I'm happy to be here in front of the committee again, this time to speak in favour of Bill C-234.
The OFA and its 38,000 members strongly support this bill and the amendments to the Greenhouse Gas Pollution Pricing Act. We are confident that expanding the list of qualifying farm fuels to include natural gas and propane, as well as amending the definition of eligible farm machinery to allow those fuels to be used to provide heat to dry grain and raise or house livestock, will make a difference.
This will have an immediate positive impact on the livelihoods of Canadian farmers and their ability to respond to the greenhouse gas reduction targets.
You have heard a lot about the negative impacts of the fuel charge on grain drying from both the provincial and national organizations. We're going to leave it there. We agree with their comments.
Today I would like to focus on the impacts on indoor livestock operations. The fuel charge has placed a significant and disproportionate financial burden on indoor livestock farmers in Canada. Similar to grain drying, livestock farmers, like poultry, swine and aquaculture operations, have limited ability to pass these added costs to the consumers. You heard that from someone else as well. They also have limited technology alternatives to reduce their consumption of fossil fuels without compromising growing efficiencies and animal welfare. I think the animal welfare one is pretty key.
I'll provide this example. This year, the fuel charge added just under $10,000 to one turkey farmer's cost of production. That's significant to him. It's not an old and inefficient operation. In fact, he's already insulated the walls and ceilings of the barn and sought out energy efficiency where it makes financial sense. Why did he make those changes? It was primarily because government incentive and cost-share programs allowed him to meet the threshold for change, and the return on investment was reasonable. With $10,000 this year and a projected $32,000 per year by 2030, those amounts of fuel surcharges will significantly impact his ability to do any further efficiencies that might exist.
Farmers are very good at math. If a new technology is available and the payback is appropriate, they will adopt it. With an incentive over a penalty, that uptake will be even faster. Making changes in a low-margin, high-risk business environment takes incentives, not penalties.
There are alternatives—you have talked about some—but farmers have concerns. Are they easy to fix? Are there established and robust supply chains for parts? Are there repair technicians in every part of the country that can come out at 10 p.m. to fix it? If there aren't, quality can be damaged and animals may suffer. Also, do they have a return on investment that farm businesses can work with? Are they any better or are they simply shifting the carbon emission to something else?
These are questions that farmers have. That's why we say there are currently no significant viable alternatives. There needs to be a transition.
The nature of agriculture production means that farmers are always looking for ways to reduce costs and improve efficiencies. However, most technologies do not eliminate the need for fossil fuels in agricultural production. In the agricultural sector, the cost of energy alone, without the fuel surcharge applied, is already a significant price signal that drives improved efficiencies and reduced consumption.
As I indicated earlier, incentives are powerful and proven mechanisms to help accelerate the pace of technology adoption in the agricultural sector compared to penalties. Removing the fuel surcharge will free up capital that can be leveraged with cost-share programming to invest in innovations that can reduce emissions from the farm.
The last thing I'd like to add is that the point of a fuel surcharge is to change behaviour. Farmers must heat or cool their barns. Completely changing this behaviour is not a realistic option. In fact, when the pricing actually drives the price margin down to nothing, it drives people out of business.
Last week I was here talking about global food insecurity. You can't have both. Farmers still have to make a profit, otherwise they will just stop farming. We have to be careful with that. If Canada has a desire to impact global food insecurity or even feed our domestic markets, that isn't the change that anyone wants to see happen.
Again, we support the bill, and we look forward to further conversation on this.