Agriculture Committee on Oct. 17th, 2022

[The Vice-Chair, Conservative, John Barlow]

Colleagues, we'll call the meeting to order.

Thank you for everyone's patience. Obviously we need to ensure that the translators are able to understand our witnesses, certainly for our francophone colleagues on the committee. Everyone has been tested, and we should be all good to go.

We'll carry on, as time is of the essence now.

This is meeting number 31 of the House of Commons Standing Committee on Agriculture and Agri-Food.

I have a couple of quick reminders, and I'll go through these very quickly so we can get going.

This is a hybrid format. The proceedings will be available on the House of Commons website. The webcast will always show the person speaking rather than the entirety of the committee. Screenshots during the committee are prohibited, so please do not take screenshots of this meeting.

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

I would like to make a few comments for the benefit of our witnesses.

Members and witnesses may speak in the official language of their choice. Interpretation services are available for this meeting. If interpretation is lost, please inform me immediately, and we will ensure that interpretation begins again before we resume.

Before speaking, please wait until I recognize you by name. If you are on video conference, please click on your microphone to unmute yourself. For those in the room, your microphone will be controlled by the proceedings and verification officer.

Especially for those on video, please speak slowly and clearly for the benefit of translation and make sure your microphone is on. This is a reminder to all members and witnesses that all comments should be put through the chair.

I would like to welcome our first panel of witnesses. We have Brendan Byrne, chair, from the Grain Farmers of Ontario, by video conference. From Grain Growers of Canada, we have Branden Leslie, manager, policy and government relations. From the Saskatchewan Association of Rural Municipalities, we have Mr. Raymond Orb, president.

Each of you will be given five minutes for your opening remarks, and we will proceed to the rounds of questioning following that. I will give you a signal, especially for those of you on video conference, a hand up that you have about one minute left if you're running on time.

I will welcome Mr. Byrne from the Grain Farmers of Ontario to start.

You have five minutes. Go ahead, please.

[Brendan Byrne, Chairman, Grain Farmers of Ontario]

Thank you very much for inviting me to be with you today. This is an issue that remains top of mind for our farmer members, so it's much appreciated that I was invited here today.

My name is Brendan Byrne. I'm the chair of the Grain Farmers of Ontario. I farm in Essex, near the Windsor border, with my family. It's harvest time for our members, so on our farm we're harvesting soybeans, and around me the corn harvest has also started, which is similar across the province.

I want to begin my remarks by just thanking members of this committee for examining this important bill. It's something that our farmer members are looking at, checking in and asking about it, so it's important that we're here today.

An exemption from the carbon price is important to our grain farmers for five reasons.

First is to prevent spoilage. Grain needs to be dried down to be able to be stored; otherwise, it will rot and will not be available.

Second is reliable grain drying systems. A reliable supply of energy and proven grain-drying technology allow farmers to dry their grain in a short period of time under any weather conditions.

Third, there are no alternatives. There are ideas and potential alternatives that people are looking at, but none of them have been proven to work on the scale or at the level that we need them in Ontario. With these alternatives, there isn't a clear message as to whether they actually would reduce our carbon. The EU is backing away from such things as biomass dryers due to its carbon emission profile, and the CBC reported this week that wood biomass burning is worse than coal.

Fourth, our farmers are unable to reduce their carbon price. We are price-takers in the marketplace. We feel that the money would be better off in the hands of the farmers to further innovate on their farm and to try to come up with ways and solutions to better their carbon footprint.

Fifth, the rebate that's been presented to us falls far short of what's actually paid. Less than 15% of what grain farmers are paying is returned by the government rebate.

I want to quickly explain how grain drying works in Ontario. Corn, for instance, needs to be at a level of 15% to store it or ship it. In September, the corn plant stops growing. We wait for Mother Nature to drain out as much moisture as possible. Wind, sun, and the natural effects of the weather do that, but then we need to get the corn off before the weather turns to where we can't do that anymore.

Once we get into the fields, we find out exactly what the moisture level of the corn will be. Once we get in there, we are very much at the mercy of the weather, so time is of the essence to get the crop off. Typically, the corn harvest is anywhere from 20% to 28% moisture when we're taking it out of the field and trying to get it off, get it dried, and get it shipped at an acceptable level, which is very hard for our farmer members as it is.

