Good afternoon, everyone, and welcome.
I'll call this meeting to order.
Welcome to meeting number 26 of the House of Commons Standing Committee on Agriculture and Agri-Food. Pursuant to the order of reference of Wednesday, February 24, and the motion adopted by the committee on March 9, the committee is resuming its study of Bill , .
Today's meeting is taking place in a hybrid format pursuant to the House order of January 25, and therefore members are attending in person in the room and remotely using the Zoom application. The proceedings will be made available via the House of Commons website. Just so that you are aware, the webcast will always show the person speaking rather than the entirety of the committee.
I would like to take this opportunity to remind all participants that screenshots or taking photos of your screen is not permitted.
To ensure an orderly meeting, I would like to outline a few rules. Before speaking, please wait until I recognize you by name. If you are on the videoconference, please click on the microphone to unmute yourself. Those in the room, your microphone will be controlled as usual by the proceedings and verification officer.
A reminder that all comments by members and witnesses should be addressed through the chair.
When you aren't speaking, please mute your microphone.
We'll now start with the witness list.
Perhaps I'll start with the Producteurs de grains du Québec, but I don't know if they're here yet.
With us we have the Canadian Federation of Agriculture, with Mr. Keith Currie, vice-president, and Frank Annau, director of environment and science policy. From the Grain Growers of Canada, we have Erin Gowriluk, executive director, and Mr. Jonothan Hodson, director. From the Producteurs de grains du Québec, we have Monsieur Christian Overbeek, president.
Let's begin with the Producteurs de grains du Québec.
Mr. Overbeek, you have the floor for five minutes. We are listening.
Thank you very much, Mr. Chair.
Good afternoon. My name is Christian Overbeek; I am a farmer from Saint-Hyacinthe and the owner and sole shareholder of a family business. My main crops are corn, soy and wheat, which I grow non-commercially to improve the quality of my soils, as well as a few cover crops and intercrops such as ryegrass, clover, fall rye, radish and others.
To give you a brief description of our sector in Quebec, we grow grain on more than 1 million hectares across Quebec. Those crops are maintained by 9,500 families, who produce more than 5 million tonnes. As you can see, this is extremely diversified farming. We grow a broad range of grain crops across Quebec.
As per our normal farming practice, we must first of all ensure that we can cultivate our fields through sowing, crop maintenance, harvesting and tillage operations. In the past few years, we have obviously added farm-based grain drying and conditioning as well as storage. All that requires energy consumption. Consequently, if we want to stay competitive in the grain sector, it is important for us to have access to cheap energy that is not overtaxed by different aspects of various government programs.
Product quality is extremely important for us grain growers because consumers in local, provincial, national and international markets still want top-quality grain. Knowledge acquired in recent years has shown that we must harvest at slightly higher humidity levels than what the market expects, condition our grain on the farm and then market it guaranteeing the high level of quality that has made the reputation of Canadian grain in Canadian and international markets.
Any additional tax will thus increase our production costs and make us less competitive with other farmers around the world.
I understand that Quebec is currently subject to a carbon pricing system that may be different from what's being done in other Canadian provinces. Ultimately, we want to be sure we are operating on a fair and equitable basis with all farmers around the world.
To sum up the situation, the carbon tax of $23 per tonne for a medium-sized Quebec farm currently has an average financial impact of more than $2,000 on every farm in Quebec and thus an extremely significant effect on our sector's competitiveness.
We very much want this tax to be fully refunded to us through various Canadian government measures or simply for the government not to tax propane, diesel or natural gas in the first place.
Those are the essential points I wanted to make today given the short period of time we are allotted.
I will be pleased to answer your questions.
Hello, Mr. Chair and honourable members. Thank you for the opportunity to appear before you today.
My name is Jonothan Hodson. I am a member of the board of directors of the Grain Growers of Canada. On that board, I am a representative of the Manitoba Crop Alliance, a producer group representing wheat, barley, corn, sunflower, flax and winter cereal growers across Manitoba. I am joined today by the Grain Growers of Canada executive director, Erin Gowriluk.
I farm near Lenore in southwestern Manitoba. Our family farm is fifth-generation. We have a diverse crop rotation of corn, spring wheat, barley, canola, soybean, peas and forages as well as a cow-calf operation.
I'm here today to express our support for Bill . This legislation would expand the existing exemption from the price on pollution for qualifying farm fuels to include propane and natural gas. The expansion of this exemption is critical to grain farmers like me, because we often need to dry our grain prior to marketing it.
In yesterday's budget we were pleased to see the government's intention to return a portion of the carbon tax collected back to farmers in backstop jurisdictions beginning in 2021-22. We look forward to additional details. However, we continue to support the passage of Bill , as it remains the most straightforward, cost-efficient way of providing a full exemption for grain drying where no alternative fuel source exists.
