Evidence of meeting #29 for Agriculture and Agri-Food in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was farmers.
A recording is available from Parliament.
Bloc
Sébastien Lemire Bloc Abitibi—Témiscamingue, QC
Supply was more difficult during the rail crisis. Have you seen anything that farmers have been able to put forward in a rather creative or spontaneous way that could be considered as possible alternatives to drying grains with propane?
Climate Policy Analyst, Équiterre
Yes. In fact, one thing that's very common on a farm is organic matter. Organic matter can be used to heat and dry grain, for example. That would be an interesting way to do it that would need to be explored in this context.
I think Mr. Wright would like to round out my answer.
Farmer and Professional Engineer, National Farmers Union
I think there's a big parallel here with respect to drying grain. It's much like our fertilizer program. In the fertilizer realm, we're talking about four R's—the right place, the right time, the right placement....
With respect to grain drying, it is very critical to focus on psychrometrics. It's all about air temperature and relative humidity, because as you're moving air through the grain, it has to be at a lower relative humidity to pull moisture out. I don't think many farmers understand yet that it's the same type of principle here. You have to use the right air source at the right time in order to conserve power and have the lowest energy bill possible.
We could do a lot of things in terms of passive drying and passively collecting heat from the sun. A little experiment I did on the farm was to just heat the air using the sun before it went into the aeration fan rather than using any propane or other supplemental heat. By doing so, I was able to lower the relative humidity of the air going through the grain.
There are options; we just haven't been thinking about them.
Liberal
The Chair Liberal Kody Blois
Thank you, Mr. Wright.
Thank you, Mr. Lemire.
Mr. MacGregor, you have the floor for two and a half minutes.
NDP
Alistair MacGregor NDP Cowichan—Malahat—Langford, BC
Thank you, Chair.
Mr. Wright, I know the NFU has written extensively about the high-input, high-output farming model, and also about the state of farm debt, which has gone up considerably over the last 20 years on Canadian farms. Ultimately, Bill C-234 is trying to tackle one small part of the price of inputs that farmers have.
I've always been amazed at the ingenuity and innovation that exists in Canadian farming activity. Do you have any examples you can share with the committee of how farmers are really leading the way in trying to reduce their input costs, because that's such a huge part of farming and it really affects their balance sheet?
Could you provide some examples, and examples of where you think the federal government should be doing more to build upon that kind of model that farmers are already leading with?
Farmer and Professional Engineer, National Farmers Union
Yes. I'm one of those farmers, I suppose, who's experimenting and trying to do everything I can to reduce my risk and to be more ready for the extreme weather that's coming with climate change. I have been following some of the principles outlined by the NFU, largely focused on reducing my inputs. I've been trying to incorporate biological processes to provide my fertilizers.
I view farming as the start of a third revolution. The first one was mechanization. Then came chemistry with fertilizers and herbicides, and now we're just getting into the biological aspect. We're going to be looking at genetics to breed crops that might be able to fix their own nitrogen, or perhaps a perennial cereal crop so that we wouldn't have to seed it every year but continue to harvest it.
On my farm, yes, I've been employing intercropping and perennial cover to establish nitrogen in the soil and also to prevent erosion. I have reduced dramatically the amount of fertilizer that I'm applying because my back-of-the-napkin calculations show that this is the largest source of emissions on my farm. We're also trying to minimize how many passes we make so that we can use less fuel. Necessity is certainly the mother of invention.
Without pricing signals, though, farmers are still focused on yield. If we did have a pricing signal or output-based performance standards for our food, all those pollution prices collected on our food should be rebated to farmers on the basis of production to encourage these more sustainable food production methods.
Liberal
The Chair Liberal Kody Blois
Thank you, Mr. Wright. Thank you, Mr. MacGregor.
Colleagues, that ends our first panel today, but on behalf of all of you, I'd like to thank our witnesses. We had Monsieur Jean Caron from Université Laval, appearing as an individual; from Équiterre, we had Émile Boisseau-Bouvier; and from the National Farmers Union, we had Glenn Wright. Thank you so much for your testimony today.
Colleagues, please don't go far, because we're going to be turning to our second panel in just a few minutes. We'll see you shortly.
Liberal
The Chair Liberal Kody Blois
Colleagues, welcome back to the second hour. We'll get started. We're just a few minutes late, of course, because of the vote, so we send our apologies to our witnesses who have had to wait a few extra minutes.