Drying grain happens in real time. During the week of the harvest, it could be running 24 hours a day. We have to be careful not to overdry, or dry too fast, so we don't damage the corn. We want to make sure that it's useful for human consumption, for animals, and the multiple uses that the crop is used for.

The dryers right now allow us to dial it up to the energy needed, and turn it down if it gets too hot. Grain drying is an essential part of harvesting grain. If we get this wrong, we don't have a crop to sell, and we're producing less food.

Eight years from now, upwards of $2.7 billion would be paid by Ontario grain farmers for the carbon price on grain drying. All this money is coming out of our pockets. Farmers cannot pass this on to anyone else. They simply have to pay it and bear the brunt of this. As I said, the rebate that's in place now simply doesn't cover anywhere near the cost of it.

Greenhouse growers are exempt from the price on carbon for their operations, and so should grain drying. Bill C-234 would give us time to figure out viable solutions and make sure that there is potentially a road map to innovation and implementation, with the proper supply chain in place to cover that off.

This is a major undertaking. It affects food security and food supply. We have to be very careful with what we're doing there.

I do, again, thank you for your time. If you haven't seen what grain drying looks like, we could certainly submit a video, which is about three minutes. I want to thank everybody on the committee for taking time to consider this bill, and we look forward to a good discussion.

Thank you very much.

[The Vice-Chair, Conservative, John Barlow]

Thank you very much, Mr. Byrne.

You are certainly welcome to make a submission to the committee as well, if that's something you think would be beneficial.

We will now turn it over to Mr. Orb for five minutes, please.

[Raymond Orb, President, Saskatchewan Association of Rural Municipalities]

Thank you.

Good afternoon. My name is Ray Orb and I'm president of the Saskatchewan Association of Rural Municipalities, known as SARM. I was born and raised and I live in the small community of Cupar, northeast of Regina, with a population of 625 people.

I'd like to thank the Standing Committee on Agriculture and Agri-Food for the opportunity to share our association's thoughts as the committee studies Bill C-234, an act to amend the Greenhouse Gas Pollution Pricing Act.

Our membership is made up of Saskatchewan's rural municipal governments. SARM has been the voice of rural Saskatchewan for over 100 years. Today I will share the perspective of those we represent by sharing our thoughts on how the bill being proposed would impact our livelihood in rural Saskatchewan.

Bill C-234 picks up where Bill C-206 left off in the last Parliament before the federal election. As you know, Bill C-206 was passed by the House of Commons but not fully approved by the Senate.

As we were supportive of Bill C-206, we at SARM are supportive of Bill C-234 right now. This bill would provide much-needed economic relief for our members, freeing up the working capital they need to implement innovations on their farms.

Grain dryers are used to help dry wet grains so they can be properly stored. In recent years in Canada, the fall season has been particularly wet, creating a need to use the grain dryers. In 2020, grain dryers were running for a record amount of time, and farmers paid more than the federal government carbon tax estimate. Recent studies have shown that Saskatchewan farmers can expect to lose 8% of their total net income to the carbon tax. For a household managing a 5,000 acre grain farm in Saskatchewan, this will take the form of $8,000 to $10,000.

Our members have been very concerned about the impact of the federal carbon pricing system on unavoidable energy inputs like fuel to dry grain or heat livestock facilities. We have argued for years that producers cannot pass these additional costs along to our customers and that they further reduce our financial viability. The additional costs of carbon taxation do not help solve the problem of carbon emissions.

Saskatchewan has some of the greenest agriculture producers in the world. Most cropland is zero-till. This means that our producers use a low-disturbance direct seeding system. Not only does zero-till agriculture sink more carbon, but it also reduces soil erosion and the amount of fuel required on farms. The Saskatchewan Soil Conservation Association has been studying carbon sequestration for years, and through their research they found that Saskatchewan producers sequester 9.64 million new tonnes of carbon dioxide every year over 28 million acres.

