Agriculture Committee on June 16th, 2022

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

Great.

I remember being here in the 42nd Parliament when we were debating Bill C-74. That was the budget implementation act, if I remember correctly. Within that bill was the Greenhouse Gas Pollution Pricing Act.

I'm trying to understand this. In the act, the drafters did take the time and effort to spell out what eligible farming activities are, what eligible farming machinery is and what a qualifying farm fuel is. Why do you think the drafters took the time to carve out those specific exemptions in the parent act?

[Miodrag Jovanovic]

As a starting point, the B.C. system was used as a basis for a model to develop the GGPPA. The other thing I would note on the GGPPA and the general approach by the federal government with respect to climate change is that there is obviously a recognition that, in the economy, there are sectors and businesses, such as farming, that are more sensitive to a fuel charge, for instance, because they are trade exposed, and maybe also because they don't have lots of opportunities and technologies available.

If you look at the way it's done, whether through the OBPS or through very specific exemptions, you see that the general approach used is basically for these sectors to try to reduce the overall incidence of the carbon pricing so that it is easier, over time, for the industry to absorb it. It's not so much—

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

I'm sorry, I have limited time. Very quickly I want to pick up on a point you made you mentioned or recognized the fact that there is a lack of available technology I would agree with you on that.

When you see the exemptions, they include tractors. I think there is a realization that we don't yet have a commercially viable alternative to the kind of horsepower that a massive diesel tractor can bring to an operation.

We're hearing the same arguments from farmers about grain dryers. We have had that confirmed by organizations like the Agri-Food Innovation Council, who have said that a commercially viable alternative to current grain dryers allowing a transition off natural gas or propane is probably 10 years away.

I'm trying to hold both of these examples up. Why wouldn't grain drying be an acceptable change to the legislation, to your mind?

[Miodrag Jovanovic]

The approach taken with respect to natural gas and propane used for heating and cooling buildings is the refundable credit. There is an acceptance by the government that the money is to be returned directly. The question is how, and what principle to use to support that return.

My point is this: If one approach is used to return the charge on motor fuels, which is the exemption approach, that doesn't necessarily mean that the same approach should be used across the board. That's the general point.

Why? It's because there is a desire to somehow maintain a certain degree of a price signal. I think that's why this approach has been used.

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

Thank you for that.

I'll turn to AAFC now. I think that's you, Ms. Kim and I think you did touch on this.

On that last comment I made, we did have that testimony from the Agri-Food Innovation Council, which did talk about how commercially viable alternatives to natural gas and propane, specifically for grain drying, are about a decade away.

You were mentioning some of the emerging technologies. How is the government helping speed this process along so that farmers do have a wide range of alternatives to pick from?

[Natasha Kim]

That's a great question.

I might just note, in case it's of help as well, that when we look at total expenses on farm, heating fuel tends to be a very small percentage for most farms. It's around one per cent or less, actually. Greenhouses tend to much higher in energy use, of course. I say this just in case it would be helpful to the committee.

In terms of alternatives, we have a suite of different programs. Marco had touched upon the agriculture clean technology program, which looks at both R and D as well as adoption on farm. We have our AgriScience program, which is an industry partnership where we look at opportunities for things like more efficient poultry heating in barns.

There are different ways that we look to develop those alternatives.

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

Thank you. I'll leave it there, Mr. Chair.

[The Chair, Liberal, Kody Blois]

Thank you, Mr. MacGregor.

We'll now turn to our second round of questioning.

I believe we're going to start with Mr. Barlow for up to five minutes.

[The Vice-Chair, Conservative, John Barlow]

Thanks, Mr. Chair.

I have just a couple of quick questions; then I'll turn it over to my colleague, Mr. Falk.

Mr. Jovanovic, I want to just confirm that you said the average rebate for a farm was $820 a year. Is that per farm or is that per household?

[Miodrag Jovanovic]

That's per farm. It's $820 for the first year.

[The Vice-Chair, Conservative, John Barlow]

That is interesting. I have a constituent who spent $11,000 in one month to heat his poultry barns during the winter.

I would hope that if Bill C-234 were to pass, the government would take a look at maybe repealing Bill C-8, so we don't have that overlap, or as you would like to put it, double dipping and somehow taking funds away from households.

If farmers right now are getting a 15% to 20% return, are you now saying that farming is subsidizing the carbon tax rebates for homes? Wouldn't that make sense?

[Miodrag Jovanovic]

If you don't mind, I'm just going to correct something here. My understanding is the 15% to 20% return is for a very specific type of farm. It's probably a grain farm for a grain dryer, because if you look at the aggregate—

[The Vice-Chair, Conservative, John Barlow]

Right, grain farmers do the grain drying.

[The Chair, Liberal, Kody Blois]

Mr. Barlow, excuse me. I've stopped the clock.

I just want him to be able to finish. I appreciate that you have your time, but Mr. Jovanovic, please go ahead.

[Miodrag Jovanovic]

The return is 100%. For some types of farms, it may represent less than 100% and for some others it may represent more because it's an average.

The whole amount of fuel charge receipts collected from farmers is being returned to farmers. On an aggregate basis, we return 100%.

[The Vice-Chair, Conservative, John Barlow]

Well, it's too bad that you're trying to pick winners and losers and not making them all whole with this. Obviously, Bill C-234 would make sure everybody's on a level playing field.

I'll turn the rest of my time over to Mr. Falk.

Thanks, Mr. Chair.

[Ted Falk, Conservative, Provencher, MB]

Thank you very much.

Ms. Kim, I'd like to just ask you a few questions.

You're from the Department of Agriculture. Do you believe that farmers would incur the costs of heating barns or drying grain unnecessarily?

[Natasha Kim]

Certainly, heating barns and drying grain is part of the operations of farmers. As we've heard during this meeting, there is obviously an incentive built into the operations to seek to keep costs down. I think the natural economic leanings would be towards being prudent with those costs.

[Ted Falk, Conservative, Provencher, MB]

You're not answering the question, Ms. Kim. I asked you if they would heat it unnecessarily. That's a yes or a no question.

[Natasha Kim]

I would not think so, Mr. Falk.

[Ted Falk, Conservative, Provencher, MB]

No, I wouldn't think so. Right now for drying grain, natural gas or propane is principally used, as it is for heating barns. Are there any viable alternatives in Manitoba and Saskatchewan?

[Natasha Kim]

I think we've already touched on a few of those alternatives. They may be more energy efficient in terms of cutting costs. Alternatives are also being developed.

If more detail is required, I'm happy to turn it over to my colleague, Marco, who can give a better sense.

[Ted Falk, Conservative, Provencher, MB]

I'll move to the Department of Finance and Mr. Jovanovic.

You indicated that the average farm entity incurs about $800 a year in carbon tax expenses. I don't know what kind of farms you would be referring to, but I've talked to broiler farmers and hog farmers in my riding, and they're incurring costs of $10,000 plus per year. These are not overly large farms.

Do you think what you've represented to this committee—that these farmers are double dipping—is really fair?

[Miodrag Jovanovic]

I think these are two different questions.

The first question is whether our estimate is correct. We look at Statistics Canada and the tax data. We have this assessment. We assess there was about $100 million in fuel charges collected in 2021-22 from the farming sector, and now we want to return that. What we find with the rates we have—

[Ted Falk, Conservative, Provencher, MB]

That $800 you're rebating is a rebate given to every household, right?