Agriculture Committee on Oct. 3rd, 2022

There's nothing that's scalable or viable at a macro level or an action level. There are niche things that we could certainly do, such as pelletization in small instances, but I think what we saw in the first panel was a lot of theory. What Scott and I represent as the ACA is the realities on-farm. There are no viable alternatives to economically and sustainably dry your grain or heat and cool your livestock barn currently today. Natural gas and propane are the only options. Electrification often doesn't even reach the BTUs required to dry your grain.

Conservative

John Barlow Conservative Foothills, AB

I would say that's probably very similar to wood pellets or these things, which would probably cause me to go back on land more often and actually increase emissions and energies rather than decrease them. Is that accurate?

Co-Chair, Agriculture Carbon Alliance

Yes. There's certainly validity to some biomass digesters on-farm, but you would be increasing your diesel use by taking your tractor on-farm, and your labour costs. You then need to dry that feedstock and store it in some manner, which creates a lot of fire hazards, particularly in the Prairies, where we have changing weather patterns. They would need to constantly be stoking that thing. Like heating your home through a wood fireplace in your family room, it's a labour-intensive thing. It's not scalable.

We're looking to remain competitive to keep food costs down for Canadians and grow our exports.

Conservative

John Barlow Conservative Foothills, AB

Thank you.

Mr. Guénette, the other argument that we've had from some witnesses is that Bill C-234 is redundant because of the Liberal Bill C-8, the carbon tax rebate on farms. However, we had Finance Canada here in a previous meeting, and they're saying the average farmer gets about $800 back through the rebate. Many witnesses have said that's pennies on the dollar in terms of what they're actually paying.

CFIB did a study last year that showed the average farmer was paying about $45,000 in carbon tax. Are those numbers correct, and does that show the discrepancy in what farmers would be getting back through the carbon tax rebate compared to what they're actually paying in the carbon tax?

Vice-President, National Affairs, Canadian Federation of Independent Business

Jasmin Guénette

From our perspective, it's better to offer not paying the taxes than to offer rebates. You are right that in a previous survey we asked our members how much the carbon tax was costing them, and we came up with the figure of $45,000. The carbon tax is extremely expensive for our farm members. Bill C-234 would be helping our members deal with huge cost increases on their farms, cost increases related to energy and fuel use and other increases.

Conservative

John Barlow Conservative Foothills, AB

Thank you.

I have one last question to either of the witnesses. When we see that farmers have paid $34 million on a fertilizer tariff and we see the fertilizer emissions reduction policy and we see that farmers are four times more likely to commit suicide than people in other sectors in Canada, what's the burden this is having on Canadian farmers?

Another colleague said that the revenues are high, but that doesn't take account the input costs.

Liberal

The Chair Liberal Kody Blois

Please be quick. It's not because I'm trying to cut you off, but we are out of time. Maybe take just 20 seconds, Mr. Ross.

Co-Chair, Agriculture Carbon Alliance

We'll just say that one of the things we look at right now when we look at our sector is the level of farm debt, for example, that farmers are taking on. We are now exceeding historic record levels with over $110 billion in farm debt.

As well, what has happened with interest rates is that the debt servicing costs on farmers are more than doubling, tripling, over the last 12 months alone. That just piles onto many of the input costs you just referenced as well, so it's a very challenging time for profitability and competitiveness in our sector.

Liberal

The Chair Liberal Kody Blois

Thank you, Mr. Ross, and thank you, Mr. Barlow.

We're now going to turn to Ms. Valdez for up to six minutes.

Liberal

Rechie Valdez Liberal Mississauga—Streetsville, ON

I'd like to thank the witnesses for joining, and it's good to see some of you here in person as well.

I'll start with some questions to the Agriculture Carbon Alliance.

In your opinion and through the experience of your members, what is the greatest barrier to farmers in transitioning to more sustainable technologies? Is it the cost, or do farmers not have proper access to the technologies?

Co-Chair, Agriculture Carbon Alliance

I can start.

Currently for oilseed and grain drying and for the heating and cooling of livestock barns, there just isn't another technology commercially available at any sort of scalable, economically viable level.