Canada is truly blessed with a large agricultural land base right across this country, but many areas have to deal with a short growing season in combination with a changing climate. We are increasingly feeling the impacts of wet harvests and early snowfall. When we experience a lot of moisture and unpredictable weather, we have no choice but to dry our grain to make it suitable for the markets who rely on us, both at home and abroad.
Canadian producers grow and market some of the best-quality grain in the world. In many regions of Canada, one of the tools we use to ensure that quality is the grain dryer. The reality is that putting grain with too high a moisture level in the bin isn't an option for us. It needs to be dried to the correct level or we risk losing part of, if not the entire value of, that product. When compounded by the rising carbon tax, this represents a real blow to the profitability of my farm.
A couple of years ago, we made a significant investment of over $100,000 to upgrade to a more efficient grain-drying system. There were no programs available. Just like many other farmers, we spent the money ourselves to improve our drying efficiency. If there was a grain dryer that ran off something other than fossil fuels, we would look at upgrading again, but that option just does not exist right now.
Each year our farm spends between $15,000 and $25,000 in propane to dry our grain. Of our total expenses, this is not the largest, but as a necessity after harvest, money spent on drying my grain is money out-of-pocket. Each year the carbon tax goes up, that is more money straight off my bottom line. As a farmer, I am a price-taker, not a price-maker. Unlike other businesses, I cannot pass on these extras costs to the consumer. However, the increased costs of production for my inputs and equipment and the rising rates for rail and road transportation do get passed on to me.
This legislation is not a remedy for the increased costs that the carbon tax adds for us. However, it is an important recognition that the spirit behind the carbon tax cannot be achieved in this instance. The desired purpose of the price on pollution is to drive a transition to alternative fuel sources, but in the case of grain drying, there are simply no viable alternatives available.
There are other environmental considerations beyond just taxing unavoidable emissions. Certain crops that are common across all of Canada, such as corn, are generally harvested with high moisture and must be dried. Corn has become a valuable part of my crop rotation, which in and of itself is a critical tool in the environmental sustainability of our operation. Crop rotation provides many benefits, including improved soil health, reduced erosion and disease prevention. If the costs of drying become too high and eat away at potential profits too much, that will be one less crop available for our rotation and a potential loss of those environmental benefits.
We were very encouraged to see support for this legislation from the Bloc Québécois, NDP, Green Party and a number of independent MPs. It is important to recognize that where the carbon tax is ineffective in its aim, changes like those proposed in Bill should be made. I hope this legislation will receive unanimous support to pass through this committee and be on a path to become law in time for this year's harvest.
Thank you, Mr. Chair. We would be happy to answer any questions the members may have.
We will now go to the Canadian Federation of Agriculture, and Mr. Frank Annau and Mr. Keith Currie.
You have five minutes for an opening statement. Hopefully, the sound will be okay. I believe they didn't have time to run the checks. I just want to advise the committee that although we do have that requirement as a motion, they did not have time. Hopefully, things will work out great.
Mr. Annau, you can start your statement.
I'm just checking.... Can everyone hear me okay? Perfect.
I'll leave my video off to give myself some more bandwidth here to accommodate my audio.
Good afternoon, everyone. Thank you to the chair and the committee for inviting us to appear today.
My name is Frank Annau. I'm the director of environment and science policy. Our vice-president, Keith Currie, should be joining us shortly.
We greatly appreciate this opportunity to provide testimony on Bill . The CFA is Canada's largest general farm organization, and we represent approximately 200,000 farmers and farm families nationwide. We are dedicated to promoting best management practices that reduce on-farm emissions to help Canada meet its goals under the Paris Agreement.
However, the carbon tax has significantly increased farmers' cost of business. As price takers, farmers cannot pass on these costs to customers or to the national market. To that effect, our members greatly support the bill's goal to extend the exemption for qualifying farming fuel to marketable natural gas and propane.
As everyone is aware, Bill arose largely in response to the 2019 wet harvest, when extreme rainfall put increased burden on grain drying, which is made even more expensive by the carbon tax. The Western Canadian Wheat Growers Association has reported that some farmers paid over $10,000 in carbon taxes on their grain drying bill that fall alone.
These price hikes led the Green Party and the Conservatives to both comment that carbon tax relief for farmers was justified and necessary and [Technical Difficulty—Editor]. During the bill's pandemic hiatus, the government released a report estimating that the carbon tax had only increased grain drying costs by an average of $210 to $774 in 2019. The CFA did not endorse this downplaying of impacts, as the low range estimates were provided by the Government of Alberta, a province that was not under pollution pricing for the 2019 harvest and had no real-world data to contribute to the report. As such, this report does not rebut the need for exemptions under Bill .