Taxation on food production is short-sighted and not a solution. If we do not work together to find solutions, we will see even more decreases in the number of farmers and farms in Canada, and we will lose the food security we have.

In closing, on behalf of Saskatchewan's rural municipalities and rural Saskatchewan, we thank the standing committee for the opportunity to lend our voice to this important conversation. We look forward to continued dialogue as we all work together to further the best interests of all Canadians.

Thank you.

[The Vice-Chair, Conservative, John Barlow]

Thank you, Mr. Orb. I also appreciate your patience with your technology and your microphone.

I'd also like to welcome Mr. Johns to the committee today. He's subbing in for Mr. MacGregor, who I'm sure is out celebrating at the grocery store with his motion today.

We have Mr. Leslie for five minutes, please.

[Branden Leslie, Manager, Policy and Government Relations, Grain Growers of Canada]

Good afternoon, Mr. Chair and honourable members. Thank you for the invitation to appear today on Bill C-234.

My name is Branden Leslie, and I am the manager of policy and government relations for the Grain Growers of Canada. The Grain Growers of Canada represents 65,000 grain, pulse and oilseed farmers through our 14 provincial, regional and national member organizations across Canada.

Canadian farmers have a long reputation as environmental stewards, adopting the best environmental practices whenever possible.

Canada's grain sector is proud of our hard-earned reputation as one of the world's largest suppliers of safe, sustainable and high-quality grains, of which the exports of cereals, oilseed and pulses add over $30 billion to the Canadian economy every year.

Our sector is also proud of our record of sustainably intensifying our production when the world demands more food and cleaner fuels, while simultaneously working to reduce emissions and increase carbon sequestration. That sustainable intensification of production is enabled by farmers reinvesting profits back into their operations in the form of new machinery, technologies and the adoption of beneficial management practices, all of which reduce emissions and increase operational efficiencies.

This is why Bill C-234 is a critical piece of legislation, which our members strongly support.

As a result of climate change, we are seeing an increased need for grain drying. With the steadily rising price on pollution applied to propane and natural gas used to dry grain, farmers also now face incredible cost increases without an alternative fuel source available. While there are emerging potential alternative fuel sources for grain drying, the reality is that they are not commercially viable at this time. Further, it will take years to scale them up and implement necessary infrastructure upgrades as required.

Given the significant operating costs of using propane or natural gas, there currently exists a price signal to be judicious with the use of these fuels, as there is no benefit of drying grains beyond what is necessary for sale or storage. As such, most farmers have also already made significant investments to upgrade their dryers to make them as efficient as possible, leaving little room for improvement in that area.

It's fair to say that no farmer wants to be spending money on drying their grain but does so out of necessity and, certainly, hope that a more cost-efficient and lower-emission option becomes available in the not-too-distant future. However, until that happens, farmers have no choice but to use propane or natural gas to dry their grain, making the price on pollution a punitive tax and not a market-driven signal to change fuel sources. Right now, this simply means that farmers have money taken out of their pocket to undertake a necessary process to ensure their product does not spoil during storage.

The federal government has tacitly admitted the flawed nature of the price on pollution put on propane and natural gas used on farms through the rebate program offered under Bill C‑8. While we appreciate the government acknowledging that farmers currently have no choice but to use these fuels, the reality is that the rebate is a blunt tool that does not fairly reimburse farmers for the fuel they actually use. This means that depending on the crops they grow, they may receive only a small percentage of the carbon price paid through their operation.

That is why the exemption offered through Bill C-234 is superior to the rebate system. With an exemption in place, Canadian farmers will remain competitive and have additional working capital to reinvest in their operations, leading to more tangible environmental outcomes and emission reductions.

Grain drying is necessary to maintain the grains' quality. Taxing this practice will not result in emissions reductions and instead will hinder farmers' ability to invest in sustainable innovations.

A reinvestment into updated machinery or technologies has proven to make real progress in emission reductions. Canadian farmers need policy and the incentivization of innovation of best management practices and other adoption tools that put working capital back into farmers' pockets. Farmers are simultaneously facing rising input costs, rising interest rates and increased debt loads required to finance equipment and farmland. So for many, every dollar counts.

