Great, thank you, Mr. Chair, and good afternoon, everyone. Thanks for letting me take part in this.
As mentioned, I am Keith Currie, the first vice-president of the Canadian Federation of Agriculture, which I will refer to as CFA going forward.
We are Canada's largest general farm organization; we represent, roughly, 200,000 farmers and farm families from coast to coast to coast here in Canada. I'll also mention that Frank Annau, who is our environment and science policy director, is joining me today and is going to answer all the really tough questions.
We appreciate this opportunity to present to the House of Commons Standing Committee on Natural Resources. Creating a fair and equitable and energy transformation is critically important to Canadian agricultural producers. As you may be aware, the producers I represent are price-takers in the market, which means that when we incur increasing input costs, such as rising energy costs, we cannot increase the price of the products we produce to offset those rising costs. In a report that came out last December on the energy sector and agriculture, the Parliamentary Budget Officer noted that in 2019, half of all farms were either losing money or barely profitable.
We must ensure that the financial burden of a just energy transformation doesn't fall solely on the shoulders of these producers. This will require some support to invest in the technology needed to make this transformation on farms. Unfortunately, as we all know, Russia's invasion of Ukraine has caused skyrocketing input costs for gasoline and diesel along with many other products, which will likely continue into the foreseeable future. This is reducing the cash available to farmers to make such investments.
To increase this cash influx, we recommend an extension of the federal carbon price exemptions to cover natural gas and propane. These are fuels used for grain drying and livestock cooling and heating, and they are also critical activities for mitigating climate impacts, such as extreme autumn rainfall occurrences and our summer heat domes.
While the carbon price is meant to incentivize energy transformation to lower emission fuels, current fuel prices are high enough to really eclipse that as a market signal. Producers can, instead, use that money to reduce the impact of high fuel prices by adopting clean technology wherever feasible. A perfect example is precision agricultural technology, which significantly improves fuel efficiency by using fleet analytics and auto-guidance systems to reduce the number of passes needed for cropping.
One U.S. study recently found that this can decrease fuel by up to six per cent, which would be the equivalent of about 18,000 flights. That very same study also stated that this fuel use could decrease further 16% with broader adoption of such technology.
However, we face a number of barriers to this adoption, including the lack of reliable rural Internet needed to run the equipment and the fact that adoption rates drop significantly on farms that are under 500 acres in size or that have a smaller annual income of under $75,000 per year.
We recommend that the government prioritize rural Internet and scaling down this technology in order to realize these fuel efficiencies.
It's also important that we enhance existing mechanisms to support uptake of these technologies. An example that is greatly appreciated by our producers is the agricultural clean technology program, which offers a 50% federal cost share for the purchase and installation of clean tech on the farm. However, the value of eligible projects starts at $50,0000, which means that farmers need to put up a minimum of $25,000 in order to receive funding. Our concern is that this leaves out a large number of small family farms who are unable to contribute that minimum amount but are in need of being, and wanting to be, part of that energy transformation.
We recommend that this cost share be enhanced to accommodate these low-income farms and that the government reduce the $50,000 minimum project value to accommodate a greater number of low-cost projects, which will multiply the cumulative effect.
Once farms have made this transformation, we must ensure that they do not continue to shoulder the burden of energy transformation financially. This is needed on farms in provinces under the federal carbon price where fossil fuel powered electricity grids pass on carbon costs to our producers. The irony is that producers who adopt electricity to reduce their carbon costs instead pay a price on carbon passed down through their energy providers on their electric bill. These costs will only rise as fuel suppliers face pressure to meet Canada's 2030 methane reduction goals and the upcoming clean fuel standard, the latter of which it is confirmed will increase fuel prices in rural areas where there are fewer low-emission alternatives. Again, this is yet another reason to ensure that the price exemptions on farm fuels are extended to include the full range of farm fuels.
Finally, a just energy transformation on farms is only possible if we identify any inequalities.
I would like to mention that Canadian agricultural producers are looking to partner with the federal government on initiatives, going forward.