The Liberals have since raised a very valid concern that the bill might not provide the intended relief for grain dryers, as dryers are not considered eligible farming machinery under the Greenhouse Gas Pollution Pricing Act. To ensure that the bill provides the intended relief for farmers, the CFA is recommending that it cover exemptions not only for grain drying but also for machinery used for livestock heating and cooling, and for irrigation as well. The rationale is that these tools are critical for mitigating the increasing on-farm impacts of climate change.
Canada's changing climate report shows that annual precipitation has increased in all regions since 1948, especially during the fall and winter seasons, the very months that harvesting and grain drying take place. With each passing year, this trend results in a higher risk of conditions similar to or even worse than what we saw in 2019. The same report further states that temperature extremes have also increased since 1948, which will raise the severity of heat waves and droughts and will bring a higher risk of crop damage and livestock heat death. While extreme heat has yet to have its carbon tax watershed moments, it is only a matter of time.
When that time comes, farmers should not be penalized for relying on tools needed to mitigate these impacts. We, instead, believe that the money paid in carbon surcharges would be better spent on participating in programs that increase fuel efficiency, such as those announced in yesterday's budget. While the CFA is currently analyzing the budget, these programs do appear to offer avenues to obtain these efficiencies. However, it must be noted that these avenues are often administered as cost shares, with farms required to contribute up to 50% of expenses.
As such, it is in the best interest of government to ensure that farmers have the cash needed to invest in and deliver these programs. While the carbon tax's driving up grain-drying bills to $10,000 does add incentive to reduce emissions, it also reduces the amount of cash that farmers have to buy into these cost shares. That is the reason why the exemption is still required. As it stands now, carbon surcharges have the very unintended effect of taxing the very mitigation measures needed to respond to droughts and extreme rainfall.
As an incentive to drive down emissions, the tax is an added and unnecessary burden. Even with exemptions for natural gas and propane, the price of those fuels is still scheduled to increase under the clean fuel standard in 2023. This, combined with cost savings from fuel-efficiency programs, is more than enough incentive to reduce emissions.
In closing, the CFA shares the government's vision of a future with zero-emission energy sources that are scalable and adopted by the agri-food sector. Until then, the upward trend of climate impacts will place continued strain on even our most innovative fuel-efficiency gains. That is why the exemption for natural gas and propane must be applied to grain drying, irrigation, and livestock heating and cooling.
Thank you, again, for this opportunity to engage. We welcome any questions that you may have.
It is a pleasure to be back out in front of the agriculture committee.
Also, thank you to the witnesses.
I just have a brief comment here, if you'll indulge me.
I think one of the untold stories of the pandemic is the sacrifices our farmers have made. They've been working through all the challenges with the lockdowns to make sure that we haven't had disruption in our food supply. They work every day, tirelessly, even before the pandemic and then with the additional obstacles.
A big thank you, I'm sure, on behalf of everyone here—and all Canadians—for everything that you and your members have done for Canada in keeping us well-fed during these difficult times.
Let's go on to our questions. First of all, I just want to go round the table with all of the witnesses to hear what the impact of the carbon tax is on their members. Could they comment on whether the credit provided by the government is substantial, or whether in fact the majority, if not all, of their members are actually in a loss position because of the carbon tax?
I'll start with the Grain Growers of Canada, if that's okay, Mr. Chair.
I'd maybe pass that on to Erin Gowriluk.
I can make a comment that, as producers, we're always listening and hearing. If there's something out there, we would hear about it. If there were a possibility to replace what we're doing, it would be something we would know about by now. At this point there is nothing tangible out there.
As far as collaborating down the road is concerned, that's something that I'm sure organizations will start to do. As we see this window closing and we have to do something, I'm sure that's what organizations will start to work towards.
Thanks to our witnesses for coming to speak with us about their situation. We're grateful for that.
I'll go first to Mr. Overbeek, whom I thank for accepting our invitation. You say that you haven't been granted an exemption in Quebec. We're all aware of that. We've even had discussions about this bill. We're trying to look at this objectively. You even touched on the subject of jurisdictions with Mr. Drouin.
Why are you nevertheless in favour of this bill?
Do you think Quebec may align itself with the rest of Canada? That's what you said earlier.
Thank you so much, Chair.
Thank you to our witnesses for helping to guide this committee on this journey with Bill .
It appears to me from reading budget 2021 that the government actually paid Mr. Lawrence a big compliment by devoting a good section to the costs of grain drying, with $100 million in refunds in that first year, and also by devoting $50 million specifically for more efficient grain dryers.