As for a rebate versus an exemption, farmers during the season need to be able to invest in their operations. When they actually have more money on the farm, they make more investments.

These days, the average combine to harvest your crop is now over $750,000. Those were major capital investments if you made them, but there's no alternative to natural gas and propane at a scalable, economically viable level.

Co-Chair, Agriculture Carbon Alliance

I would say that where those technologies are available and where there are improvements that can be made, working capital is what's needed. What we hear from farmers is that they need the capital to invest in those available technologies.

Liberal

Rechie Valdez Liberal Mississauga—Streetsville, ON

Your fact sheet mentions that Bill C-8 does not adequately respond to the breadth of surcharges that apply to farms. Can you describe how these affect farmers in your alliance and how we, as the government, can improve our price on pollution in terms of rebates to better address the needs of farmers?

Co-Chair, Agriculture Carbon Alliance

I will just say that when we look at the impact of carbon surcharges on farmers, we see it's very lumpy. It's very variable from one farm to another, and it's not a reflection of the sustainability of their practices so much as it is a reflection of what they're producing, where they're producing it and the extreme weather events they are facing.

Many of the challenges we're talking about today with grain-drying costs and the heating and cooling for livestock are necessary climate mitigation activities that farmers are taking to respond to the climate conditions they're experiencing on their farms. The challenge with a rebate is that it's a blanket treatment that doesn't necessarily respond to that variability.

Co-Chair, Agriculture Carbon Alliance

I think it's very hard to create a taxation policy like this that actually applies to sensitivities on-farm, and farmers, as has been alluded to by my colleague at the CFIB, are getting pennies on the dollar back. As well, the turnaround time is 18 to 24 months down the road, as opposed to having the working capital that they need throughout the year.

During the harvest for grains right now, they're running their grain dryers 24 hours a day. These are not small dryers of the kind we think of for laundry; these are sometimes 100 feet tall and 50 feet wide, running continuously for the duration of the harvest in September, October and November.

The grain bills are $20,000 or $30,000. They might get a few hundred dollars back a year, 18 months or 24 months from now. It does not allow them to make any adjustments on the farm when they need to during the year, when cash is more difficult to come by.

Liberal

Rechie Valdez Liberal Mississauga—Streetsville, ON

You spoke about farmers really needing funding. How can we improve on the on-farm climate action fund? Any feedback you have there that can assist farmers would be greatly appreciated.

Co-Chair, Agriculture Carbon Alliance

I would say that the biggest thing is flexibility in ensuring that funding is available to emerging technologies and innovations as they come online and is not overly prescriptive in order to ensure that you're really enabling farmers to be decision-makers. They are fundamentally very focused on farm efficiency and improving their environmental footprint.

Also, it's ensuring that you're working with partners who have strong relationships and networks in the industry to help spread the word of mouth around new technologies and ensuring that funding is flexible to accommodate the diversity of technologies we see coming online.

Liberal

Rechie Valdez Liberal Mississauga—Streetsville, ON

Thank you.

If I have some time, I'll continue my questions with Mr. Legault.

I understand that farmers have had difficulties with climate change, rising prices and global instability. Can you share how grain farmers could benefit from the exemption from the fuel charge for propane and natural gas?

General Manager, Producteurs de grains du Québec

Benoit Legault

I don't know if your question addresses....

I'll do it in French. It's going to be easier for me.

I imagine your question is mostly about Quebec. As you know, in Quebec we have a particular situation. We have a credit system and we are not covered by the federal tax, so this exemption, in the short term, affects us less. However, it will affect us more in the medium term, because the gains we will make in terms of tax exemption for agricultural fuels will allow us to obtain the same flexibility on the Quebec side.

So that is why we are here today. We support a principle that has just been talked about a lot, which is that we have to do things the right way, in a coherent and useful way. This is not what is being done at present by applying the carbon tax to propane. We are here to talk about this principle. Once this exemption is applied nationally, obviously, we will try to transpose it here in Quebec for agricultural fuels that are not yet covered by the exemption.

Liberal

Rechie Valdez Liberal Mississauga—Streetsville, ON

Thank you.