It is also important to note that the passage of this legislation would not alleviate all the carbon pricing costs and associated signals that are built into the prices of transportation and other inputs the farmers use, which are passed on to farmers. As price-takers, they are unable to pass those costs on any further.

Ultimately, the savings that would be found for farmers should Bill C-234 pass would make up just a small percentage of their overall operational costs, but would absolutely make a difference to their bottom line.

By passing Bill C-234, Parliament would acknowledge the important sustainability efforts farmers have undertaken and will continue to undertake, and empower them to reinvest in their operations, further reduce emissions and improve on-farm environmental indicators. We urge all parties to support the swift passage of this legislation.

Thank you. I look forward to your questions.

[The Vice-Chair, Conservative, John Barlow]

Thank you, Mr. Leslie. You're done right on time. I appreciate that.

We also have a couple of new additions to the committee—well, “old new” additions. I'd like to welcome Ms. Rood and Mr. Steinley to the Conservative bench on the committee. We look forward to working with you, of course.

We will now go to Ms. Rood to lead things off for the Conservatives for six minutes, please.

[Lianne Rood, Conservative, Lambton—Kent—Middlesex, ON]

Thank you, Mr. Chair.

Thank you, witnesses, for being here today to discuss this very important topic.

A common theme I've heard throughout the testimony we've just heard is the fact that the costs farmers face—especially when it comes to the carbon tax on drying their grains in this particular instance—are not able to be passed on to the consumer. That means that farmers are having a harder time making ends meet, so they are not actually getting the profits they should in their business to keep farming.

If we continue to have policies such as this, what I see happening is that it's going to price farmers out of the business of farming. We're not going to see the next generation taking over the family farms, because they simply can't afford it. If we don't have farmers, we don't have food.

Particularly in my riding, it being a very heavily agricultural riding and a riding that farms a lot corn, soy and grain as well, this is very pertinent. I was just visiting a corn farmer on the weekend. He has a state-of-the-art new drying system. Most folks don't understand that the corn must go through the dryer in order to get the moisture content down so it can be stored.

I have a question for the Grain Farmers of Ontario.

Just to go back for a second, I've been told that this farm requires six hours in a dryer to get its corn dry enough to go into storage. Then it's going to become ethanol or go into feed. Farmers are running these machines 24-7. Sometimes it's for a month; sometimes it's for three weeks, and sometimes it's for six weeks. We've had a really wet fall. Moisture content is high in Ontario right now. There's also a threat of disease setting in if they don't harvest the corn right now with the rain that keeps coming.

What will farmers get back of the carbon tax compared to what they're actually paying? To me, $800 seems like a drop in the bucket to somebody who has to run a propane or natural gas grain dryer for 24 hours a day.

[Brendan Byrne]

I can start on that.

It's going to be different across the province with moisture levels where the corn is coming off at and with how much it's used. I've talked to grain farmers who paid an $8,000 bill just in the carbon tax to dry their grain last year. With the escalation of how that will be going from now until 2030, you're not wrong in saying that it will be putting family farms at risk. A lot of people are looking at the policy that's coming towards them, whether it be the carbon fees or fertilizer, and they're wondering how they're going to get through this time.

Input costs are at an all-time high. There's not a lot of certainty on the farm. We're at the mercy of the weather. I think that adding something like this carbon piece makes it very tough for farmers to know what their bottom line is going to be. Prices are good, but there are areas that suffered severe drought. They're probably going to have 30% to 40% less yield this year on their corn crop than they had in previous years.

I know that in an area like yours, Ms. Rood, there's a lot of great corn grown, but there are parts in there that I know suffered some drought. Now there's some wet weather, so there certainly is a risk of disease.

It's a very timely matter to try to get the crop off. At this point, to be honest, farmers are just very concerned with getting the crop off. In the back of their minds, every day is about what's coming at them, what the next cost will be that's going to escalate, and how they are simply going to weather this to maybe be able to pass it along to the family. Some are making tough decisions and saying that they're not sure they'll be able to.

[Lianne Rood, Conservative, Lambton—Kent—Middlesex, ON]

Just to circle back, in your opening remarks you said that farmers are getting back less than 15% of what they pay in carbon tax. Is that what you said, just so I'm on the right page?