My first question is for the Grain Growers of Canada. I really want to dig down into what alternatives to propane and natural gas are available.
I've been looking on the Internet and there is a company called Triple Green Products that has a BioDryAir dryer, which uses crop residue as a fuel to help dry their grain. They're exempt from the carbon tax because they're using residue that comes from their own farm. Is this a viable technology? Is this the kind of place we want to start investing that $50 million in trying to find that efficiency? If we leave the carbon tax aside, farmers are still paying a lot of money just for the propane and natural gas itself. I just want to find out from you where this technology will go in five to 10 years from now.
Thanks for the question, Mr. MacGregor.
With respect to any carbon tax, and in this discussion in particular, it's really about whether the bill is meeting its intended objective, which is to ultimately incentivize practice change. With this tax, we want to encourage, for example, farmers to use alternatives to fossil fuels to dry their grain. With no viable alternative at this point, I think your suggestion is a very good one.
What investments can we make to ensure there is an alternative in the future? I think it would be something that farmers would widely adopt if it were commercially available as an affordable alternative. Let's make those investments in the future. Let's use this bill, and an exemption to bridge that gap until such time as we have those alternatives, to ensure that while there isn't an alternative, farmers are not being punished for doing something they have no choice but to do.
Yes. Even specific to switching from natural gas and propane in the context of grain drying.
There is potential, for example, with existing mechanisms. I alluded to the clean fuel standard that will be applying regulations scheduled for natural gas and propane in 2023. There is the potential that this will increase the price of these fuels.
Under the actual clean fuel standard, as you probably know, there's a credit category that will provide credits to end-point users, such as farmers, for switching away from fuels such as natural gas and propane to potentially more emissions friendly fuel sources that are less carbon intensive.
That's one example of a potential mechanism that could serve very well.
I think our only real concern is that in the interim, as these processes are getting under way, farmers may still be subject to extreme weather that could drive up the costs of grain drying as that transition is occurring.
As I said, even without the actual carbon tax, it could be that the clean fuel standard in and of itself provides that incentive for the switch, along with the actual programming available that provides support.
I'll also refer further questions to Keith Currie, who is our vice-president of the CFA.
That's all the time we have for this round.
If I may make a comment. As a greenhouse grower, I bought a boiler from southern Ontario about 15 years ago that burns round bale to heat whatever you want to heat. I heat my greenhouse. Therefore, it does exist. Whether's it efficient, I'm not sure. I bought it from southern Ontario about 15 years ago. It's still in the works. If anyone wants to have a look, it's there.
I just thought I'd throw that in there.
Go ahead for five minutes, Mr. Lehoux.
I'm going to share my speaking time with my colleague Mr. Epp.
My first question is for Mr. Overbeek.
The average cost to Quebec grain growers is currently $2,000. I understand that this is unfair because you're already bearing costs that your colleagues in the other provinces don't.
If the bill were passed in Canada and everything was in place in the other provinces, do you think the Quebec government would be prepared to take a step toward supporting its producers?
Thank you, and thanks to all of the witnesses for your excellent testimony.
I'd like to begin by taking this back and trying to place this whole issue into some sort of context from an economic perspective.
A number of you indicated that as grain producers, you are price takers and that we generally operate in an integrated market. When this issue first came out, the federal estimates were between $210 and $819 per farm. We later learned that was based on the denominator's being all census farms, as opposed to commercial farms, and then we heard estimates more in the $10,000 to $14,000 range coming from the Federation of Independent Business.
I'm going to begin directing my comments to the Grain Growers. Can you talk about the discrepancy between these estimates? In the absence of the passage of this bill, would you expect the Canadian basis, which is a function of pricing in our integrated market, to compensate producers for this additional cost as they incur the carbon tax?
I'll start with the grain producers, please.
Sure, I can speak to that.
I think with respect to grain prices, certainly they fluctuate. It really depends on the commodity and the market in which you're selling. Certainly some of our growers have faced some significant market access issues, depending on markets around the world—China, India and Italy, for example.
In terms of the future of the sector, like I said, we are securing more free trade agreements around the world, but again, increasingly now we're facing market access challenges in key jurisdictions around the world unlike ever before.
I'll go back to a comparison between Bill and what was announced in the budget yesterday. The Department of Finance is estimating $100 million in the first year, and then it goes on to say that returns in future years will be based on proceeds from the price of pollution. It says that the intention is to return a portion of the proceeds. I know policy like this doesn't just occur in a vacuum.
In the lead-up to the budget, did the government, specifically the Department of Finance, ever have any consultations with you?
