Agriculture Committee on Oct. 24th, 2022

[Brian Masse, NDP, Windsor West, ON]

You mentioned some low-hanging fruit that isn't being accessed right now. If there was some movement on this bill, and if it did actually provide some targeted incentives for that low-hanging fruit, would that be of interest in the sense of a temporary measure to bridge the gap? I'm from the auto industry. We've been dealing with incentive models and so forth for a long period of time.

Do you think that's a reasonable bridge between the two?

[Dr. Tristan Skolrud]

Oh, absolutely. I wouldn't even consider it to be a bridge. I would consider it to be a good practice to leave in place. If a farmer is subjected to higher carbon taxes through grain drying, they should have the ability to implement 4R at a higher rate, for example, to reduce emissions that way at a cheaper cost. If they could offset the carbon tax they are paying in grain drying by substituting some other practice that they could see a benefit from in terms of carbon tax revenue reductions, that would be a win-win. It would also lead to fewer greenhouse gas emissions.

[Brian Masse, NDP, Windsor West, ON]

Okay. Excellent.

I'm going to move to Mr. Gray and Mr. Lewis.

With this bill laid out the way it is, if the amount of money even allowed farmers to plan for 10 years in terms of that relief, do you think there's enough in here to make it meaningful, especially if it is targeted to those things that actually reduce emissions and provide some relief for our farmers?

Perhaps I'll start with you, Mr. Gray, so that you're not left out, being virtual, and then I'll go to Mr. Lewis.

[Richard Gray]

I believe that certainly a 10-year window is a time to respond to some of these, but again, you have to identify the specific technologies. You can't talk generally. There have to be specific technologies that are developed or in the wings, if you like, that can be implemented.

I'll leave it up to Todd to mention specific examples, so I'll pass on that, thanks.

[Brian Masse, NDP, Windsor West, ON]

That's good. I'm a big fan of the carrot-and-stick approach, as long as you have the appropriate ones available, so that was a great answer.

Mr. Lewis, please.

[Todd Lewis]

To go back to the example from the professor about offsets and so on, and the recognition of it, that's an important part of what producers want and need to see, but that needs time to be developed as well. We're not there yet, but we are paying this carbon tax today. It's coming out of producers' pockets today, right as we speak.

This year's drying costs are increased because of the carbon tax. I think that's an example of something that very practically is pinching producers' ability to invest in new technologies before we even get some of these technologies off the ground. That's what farmers are saying: Let's get these programs developed, and then we can offset and do those kinds of things.

However, the carbon taxes come first, and that's very difficult for producers to deal with, because it's money out of their pockets today.

[Brian Masse, NDP, Windsor West, ON]

With interest rates rising as well, borrowing for innovation is going to become a greater struggle. We should probably be looking at low interest rate loan programs or something along that line, because that's a concern.

I'm also worried that if it's not dried properly, you've just wasted all the greenhouse gas emissions and all the environmental and other things beforehand, and if it gives a damaged product, that's a complete writeoff altogether.

Is it fair to say that sometimes farmers struggle to decide on how much to do in terms of the associated cost to their products? Is this something that's happening out there or not?

[Todd Lewis]

We have examples. I know people who haven't bought new dryers because of the cost involved. They're not cheap things to buy, and they're not something that's used every year in a lot of grain operations, so they stick with the old dryer. Once again, they're paying the carbon tax on propane.

Typically, natural gas dryers are more efficient than propane ones. Natural gas costs a lot of money to have brought on site to a lot of farms. Those are just examples of programs that could help bridge the gap until the new technologies are here, but as it sits right now a lot of producers are having trouble funding more efficient grain dryers.

[Brian Masse, NDP, Windsor West, ON]

It's very significant. Thank you.

Is that all the time, Mr. Chair?

[The Vice-Chair, Conservative, John Barlow]

You have about a minute left.

[Brian Masse, NDP, Windsor West, ON]

I have one last question for Mr. Lewis.

Excuse my ignorance on this, but is there a preferred technology at this point in time? Do we have a leader in innovation for the dryers in Canada, or is this almost all foreign purchasing products that we have to do for those things?

[Todd Lewis]

It's in Canada. I think there's going to be a made-in-Canada solution. With the innovative manufacturers and so on that we have in Canada, if there's a solution to be had it will be found here in Canada, I believe, anyway.

The other part we can't forget about is the livestock heating. It's vastly important as well, and they're paying that. As I said, when it's 40 below outside, you've got to have the temperature turned up for your chickens. There are better building codes and everything else. Producers are making the investments in better buildings, better heating and more efficiency—just like you are in your homes—but at the same time they have to have it and that cost is really hurting a lot of producers.

[Brian Masse, NDP, Windsor West, ON]

Thanks for returning us back to that conversation.

Thank you, Mr. Chair.

[The Vice-Chair, Conservative, John Barlow]

Thank you, Mr. Masse.

