Agriculture Committee on Feb. 6th, 2024

[Tyler McCann]

There are a couple of important things to keep in mind when we think about the carbon tax in agriculture, and agriculture and food, because those things are slightly different.

First, the government made a decision with the GST to exempt the food system because it's different. I think there's an interesting precedent to think about. Should food have been treated differently when it came to the carbon tax?

The carbon tax today is a relatively small amount, but it is an amount that's growing and we expect the impact will continue to increase. The reality is that the vast majority of emissions from agriculture and food are exempt from carbon pricing today, but they all aren't. One of the challenges we get with the carbon price as an effective policy tool is that there is a lot of inconsistency in how it's being applied. If you're a grain farmer, you're treated differently than if you're a greenhouse grower. If you're a livestock farmer, you're treated differently again. There's a really challenging policy environment around it. It also comes to the reality that, if what we really want to do is drive down emissions in agriculture, there are probably better ways to do it than through carbon pricing if you look at what's happening around the world.

On the challenge of the volatility in fuel prices, again, it's not just fuel prices. Fertilizer prices have been volatile and have been impacting farmers. It is a challenge that farmers deal with. Again, as was mentioned earlier, farmers don't have many options. Whenever these costs increase with this volatility that impacts them, they don't have the flexibility to pass it on to someone else. It is often their own income, their own livelihood, that gets impacted by those price increases.

When you think about those long-term solutions to volatility, helping farmers switch off of fossil fuels and look at other sources can be one of these really effective mechanisms to help them manage the volatility in oil and gas, but I think there's a different set of policy tools that could help them get to that point.

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

Thank you.

That's a great segue to my question for Mr. Janzen.

Concerning Bill C-234, I—along with the Green Party and the Bloc Québécois—was happy to support that bill at third reading. In my interpretation of that bill, as Mr. McCann mentioned, it's in line and in the spirit of the original Greenhouse Gas Pollution Pricing Act, in that there are already exemptions for farm fuels, farm machinery and farming activity. I see the provisions in Bill C-234 as being in the spirit of the original law. The Liberals, in 2018, recognized that there was a special place for agricultural activity. I think that Bill C-234 keeps in line with that. I was happy to support it at third reading, and I think I'm going to keep my vote consistent with the vote at third reading.

Mr. Janzen, just on the subject of fuel price volatility, it can have a significant impact. We did, as the House of Commons, program in a sunset clause. With respect to the greenhouse sector, are there some promising opportunities in the next decade whereby operators of greenhouses are able to switch to a more stable fuel source or mechanism to heat their greenhouses? Can we talk about some of the light that exists at the end of the tunnel so you're not subjected to that volatility?

[Marcus Janzen]

I'm hard pressed to suggest that the greenhouse industry has the potential to completely disconnect from fossil fuels in the next 10 years. That being said, I think there are some very promising opportunities when it comes to plant genetics—plant genetics that are more energy efficient and still can be grown in a northern climate. That's the challenge.

There are meaningful amounts of research being done on what we call “closed” greenhouse systems, where essentially you have a heat pump concept on, obviously, a larger scale. The challenge there is the capital cost to remain competitive in a marketplace where you're competing against California and Mexico, especially in certain parts of the year.

Just to personalize it, when I started in the greenhouse, using 42 to 45 cubic metres of gas per square metre was considered very efficient. Now it's 38 or 36. Some of our really elite growers go to 33. It's that incremental improvement that we can make. The challenge is that the carbon tax being applied is being increased at a far higher rate than science and technology can keep up with.

[The Chair, Liberal, Kody Blois]

Thank you to you both.

I gave you a little bit of extra time, Mr. MacGregor, so I expect a Christmas card next Christmas.

Go ahead, Mr. Epp. We'll have to shorten it to four minutes.

[Dave Epp, Conservative, Chatham-Kent—Leamington, ON]

Thank you, Mr. Chair.

I'd like to thank the witnesses for their testimony.

I'll begin with you, Dr. Lee. Last spring you testified to this committee that StatsCan evidence—this has come up already—described increases in diesel fuel, fertilizer, crop protection products and trucking costs. In my discussions with industry, I'm going to add packaging costs and interest costs to that list of costs that are hitting the industry. One of those things, interest costs, is not like the rest. I think it's the only one of those cost components that is not attracting a carbon tax.