This is to all of the witnesses. I'll start with the Grain Growers. Did it ever have any consultation with you on developing this policy?
Did it give you any idea as to what the portion of the proceeds would be?
Thank you, Mr. MacGregor.
That will end our first round.
I really want to thank the Canadian Federation of Agriculture, Mr. Keith Currie—although you came in late, and probably nobody noticed that, but that's good and thanks for being here—and Mr. Frank Annau, director of environment and science policy.
To the Grain Growers of Canada, and Erin Gowriluk, executive director, and Jonothan Hodson, director, thank you for being here.
I'd like to thank Christian Overbeek, the President of the Producteurs de grains du Québec, for being here, and for his comments.
With that, we shall suspend for a few minutes so we can change the panel. We'll be right back as soon as we can. Thank you.
I would like to welcome our second panel. From the Canadian Cattlemen's Association, we have Mr. Bob Lowe, president, and Fawn Jackson, the director of policy and international relations.
I'd like to welcome the Équiterre representatives, Mr. Marc-André Viau, Director, Government Relations, and Mr. Émile Boisseau-Bouvier, Analyst, Climate Policy and Ecological Transition.
I'd also like to welcome Ms. Karen Ross, the Director of Farmers for Climate Solutions.
We'll begin with the testimony.
Good afternoon, and thank you for the opportunity to appear before the committee on Bill .
My name is Bob Lowe, and I'm the president of the Canadian Cattlemen's Association and a rancher from Alberta. With me is Fawn Jackson, director of policy and international relations with the Canadian Cattlemen's Association.
The beef industry contributes $17 billion to Canadian GDP while generating over 225,000 jobs. It is the largest Canadian conserver of the great northern plains, in which I would note is a very large store of carbon. In regard to climate pricing policies, we recommend Canada's farmers and ranchers be exempt from direct carbon taxes, but we want to make sure our policy position, shared by leading economists, isn't confused with our very real commitment to being a partner in tackling climate change.
Canada's beef industry has recently set very significant and ambitious environmental goals, such as reducing the sector's greenhouse gas footprint by 33% by 2030.
As agriculture is a trade-dependent and complex industry, it can be very difficult to correct for competitiveness and trade impacts due to carbon pricing. It is extremely unlikely that farmers and ranchers will be able to pass along the carbon tax, as we are price takers and as there are no real alternatives for farmers. Increasing the price of propane and natural gas will not decrease the use of these energy sources.
For these reasons, we have seen agriculture commonly exempted from the direct costs of carbon pricing schemes, as recommended by policy experts. It's not the right tool for the job. We do recognize that the initial act exempted most direct taxes on farmers and ranchers, and we appreciate those exemptions, but as identified by this private member's bill, it is important to cover all direct taxes, and we have examples why.
Example one is a farm that uses natural gas to heat a calving shed and a small shed for holding a couple of tractors and their work bench. On another farm, they have a steam flaker that uses propane to flake corn to improve the digestibility of the feed. The first farm will have a $6,500 annual carbon tax, while the second will have a $63,000 annual carbon tax once the carbon tax reaches the expected $170 per tonne.
These are taxes on family farms that currently operate on very small margins in an international marketplace. I point to the study that found the average long-term margins for a 200-head cow-calf operation provides an annual income of about $20,000 and that 74% to 85% of the cow-calf sector relies on off-farm income. Furthermore, a study completed by Dr. Schaufele at Western University looked at the impact on the beef sector when farm fuel is exempt and when it is not exempt. The study found that even when exempt from the fuel tax at $40 per tonne, the carbon tax has a negative $25 per animal impact at the feedlot level and a negative $11 per animal impact at the cow-calf level.
The probability of unintentionally pushing food production to other jurisdictions is very real, and with Canada having one of the lowest greenhouse gas footprints per kilo of production at 50% of the global average and being the key conserver of the grassland ecosystem, this pushing of production to other jurisdictions would have serious economic and environmental implications.
CCA strongly supports Bill , however we need to ensure the act covers all areas where a direct carbon tax could impact farmers and ranchers, including heating of buildings, irrigation and machinery such as grain dryers and steam flakers. We recognize that the budget acknowledges a rebate, but to avoid additional red tape, the exemption should be straightforward and not a layer added to the already complex accounting required to operate Canadian farms and ranches.
The Government of Canada is also working on carbon pricing protocols, and we are keen to see these move forward, as it provides opportunity for agriculture to further contribute to fighting climate change. One of the biggest challenges we have in the beef sector regarding climate change is the loss of grasslands and subsequently the carbon stored in them. We must make sure that either through the offset protocols or other policy tools, the very real possibility of further grassland loss is taken into consideration and the conservation of these grasslands within the agriculture ecosystem is appropriately recognized.