[Brendan Byrne]

Yes. I think when we initially ran the numbers it was about 13%.

[Lianne Rood, Conservative, Lambton—Kent—Middlesex, ON]

I have a question, just for clarity. You mentioned in your opening remarks that this will affect the food supply. What in particular or what part of the food supply will this affect? Not all of this will be going into ethanol. It's not all going into feed for animals.

I'm just wondering if you could elaborate on that, just to give folks an idea of where this is actually going to affect them down the supply chain when it comes to their groceries.

[The Vice-Chair, Conservative, John Barlow]

Just give a quick answer if you can, please.

[Brendan Byrne]

At the end of the day, farmers might decide to grow a shorter-season corn to try to get it off at a lower moisture, which is going to result in less production, or they may be looking at ways to plant less corn or fewer crops that need to be dried, creating a kind of shortage in those particular crops.

[Lianne Rood, Conservative, Lambton—Kent—Middlesex, ON]

Can you just elaborate on where that corn is going to go down the line after it leaves the farm gate for us, just to give consumers an idea of where it's going?

[Brendan Byrne]

Once it leaves the farm gate, it can be used in animal feed. It can be used in ethanol. It can be used in whiskey. It can be used in a lot of different things. If you go through your grocery store, you will see high-fructose corn syrup. It will affect things across the board. Whether it is driving or groceries, there's less to be put into the marketplace.

The only way for us to then compensate for this is to try to bring supplies in from the United States, which does not have this carbon tax. We're at a competitive disadvantage from the start if we lower our yields and then start bringing in more product from elsewhere.

[The Vice-Chair, Conservative, John Barlow]

Thank you, Mr. Byrne. I appreciate that.

[Lianne Rood, Conservative, Lambton—Kent—Middlesex, ON]

Thank you.

[The Vice-Chair, Conservative, John Barlow]

Thanks, Ms. Rood.

I now turn it over to Mr. Drouin for six minutes.

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

Thank you, Mr. Vice-Chair. It's great to see you in that position.

It's good to see my colleagues rejoin this committee. It's been a pleasure working with you guys in the past. I look forward to working with you again in the future.

My first question is for Mr. Byrne.

It's good to see you. I know you're busy right now with harvest season. It's good to see you taking the time to appear before our committee. There have been talks through the former bill about putting in a sunset clause. I'm just trying to get your sense of it. Should this committee entertain a potential sunset clause?

Some witnesses recognize that we need time to innovate on the farm and we need time to test. We've often heard from grain dryers that there are no commercially viable technologies yet. While some have adopted those, they are not widely available.

Would you be against putting in a sunset clause, for instance by 2030, or do you see a forever exemption?

[Brendan Byrne]

I know that, in general, farm innovation can happen at a quick rate, or it can take some time. I think that in this case a sunset clause could be entertained if it were long enough—say a 10-year runway with a variable such that it would result in something reliable that we're able to use, and with a background industry here to support that. I know that in some of those cases it might take a while to be able to have parts that can be accessed in a timely fashion.

I think a sunset clause could be fine, with the variable that there is an actual solution that comes out of it and that it's long enough.

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

Okay.

Obviously, if this bill goes through, I assume the farmers would no longer be eligible for the fuel tax rebate. Would you continue to be in support of programs such as the agricultural clean technology program, or do you believe that farmers would now have enough capital to make those investments themselves?

[Brendan Byrne]

I would have to look a little more into the agricultural clean technology program. I think a partnership between farmers and the government in coming up with solutions is probably the best way to go about it—more collaboration and maybe less top-down management. Maybe seeing how it would work on the farm and then sharing costs on some research and testing could be the way to go.

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

Okay.

I have just a quick question. It has nothing to do with Bill C-234, but you did mention soybeans. I'm just wondering if you're averaging over one tonne an acre right now, or are the crops not doing so well in your neck of the woods?

[Brendan Byrne]

You see, where I'm at, we go by bushels and not tonnes. We're about average. Maybe 40-45 bushels per acre. With how dry it was, we'll take it.