To move forward on food affordability, Dr. Lee, given the discussion earlier on the success of the carbon tax, should we remove the carbon tax from the other four or add it to interest costs somehow and fabricate some carbon in that component?

[Dr. Ian Lee]

I was listening to the conversation in the previous round and this round, and I'm going to answer it tangentially. To provide full disclosure, I believe in Pigou taxes. I'm referring to Professor Pigou of Cambridge from 100 years ago, who said that if you want to discourage something, make it more expensive with a tax. Liquor taxes are Pigou taxes, as are what we now call carbon taxes—so are cigarette taxes. The principle has been around for a very long time. Make something more expensive and you'll consume less of it. It's kind of hard to argue with that.

I think the problem—it reminds me a lot of the debates over the HST back in 1991, when Michael Wilson was the finance minister—is the aggressivity. I'm now talking about the carbon tax. The solution, to answer your question, is this. As the previous witness just said, it's rising so quickly that technology and investment can't keep up.

I think the criticism is not the carbon tax; it's the speed of the implementation of the carbon tax. Instead of squishing it through in what I think is five years—correct me if I'm wrong—maybe we should be amortizing that over 10 years or 12 years. I debated the head of Ecofiscal Commission at McGill. They are very pro-carbon tax too. We both agree that it's going to take 50 years to decarbonize the American and Canadian economies, not five or seven or 10 or 12 years.

Maybe we should acknowledge that and stretch out the amortization, which means a lower rate of increase so that the growers, the farmers and the greenhouse operators can adapt and adjust incrementally because it's not going up so radically so quickly.

[Dave Epp, Conservative, Chatham-Kent—Leamington, ON]

Thank you, Dr. Lee. I hear you not supporting the amendments on Bill C-234 and the shrinking sunset time.

I'll shift gears a bit. There are those who are calling for more competition in the grocery retail sector. In fact, the Minister of Innovation is working the phones, supposedly, to make that happen. We've talked about the profits at the retail sector, and hear on average 3.7%, but that would only reduce a basket of groceries if they were zero, from $25 to $24. I'm wondering how a zero profit, if that was our goal, would attract or expand more foreign or smaller grocery retailers here in Canada.

With regard to the grocery code of conduct, would it not make more sense to have a market-based level playing field that is industry-led and uniform across Canada in existence? Would that not attract...? I'll cite the example of Australia, which has a voluntary code. It has attracted another retailer since the existence of the code. The U.K. has also attracted another retailer since a mandatory code was put into the U.K.

I'll start with you, Mr. McCann. Could you comment on those dynamics in other jurisdictions and how the code could potentially help bring more competitors into Canada?

[The Chair, Liberal, Kody Blois]

Answer in about 45 seconds, Mr. McCann, and then we'll have to wrap up.

[Tyler McCann]

I think the simple reality is that a well-functioning supply chain is good for everybody who is involved in it. It's good for the farmers. It's good for the retailers, and it's good for the consumers at the end of the day.

The question is what role a code can play in making it function better. We have certainly seen from the experiences around the world that it does have a positive impact. There are lots of examples from the U.K. and Australia of how it's improved that fluidity and made it a more attractive, more effective marketplace for everybody involved.

[Dave Epp, Conservative, Chatham-Kent—Leamington, ON]

Mr. Janzen, answer quickly.

[Marcus Janzen]

I would concur with those comments.

I think at some point, there has to be a more fixed timeline to put this in place. I believe if there's a political will, there's a way.

[The Chair, Liberal, Kody Blois]

Thank you very much. We'll have to leave it at that.

We're going to go to Mr. Carr for four minutes.

[Ben Carr, Liberal, Winnipeg South Centre, MB]

Thank you, Mr. Chair.

I'll start by quickly addressing something my colleague from Saskatchewan, Mr. Steinley, said during his intervention.