Thank you, and we look forward to your questions.
Good afternoon, Mr. Chair and distinguished members of the Standing Committee on Agriculture and Agri-Food. My name is Marc-André Viau and I'm Équiterre's Director of Government Relations.
I'm going to share my speaking time with my colleague Émile Boisseau-Bouvier, the Climate Policy and Ecological Transition Analyst at Équiterre.
Thank you for giving us this opportunity to comment on Bill .
Before addressing the subject itself, I'd like to say a few words about our organization. Équiterre is a non-governmental environmental organization that founded the Family Farmers Network in Quebec. We are currently working on a technological showcase project on health and soil conservation and on regenerative practices. We have also just published a report on soil health in collaboration with the Greenbelt Foundation. We have been working with producers, institutional buyers and decision-makers to come up with ways to build more resilient and sustainable forms of agriculture.
I'd like to say a word about our climate expertise because it's related to today's topic. We recently defended federal jurisdiction over a carbon pricing system before the Supreme Court with our colleagues from the Centre québécois du droit de l'environnement. We're pleased to see that all parties represented in the House support the carbon pricing principle.
As for Bill C-206, things have changed a lot since yesterday and, to be sure, since the bill was initially tabled. First of all, the government announced yesterday in its budget presentation that a portion of the revenues from pollution pricing would go directly to farmers in Alberta, Saskatchewan, Manitoba and Ontario beginning in 2021.These are the provinces that do not have a carbon pricing system and that have a federal safety net. An estimated that $100 million will be sent to these provinces in the first year and the amount would increase as carbon pricing rises.
Most important is the fact that the government has also announced that its priority will would be to pay a minimum of $50 million to farmers across Canada to help finance more energy-efficient grain dryers. Eventually, these investments will compensate for carbon pricing on fossil fuels because producers will be able to make a gradual transition. The announcement was very favourably received by the Canadian Federation of Agriculture and the National Farmers Union.
I'm sure you'll agree that the federal budget addresses the very real problem raised by this bill, without weakening the carbon pricing principle. We encourage parliamentarians to continue to pursue this path rather than the direction under study today. We agree that farmers need help, but we cannot agree on the systematic erosion of carbon pricing mechanisms. According to the most recent inventory, greenhouse gas emissions are still increasing. The transition needs to begin soon.
We know that farmers are experiencing growing stress because of the pandemic and a number of harmful climate events. We suggest compensation for income losses resulting from the use of fossil fuels in ways that would allow incentives for energy transition to continue. I hope that this option will be offered by the government. Bill C-206 is in my view incompatible with what the government has just proposed in its budget.
I will now give the floor to my colleague, Émile Boisseau-Bouvier.
According to information received by the federal government, the average cost per farm of pollution pricing for grain drying varies from $210 to $774, depending on the province. Based on the data, this is equivalent to 0.05% to 0.38% of net operating costs for a medium-sized farm. These percentages are not very high and should enable us to find solutions quickly, particularly in view of yesterday's announcement about financing for more energy-efficient grain dryers.
Let's look in more detail at the costs for provinces affected by the bill. In 2019, Alberta estimated that carbon pollution pricing for grain drying would cost farms in the province 16¢ per acre, or $210 for an average-sized farm. Saskatchewan estimated it at 51¢ per acre of wheat. Manitoba estimated costs of $311-$467 per farm, or between 23¢ and 33¢ per acre. In Ontario, grain producers estimated this cost at just over $750 per average sized farm of approximately 400 acres, or at approximately 0.44% of operating costs.
To conclude, Mr. Chair, although the bill is presented as a plan to help farmers, it is really creating conditions that will tend to keep farming activity dependent on fossil fuels.
In view of yesterday's budget announcement, it would be in the interests of the farming sector, its farmers and its workers, for your committee to quickly look into alternatives to grain drying with fossil fuels so that the government can receive good advice as it implements the program.
We'll be happy to answer any questions you may have.
Good afternoon, Mr. Chair and members of the committee. Thanks so much for inviting me to present today. My name is Karen Ross. I'm the director of Farmers for Climate Solutions, or FCS. We're a national coalition of farm organizations who know that agriculture must be part of the solution to climate change.
Launched in 2020, our coalition has grown quickly and includes 20 farmer-led and farmer-supporting organizations that now represent over 20,000 farmers and ranchers from coast to coast. Many of them already use farming practices that reduce emissions, increase resilience to extreme weather and improve their livelihoods. With the right government support, we can rapidly scale these kinds of practices and dramatically reduce emissions from agriculture.