Today we have three different panellists. From the Agriculture Carbon Alliance, we have Dave Carey and Scott Ross, who both serve as co-chairs and are in the room today. Welcome back, gentlemen. Again, you're no strangers to this committee.
From the Canadian Federation of Independent Business, we have Jasmin Guénette, who is the vice-president of national affairs. He is also in the room. We welcome Mr. Guénette and Taylor Brown, who is online and can answer any questions. They will be sharing the opening remarks.
We also have, from the Producteurs de grains du Québec, Benoit Legault, the general manager.
My understanding is that we have a little bit of a technical issue. We are working on getting Mr. Legault on the line, but I'm going to move forward and make sure that our witnesses are able to provide opening remarks.
We're going to start with the Agriculture Carbon Alliance for up to five minutes.
Gentlemen, I'll let you two share the time. It's over to you.
Dave Carey Co-Chair, Agriculture Carbon Alliance
Thank you for the invitation to appear today on Bill C-234.
My name is Dave Carey. I have the pleasure of serving as co-chair of the Agriculture Carbon Alliance, or ACA. I'm joined today by my fellow co-chair, Scott Ross. I will be sharing my time with him.
ACA is a first-of-its-kind coalition of 15 national farm organizations dedicated to working collaboratively on agri-environmental policy. Our membership encompasses major agriculture commodities, including seed, grains, oilseeds, pulses, cattle, sheep, pork, fruit and vegetables, dairy, forage and grasslands, and poultry. Collectively we represent more than 190,000 farm businesses.
A resilient driver of our economy, Canada's primary agriculture industry contributes more than $32 billion to our GDP, while the entire agri-food industry represents another $135 billion and provides one in nine Canadian jobs.
The ACA was established to ensure that Canadian farmers' sustainable practices are recognized through a policy environment that maintains their competitiveness, supports their livelihoods and leverages their critical role as stewards of the land. Bill C-234 is a key policy priority for our members. They have been proponents of this bill since day one.
To remain competitive and environmentally sustainable, farmers increasingly need capital to invest in innovations that drive efficiencies, reduce fuel use and implement best management practices in their operations.
Currently farmers pay a carbon price for utilizing natural gas and propane for on-farm practices that are essential to food production. These practices include grain drying, heating and cooling of livestock barns and greenhouses, feed preparation and steam flaking, and irrigation. With no viable alternatives, pricing these activities does not provide the adequate signal to lower emissions from these energy sources.
Bill C-234 allows farmers the capital to make the investments on farm that will drive energy efficiencies and support practices that will help the environment, including energy-efficient grain dryers, precision agriculture technologies, anaerobic digesters and solar panels. Investments in these technologies can cost hundreds of thousands of dollars. Where no alternative exists, carbon surcharges pull capital away from these critical investments that would augment the sector's potential to further reduce emissions.
It's over to you, Scott.
Scott Ross Co-Chair, Agriculture Carbon Alliance
Thank you.
Exemptions are, simply put, the best option. Unfortunately, the carbon price rebates for farmers contained in Bill C-8 do not adequately respond to the breadth and variety of carbon surcharges applied to farms. Bill C-234 would provide a complete exemption for essential activities that lack viable alternatives and leave the money in farmers' pockets to make timely investments in their operations.
To support farmers in these efforts, Bill C-234 seeks to amend the Greenhouse Gas Pollution Pricing Act to extend the exemption for qualifying farm fuel to marketable natural gas and propane. We view this as tidying up exemptions that should have been in place from the get-go when diesel and gasoline used on farm were exempted.
Farmers and ranchers are climate solution providers, sequestering millions of tonnes of carbon, protecting biodiversity and grasslands and utilizing the latest technologies to reduce fuel and water use. Agricultural production has increased significantly while total emissions from the sector have been relatively stable for 20 years, resulting in a decrease of GHG emission intensity of 50% from 1997 to 2017.
Farmers and ranchers are stewards of the land, adopting the best environmental practices whenever possible. To be able to continue to invest in innovations, they need to remain competitive and have available working capital to do so. By adopting policies that enable them to remain competitive, producers will be able to further their investments and the sustainability of their operations, which will augment the sector's potential to further lower emissions and sequester carbon while feeding Canadians and driving our food exports.
Canada's farmers and ranchers are strong supporters of Bill C-234 and look forward to it being moved to committee stage for further discussion, debate and analysis.