We will now go back to the Conservatives.

Go ahead, Mr. Lehoux. You have five minutes.

[Richard Lehoux, Conservative, Beauce, QC]

Thank you, Mr. Chair.

I'd also like to thank the witnesses.

Mr. Lewis, there's a lot of talk about carbon sequestration and the lack of recognition of it. If we actually accounted for all the sequestration that farmers and producers are doing right now, do you think we'd be close to net zero?

[Todd Lewis]

I am a former president of the Agricultural Producers Association of Saskatchewan, and some of the research we did showed that in some cases farmers are not only net zero; they're net positive if we can get sequestration recognized.

It's not just in crop production. Our livestock producers are some of the best managers of grasslands anywhere in the world. We're world leaders in it as well, and it's not only in western Canada. It's in eastern Canada as well. Our producers are world leaders in it, and recognition of that will be really important in getting to net zero.

[Richard Lehoux, Conservative, Beauce, QC]

I think the answer you gave is very clear.

Farmers are already feeling the effects of the carbon tax for this season, and it will be even worse next year. We're talking about $45,000 more in carbon tax. What could a farmer do with that amount of money?

We just talked about sequestration, which is judged negatively and not recognized, and the corresponding carbon volumes are taxed again. What could an average farmer do with that money?

[Todd Lewis]

It could be something as simple as buying a new tractor, for instance. They could make a payment on a new tractor and maybe buy a new tractor. Chances are that new piece of equipment has a level four engine as opposed to a level one engine, so their emissions are actually being reduced with that investment in the new technology.

They maybe have a variable rate program for their air drill. That's another example of something that can lower your carbon footprint. There are lots of opportunities if you have the money in your pocket. It's more efficient, and that's what farmers are looking for—the drive to more efficiency—because they save money. If farmers have the money in their pocket, it doesn't go in the bank—it gets spent. That's the one thing with farmers: If the money's there, they spend it. Typically it goes to driving new equipment, and new equipment is more efficient.

[Richard Lehoux, Conservative, Beauce, QC]

Along the same lines, the problem for some farmers is investment. Should there be better investment support for all producers? Some of them are a little less up to date and efficient in terms of technology.

[Todd Lewis]

If the programs are in place for producers so they can get into the technology, they will take the opportunity to do so. It's a big step to make those investments, especially in the larger equipment. Even small things like improving the insulation in your barn can make a huge difference in your heating bill. If they have the money in their pockets to do it or a program perhaps to replace furnaces—those kind of things—it can make a huge difference in the carbon footprint of small and big producers.

[Richard Lehoux, Conservative, Beauce, QC]

Professor Gray, we talked about carbon sequestration earlier. Based on your research, why aren't farmers' on-the-ground efforts in carbon sequestration better recognized?

[Richard Gray]

It comes back to the very early decisions that were made in the international accords. At that time, we didn't know a lot about emissions or sequestrations from agriculture, so they got excluded. Because they were excluded, it's a bit like the qwerty keyboard on a typewriter in that it never really got changed. Some of it comes from the fact that we have an international agreement that was set up at a time when we didn't understand enough about agricultural emissions or sequestration.

[The Vice-Chair, Conservative, John Barlow]

Thank you very much, Mr. Gray.

Merci beaucoup, Mr. Lehoux.

To wrap us up for this panel, we have Mr. Louis for five minutes, please.

[Tim Louis, Liberal, Kitchener—Conestoga, ON]

Thank you, Mr. Chair. I appreciate that. I'm busy typing so many notes that I forgot it was my turn.

I want to thank all the witnesses for being here. I appreciate it.

I will turn to the Canadian Federation of Agriculture, the other Mr. Lewis.

We've mostly heard concerns about carbon pricing regarding grain drying. You mentioned today that we don't have alternatives to reduce GHG emissions in that regard. I wanted to focus more on barn heating. We mentioned it a bit. We heard from Dr. Gray about the use of heat pumps to reduce the footprint in heating use, as well as some lower-tech solutions.

What alternatives exist? What is the uptake right now? How can we incentivize those things?

[Todd Lewis]

When it comes to things like barn heating.... If you look at just common residential practices, when you ask people to improve the efficiencies in their homes, you get better insulation, more efficient furnaces and those kinds of things.

Water heating is also important in a lot of livestock operations—dairy operations and so on. It's a package that I think is available. At the same time, you have to realize that a lot of modern agriculture is already at the top level, with well-insulated barns, using efficient heaters and everything else, so recognize that.

If you're using the best technology available, it's hard to improve on it. I think that's some of the frustration farmers are feeling. There are always improvements that can be made, but when you're paying the carbon tax on something like all your natural gas, and you're already at the top level of barns—your barns are brand new and your furnaces are brand new—then the fact that you're still paying the carbon tax is very frustrating for producers.