FCS recognizes that putting a price on carbon pollution is essential to achieving Canada's emissions reduction commitments, and this is a fact that is now recognized by all parties in the federal Parliament, but we also understand the economic concerns behind Bill . Many farmers sell in internationally determined markets, and any additional costs can make already tight margins even tighter.
Ultimately, FCS believes that the best way for farmers and ranchers to avoid the price on pollution is to produce less pollution. By transitioning away from fossil fuels, farmers will pay less tax and will be better positioned to compete in the new low-carbon economy. However, adopting practices and technologies that use lower amounts of fossil fuels comes with a lot of risk and a lot of high upfront costs, so farmers can't and shouldn't make this transition alone.
In recent history, our international competitors have dramatically scaled up investments in agri-environmental programs while Canadian farmers have been far less supported. Furthermore, many Canadian industries are receiving ample government support to re-skill and adapt for the clean economy, but agriculture has been largely left out, which means that we are not leveraging the full potential of farmers to contribute to our climate solution.
As a result, our sector's emissions have and will continue to rise unless we act now. This is why the funding announced yesterday in budget 2021 to directly support farmers to immediately adopt lower GHG practices is so heartening. The government has just made an important and unprecedented investment to support farmers to adopt practices like cover cropping, rotational grazing, improved nitrogen management, wetland and tree conservation and the adoption of low GHG machinery, which are all known to reduce emissions and build resilience.
This investment directly responds to FCS's pre-budget recommendation and is precisely the type of support needed to help our sector address the urgency of climate change while making smart business decisions.
The budget also includes a carbon tax rebate for farmers and support for energy efficiency retrofits of propane and natural gas dryers. Taken together, these investments reflect the fact that the government recognizes the potential for farmers to reduce emissions and is ready to support us to leverage our sector's full potential. There is more that still can be done and needs to be done, but that funding is an essential down payment for a resilient and low GHG farm future.
These investments also reflect the fact that on-farm technology to transition to a clean economy already exists. When it comes to grain drying, propane and natural gas dryers are already being retrofitted in Canada to increase efficiency. Also, alternative technologies that don't use any fossil fuels are on the Canadian market already. These alternatives all reduce energy bills for farmers and allow them to avoid some or all of the carbon tax, and their high upfront costs are now shared with the government.
The transition to low GHG agriculture is inevitable because domestic and international buyers are increasingly demanding low GHG products, and farmers won't be able to meet that market demand unless we start reducing our emissions now. That's why strong government support for innovation will benefit farmers more than exemptions to the carbon price.
In conclusion, the investments made in budget 2021 recognize that farmers need support to confront the single largest threat facing our sector, that of climate change. Those are critical investments that will jump-start emission reductions this season. They also lay a foundation for making agri-environmental support a core component of the next agricultural policy framework in 2023, which must further support farmers to compete in a clean economy of the 21st century.
The investments also provide a better path forward for reducing emissions from, and maintaining the affordability of, grain drying than does Bill . Canadian farmers want to lead on climate change, and FCS is ready to support the design and implementation of these important new programs so that they are widely adopted, work for farmers and start to reduce our sector's emissions immediately.
Thanks for your time. I look forward to your questions.
I'd like to remind the member that I'm not here to play politics, but to talk about this bill.
As we mentioned, we've been working with farmers to find solutions to the climate crisis and greenhouse gas emissions. If you listened closely to our comments, you would have understood that we were saying that the problem described in Bill was indeed real.
What we are saying is that the solution being put forward in this bill is not the right one. We agree with compensation. However, placing a price on carbon emissions serves a purpose, which is the need to reduce carbon pollution. That's what we understood from the Supreme Court decision, for example.
For the first time in a year and half or whatever it is, I did it: I finally was the one who was on mute. My apologies. I just got excited about talking to the witnesses.
Thank you to everyone for being here. I very much appreciate it. I'm so excited I did not unmute my microphone.
I'd like to begin by addressing Ms. Ross and maybe ask some questions.
We all know that farmers are on the front line of worsening climate impacts and unpredictable weather posing threats to our sector. So many of the farmers I'm speaking to—we are all around the country—are practising a lot of beneficial management practices to reduce GHGs. They're sequestering carbon. They are increasing their resilience and with more government support will be able to practice more climate-friendly farming practices. We even heard witnesses in the last panel talk about wet harvests and the ongoing higher risks of these conditions.
We're all looking for a more productive, competitive and resilient farm sector. We're looking also for alternatives to lowering emissions and supporting that innovation. All the parties in Canada have agreed that we need to price pollution, and now exemptions already exist on farm fuels. As discussed, with this bill we'd be exempting for heating, but another way to make the agriculture sector more competitive would be to lower emissions and costs in other ways. You touched on a few. I wondered if you could expand on them.