The purpose of a price on pollution is to ensure that pollution is no longer free. If my colleagues across the way disagree with that sentiment, that is a conversation for us to have. Furthermore, a price on pollution is also designed to incentivize innovation and make sure that it is a critical component of decarbonization. It does not, as Mr. Charlebois quite emphatically expressed a couple of moments ago through the data and studies that he has undertaken, pass costs on at the retail level.

Mr. McCann, you said this is complex. I imagine the axing of a tax, therefore, would not be a silver bullet that all of a sudden ensures that we see a stabilization of food prices.

Do you share the view, Mr. McCann, that Mr. Charlebois expressed earlier during this committee that the price on pollution is not contributing directly to retail costs on food?

[Warren Steinley, Conservative, Regina—Lewvan, SK]

I have a point of order.

[The Chair, Liberal, Kody Blois]

We'll pause the clock for a second, just to make sure that it is a point of order.

[Warren Steinley, Conservative, Regina—Lewvan, SK]

It is.

Mr. Charlebois said there is not enough data to prove that the carbon tax is affecting food prices. Mr. Carr is putting words in his mouth.

[The Chair, Liberal, Kody Blois]

We'll make sure that everyone has access to the blues and the testimony.

I paused the clock.

Mr. Steinley, it's Mr. Carr's time and we're getting close to the hour.

Mr. Carr, I still have you at about three minutes and 30 seconds. The floor goes back to you.

[Ben Carr, Liberal, Winnipeg South Centre, MB]

I appreciate the debate, Mr. Chair.

Mr. McCann, do you share the view or do you believe that the carbon tax is having a direct impact at the retail level on the prices of food in the country?

[Tyler McCann]

Again, I think what the professor said earlier was that we don't have a lot of data.

The reality is that retail prices are set by a variety of different factors. Farmers will say that retail prices don't reflect what happens at the farm gate. I think a lot of people along the value chain will say that retail prices don't reflect the different policies and impacts along the way.

[Ben Carr, Liberal, Winnipeg South Centre, MB]

I'm sorry to interrupt, Mr. McCann.

When politicians say a price on pollution is resulting in an increase in the cost of food in Canada—which I hear every single day in the House of Commons from colleagues across the way—you're saying there is no data to support that argument.

Do I understand you correctly?

[Tyler McCann]

That's right. Yes.

[Ben Carr, Liberal, Winnipeg South Centre, MB]

Okay. Thank you.

You mentioned something earlier that I thought was quite profound—and I'm glad you did—regarding poverty.

I come from Manitoba, with the largest per capita indigenous population in the country. Unfortunately, due to all sorts of intergenerational trauma and wrongs committed against indigenous peoples on the part of the Government of Canada and governments of Canada over the years, the poverty rate for kids in Manitoba is at about 20%. I will note that this is after eight years of a Conservative government in Manitoba. That's 7.4% higher than the national average.

A colleague of mine has recently put forward a piece of legislation to look at addressing food in schools through nutrition programs and establishing a framework. I know the new Premier of Manitoba, Premier Kinew, has talked about this and is currently investing tens of millions of dollars to ensure that there is food stability in schools.

Can you comment on the role you believe industry may play in helping to support the establishment of nutrition programs in schools? Whether that's around food waste or in regard to some of the policies you noted earlier vis-à-vis poverty, I'd be interested to get your view.

We're probably running out of time, but if there is time for Mr. Janzen to add something specifically in relation to that, I'd appreciate it as well.

Thank you.

[Tyler McCann]

I often think that there's an untold story around the good work that the value chain actors today do in addressing poverty issues. If you look at companies like some of the large retailers, if you look at farm groups and farm associations, they are major donors and contributors to lunch programs and food banks.

We have some mechanisms that are there, but I think there are interesting opportunities to create better conditions, where maybe there are better tax credits or other tools that go further to encourage value chain actors to do more to donate food or direct surplus foods to these spaces where it's really needed.

[Ben Carr, Liberal, Winnipeg South Centre, MB]

Thank you.

Mr. Janzen, go ahead.

[Marcus Janzen]

In B.C. we have a program called “agriculture in the classroom”. It basically coordinates primary production to elementary and middle school classrooms. In addition to that, we also have what we refer to as the buy B.C. program that encourages public institutions, schools included, to purchase local production.