Thank you.
Liberal
The Chair Liberal Kody Blois
Thank you, Mr. Carey and Mr. Ross.
I'll now turn to the Canadian Federation of Independent Business and Mr. Guénette.
Jasmin Guénette Vice-President, National Affairs, Canadian Federation of Independent Business
Good afternoon, everyone. My name is Jasmin Guénette, and I'm the vice‑president of National Affairs of the Canadian Federation of Independent Business, the CFIB. I'd like to thank the committee for this invitation.
The Canadian Federation of Independent Business represents 95,000 members in all sectors of the economy and in all provinces. We have 6,000 members working in agriculture.
Of course, our farmers are an invaluable asset to our country. They work tirelessly to ensure we have the best food on our plates to feed our families.
We support Bill C‑234.
Farmers are currently facing skyrocketing operating costs. I am thinking, for example, of the high cost of inputs and fertilizers. In addition to these, the main cost constraints for SME owners are fuel and energy, insurance, and taxes and regulations.
Through Bill C-234, elected officials have an opportunity to help our farmers deal with rising costs and invest in the future of their farms.
For the past several months, the level of optimism among farmers has been very low. Our survey, the business barometer, shows that the agricultural sector is the least optimistic about the future. Rising costs, such as fertilizer and taxes, supply chain issues, bureaucratic and regulatory red tape, labour shortages and Internet access issues in rural and remote communities all make being a farmer very difficult.
Our farmers want to protect the environment. The land is their livelihood. Ninety per cent of our farmer members farm primarily for personal reasons, and almost two‑thirds farm for economic reasons as well.
In a recent survey we conducted of our farmer members, 82% of respondents said that the federal carbon tax had a negative impact on their business. The carbon tax reduces their financial ability to make technological investments to reduce emissions and improve the environmental performance for their farm. Our members tell us that applying the tax to propane and natural gas punishes farmers for using products where there are no widely available and affordable alternatives.
CFIB members support Bill C-234. We recommend that the committee support it as well. In doing so, you have the opportunity to send a clear message to the agricultural sector that you recognize its challenges in terms of costs and the key role it plays in Canada.
While the current federal carbon tax includes exemptions that apply to fuels used for agricultural purposes, farmers are facing major cost increases and rising prices for propane and natural gas. This bill provides exemptions for propane and natural gas used for on‑farm grain drying and barn heating, for instance. The exemptions in the bill are crucial. Bill C-234 will help support the health and growth of Canada's agricultural sector.
Thank you. It will be a pleasure for me and my colleague Ms. Taylor Brown, who is with me today, will be pleased to answer your questions.
Liberal
The Chair Liberal Kody Blois
Thank you very much, Mr. Guénette.
Now, Madam Clerk, do we have Mr. Legault online?
The Clerk of the Committee Ms. Josée Harrison
Yes, he is. Could you just ask him to turn his camera on?
Liberal
The Chair Liberal Kody Blois
Mr. Legault, there's your camera and there you are. It's over to you, my friend, for up to five minutes.
Benoit Legault General Manager, Producteurs de grains du Québec
Thank you, Mr. Chair.
I thank the committee for the invitation to appear today.
My name is Benoit Legault and I am the general manager of the Producteurs de grains du Québec. Our organization represents 9,500 grain producers from all regions of Quebec. These producers cultivate more than 1 million hectares of land, generate a turnover of $1.5 billion and create nearly 20,000 jobs.
First, it is important to say that agricultural fuels represent a significant burden for a grain farm. For a typical farm with 200 hectares of corn and 200 hectares of soybeans, this represents a bill of almost $108,000 in 2022, up from $60,000 in 2019. So that's an increase of almost 80%.
Propane accounts for nearly 60% of energy costs for corn and 7% for soybeans. At over $36,000 per year for a typical farm, propane is therefore a significant energy cost item.
As you know, Quebec has a greenhouse gas policy based primarily on a cap-and-trade system for greenhouse gas emissions. The latest offers were between $25 and $78 per tonne of carbon, averaging $40 per tonne. The federal tax has been $50 a tonne since April 1, 2022, and is set to rise to $167 a tonne by 2030.
Quebec carbon credits mean a carbon cost of over $9,000 for a farm, of which nearly $4,000 is associated with propane. Should the cost of carbon in Quebec follow the trend of the federal tax, these carbon costs would rise to $38,000 and $16,000 respectively, in the specific case of propane.
