that as well?

From the CFA's perspective—and I know this was spoken about at your AGM last week in Ottawa—why is it important to have that full exemption from the carbon tax rather than a rebate?

[Keith Currie]

I think Dave and Scott highlighted the main key concerns around the exemption versus the rebate.

The other thing I will add is that rebates are an administrative burden on everybody, both farmers and ranchers, but also government. It's very costly to initiate a rebate type of system; whereas an exemption is simply a signature on a piece of paper by a farmer or rancher that they are a registered producer and then away we go. There are no administrative costs beyond that.

Getting that money back into producers' hands in a timely fashion is what's necessary, along with not costing the government a lot of money to administer the program as well. That's why we are fully on board with Bill C-234 for the exemption, as opposed to the rebate system.

[John Barlow, Conservative, Foothills, AB]

Thanks, Mr. Currie.

Certainly, we have the seen the high cost of diesel, propane and fertilizer, and now there's discussion of there potentially being a shortage of some of these products as well as herbicides.

In the face of a global food shortage, which is certainly a very real possibility with the conflict in Ukraine and now the federal government talking about a 30% reduction in fertilizer use, what impacts, Mr. Currie, would that have on the ability of farmers to meet not only local demand but perhaps an increasing global demand when it comes to reduced yields?

[Keith Currie]

Farming is what we do very well in this country. We're very efficient at it, and we're good at what we do. We take pride in not only feeding our own country but feeding people around the world, so having a reduction in fertilizer because of cost or because of an action requiring a reduction—and we prefer to talk about a reduction in emissions as opposed to a reduction in fertilizer—certainly....

There's a limit to what we can really cut back on until it greatly affects our yields. Once we start affecting yields, there's a spiral downward that we just cannot recover from economically. Quite frankly, we will not be able to be those people who feed the world if we reduce our fertilizer beyond certain levels.

We want to work with government on this.

[The Chair, Liberal, Kody Blois]

Thank you, Mr. Barlow.

Thank you, Mr. Currie.

I will now give the floor to Mr. Drouin for six minutes.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

Thank you, Mr. Chair.

My first question will go to the Canadian Federation of Agriculture. I want to say thank you to Mr. Currie for attending Mr. Pommainville's wake yesterday. I know the community really appreciated it.

On the issue of Bill C-234, I know that on Bill C-206 there were some conventions with regard to putting a timeline on that exemption.

Are you in favour of putting a 10-year exemption on there or just a complete exemption for as long as it lasts?

[Keith Currie]

I think what we're looking for is to be a partner with government on how we can go forward in whatever way that looks.

If the status quo is going to remain, then that exemption would probably last in perpetuity, but we want to be that partner with all governments going forward on how we can be the people who can help practically implement programs on the ground that are going to get us to where we need to be on the climate change file.

To say it will only be for 10 years would be a guess as to where we're sitting as far as programming goes. We want to do our part—let's be clear about that—but it cannot be on the financial backs of farmers or ranchers across the country for the benefit of all society.

Let's get the exemption in place, and then we can make amendments to it as we go forward and see how the program's working.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

Okay.

To the Agriculture Carbon Alliance, Mr. Ross, you have mentioned that the technology is not necessarily yet available. I know this because I made my own announcement with regard to BioDryAir grain dryers. The farmer last year spent $200,000 in propane; today he's spending $40,000 in wood pellets, so that's a saving of $160,000 of his own costs. Needless to say, he's not paying the carbon tax on that.

Is it because that sort of technology is yet not viable for all of Canada or, in your opinion, is it just that there is no technology with regard to grain drying?

[Scott Ross]

Dave and I were speaking about this earlier this morning. I will defer to him on some of the specifics around the grains and oilseed sector, given that he works a little more acutely there.

I think what we hear is that it's not a technology that works for everyone across the country. There are scalability issues with the size of operation at some of the larger farms in western Canada, for example. There are labour costs associated with access to biomass supplies that raised some issues there.

I'm certainly not saying that there are not now or never will be viable alternatives, but we certainly want to ensure, if we are going to be exploring those viable alternatives, that in the interim farmers aren't being penalized for technologies that aren't yet commercially viable for their operations.

Dave, do you want to expand on that a little?

[Dave Carey]

Just briefly to your point, Mr. Drouin, I think that is a progression in the technology, being able to use pelletization of wood. There is a carbon intensity that comes with that, too.

Previously, most biodigesters required farmers to take additional passes on their fields, take up that stubble and take up that extra material after harvest, which requires more passes burning gas or diesel. Then it requires, if that is not dry, to somehow be dried out. Then it also requires storage, which can lead to a fire hazard plus having the space.

We have heard qualitatively that to manage a biodigester might require hiring an additional hand, which again impacts your profitability and, again, could have a reverse effect if wood pelletization is scalable to get the necessary BTUs if you're doing more passes on the field with your tractor.

To your point, I think that speaks to an evolution of the technology, and that's why we want to see that continuum. The sustainability continuum is something we're very supportive of at ACA.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

Thank you, Mr. Carey.

I am now addressing my francophone friends from the UPA.

You said that you have used the on‑farm climate action fund. You talked about cover crops. I just want to make sure I understand what the situation in Quebec is.

Have the majority of farmers adopted cover crops or is that what you want to do with the program's funding?

[Daniel Bernier]

I assume you are speaking to me.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

I am speaking to you or to Mr. Caron.

[Daniel Bernier]

That practice is becoming popular. More and more producers are choosing those solutions. However, we are seeing that this is a challenge for some farm producers, since costs are associated with those practices after all. The benefit derived from them, in terms of improving soil health, is of a long-term nature. Support for a transition period is needed because it is not really easy for everyone to master the technique. It depends on the type of soil and the region people are based in. The technique must first be mastered. That is why coaching is needed, but costs are associated with that.

That is why we think rewards for environmental goods and services are an appropriate formula, which can facilitate the adoption of those practices.