Through a previous exemption, the federal government recognized that the carbon tax on farm diesel was not useful and was not the best way to achieve the desired results. The fact that agricultural producers are already well engaged in good practices to enhance soil health and lower net greenhouse gas emissions probably contributed to this. It is still very clear to us that this tax on farm diesel could only be counterproductive in this regard.
Thus, Quebec's agricultural producers believe that this tax is equally counterproductive in terms of the energy needed to dry grain. This is an essential operation carried out on the farm in order to preserve the quality of the grain and to allow for a gradual and structured sale throughout the year.
It must be remembered that there is no other cost-effective energy or technology for drying grain and that the tax only increases the cost of production, undermines the competitiveness of grain production businesses and impedes the ability to invest in beneficial practices to reduce greenhouse gas emissions. Consequently, this exemption will be very beneficial economically for farms, but also for the environment in general.
I would like to remind you that grain producers in Quebec and Canada have been investing for decades in improving their practices in order to be ever more efficient and to gradually but surely lower their environmental footprint. Practices have changed dramatically since then.
The producers I represent ask me to reiterate that sustainable production also has an economic component, namely maintaining competitiveness, profitability and transferability from the farm to the next generation. It is therefore important that any regulatory framework be adjusted so as not to harm the economic reality of the farm and its ability to pursue its process of continuous improvement of agri-environmental practices. A large body of literature in the agricultural field states that success in adopting good agricultural practices depends very much on incentives and substantial investment.
Grain farmers, their multi-generational heritage and livelihoods, have a front row seat to the impact of climate change. They want to be part of the solution and have even committed to net zero emissions by 2050.
To get there, we need research, guidance and support for structuring investments. Regulation should only be used at the end of the road and must be well targeted and consistent. The imposition of a carbon tax on grain drying goes against this principle. It is therefore essential to promote this exemption. Indeed, the financial resources lost by grain production companies are resources not allocated to practices and technologies that are beneficial to the environment and that allow the reduction of greenhouse gas emissions.
These are the main messages that Quebec grain producers have asked me to convey to the committee today.
Thank you for your attention.
Liberal
The Chair Liberal Kody Blois
Thank you very much, Mr. Legault. You respected the time allocated to you perfectly.
Mr. Barlow, you have the floor for six minutes.
Conservative
John Barlow Conservative Foothills, AB
Thank you very much, Mr. Chair.
Mr. Guénette, you said that you had about 6,000 members who are involved in the agriculture sector. Mr. Legault, do you have an idea of how many farmers your organization represents?
General Manager, Producteurs de grains du Québec
We represent around 9,500 growers.
Conservative
John Barlow Conservative Foothills, AB
Thank you.
Mr. Carey, do you have an idea of how many farmers your groups would represent?
Co-Chair, Agriculture Carbon Alliance
Yes. Our 15 national organizations collectively represent 190,000 farm businesses.
Conservative
John Barlow Conservative Foothills, AB
Okay. Perfect.
Just to put that in context, I think the NFU has about 3,000 members, and many of those aren't farmers. I just want to put that in the context of the groups in this panel who are saying that their members are very supportive of Bill C-234. I just want to ensure that we have this in context.
Mr. Carey and Mr. Ross, we've been hearing a lot today that if there wasn't this carbon tax on grain-drying and the heating and cooling of barns, there would never be any innovation, technological advancements or emissions reductions. Is that a fair statement?
Co-Chair, Agriculture Carbon Alliance
I don't agree that it would be a fair statement. I think it's important to note that when it comes to innovation, the actual farmers who are purchasing natural gas and propane are not the innovators in that sector. They are customers, just like we would be as a household.
I think currently the price signals on-farm are extremely high. Farmers are already as judicious as possible with input prices, whether that's fertilizer, natural gas, propane gas or diesel. Those are among the biggest costs in their books.
Co-Chair, Agriculture Carbon Alliance
I would just characterize.... In the previous panel, someone alluded to a third wave of efficiency gains in our sector. I think we're actually through a lot of what we have seen with biotechnology and are actually in a very data-driven time in our industry. That data is telling farmers very clearly, in no uncertain terms, without a carbon price or with, to reduce fuel use.
I think the price signal is very strong. It's coming through with the prices we see on diesel and natural gas these days regardless.