Part of your organization's six high-impact program proposals included doing more with less nitrogen, increasing adoption of cover cropping, normalizing rotational grazing, and protecting wetlands. Could you expand on some of those ways in which we could also become more competitive and lower our emissions in that sector?
Yes. Thanks for the question, Mr. Louis. I'd be happy to.
We have to remember that farm fuels, of course, demand part of the GHG portfolio in agriculture, but it's only 14%. The rest of our sector's emissions come from other sources, predominantly nitrogen management, crop production and livestock. I like the question, because I think it's important that within this whole context we think about the major emission sources and how we can work with farmers directly to support changes in practices to reduce emissions.
What the budget adopted yesterday was direct support for farmers for five priorities that we advanced. Cover cropping is a practice adopted by many Canadian farmers but is not yet scaled. With direct upfront support for farmers, we can scale this practice. It's better for soil health, water management and pest control, but it also helps to reduce emissions.
Rotational grazing is a practice that is quite well understood, again with high upfront costs associated with infrastructure—more fencing, more water bowls where necessary. Therefore, supporting farmers to share in those upfront costs to then adopt practices that further reduce emissions on our farms is a great way to go.
In terms of improved nitrogen management, nitrous oxide from the use of nitrogen fertilizer, or nitrogen fertilizer waste, is the largest single growing source of emissions in our sector. Let's not lose sight of that one. We need an agronomist to work closely with farmers to improve nitrogen management to be more efficient in our use so that we're not wasting nitrogen. That's better for farmers and it's also better for the environment.
Finally, around wetlands and trees, it's so important. Keeping trees and wetlands on farms is powerful in terms of maintaining a GHG sink. Farmers can play a huge role in that if they're supported with the economic costs of not farming that land, of not making revenue off of that land.
Taken together, Mr. Louis, in our analysis we worked really closely with some of Canada's best GHG modellers and agriculture economists. For the first time ever, we produced a report in Canada that quantifies the GHG reduction potential of these practices if scaled with the right kinds of supports that we saw in the budget. We're looking at 10 megatonnes. That's huge. That's just under one-seventh of our total emissions across a season or two. It's a powerful way to support farmers to really be climate heroes and to really be part of our collective climate solution in Canada.
They want to be. I think you touched on it. They basically need that financial support. Even education-wise, in our riding here, the Grand River Conservation Authority has a really good relationship with the farmers and they were doing their part. It's that support and the programs that are in our budget, like the nature smart climate solutions fund or the agricultural clean-tech fund that, hopefully, can make this sector more resilient and also more protected.
With my remaining time, I want to switch to Équiterre. In my riding, we have a company called Bioen, which is producing an anaerobic digestive system that turns organic waste into renewable energy through anaerobic digestion. This company has already commissioned 345,000 annual tonnes of waste processing capacity and nine million watts of electrical generating capacity to date.
Can you talk about some of the innovations, such as anaerobic digestion and biogas, that we can invest in to help make this transition?
Thank you very much, Mr. Louis.
Indeed, as you have pointed out, there are fossil fuel alternatives that have not yet been used on a large scale. The example you gave is a very good one. There is also the Triple Green Products company, which was mentioned a little earlier.
Other sources of electricity can sometimes be used, even though, as was mentioned several times, grain drying is only seasonal. There are problems involved in installing an electrical infrastructure on a farm, but there are several possibilities…
Good afternoon, Mr. Perron. Thank you for your question.
It's true that some alternatives are not viable at the moment. In Quebec, for example, electrifying some farms means extending the three-phase network, and that's extremely expensive. If we were to ask the producers and farmers to pay these costs, it would definitely not be viable.
That's why we are really making an effort to encourage governments to support the farm sector. Before the tabling of the federal budget, my colleague Ms. Karen Ross of Farmers for Climate Solutions proposed investments of $300 million. Those announced were not on this scale, but they are nevertheless significant, as I said earlier. They were welcomed by the Canadian Federation of Agriculture and other federations.
I understand, and to some extent I'm at where you are on this. There's still hesitation about dropping the price on pollution. It's a principle almost everyone agrees with. However, we can look at the current measures and strike a better balance.
For example, the Greenhouse Gas Pollution Pricing Act currently has some exemptions, for things like fuel for tractors. Bill could include propane and natural gas, which in fact create less pollution than methods that are already exempt, and for which producers tell us that they have no economically viable alternatives.
No one is talking about eliminating the carbon tax, Quebec's carbon exchange and things like that; far from it. But might there not be an interim solution in the form of an exemption for these fuels, combined with massive investment in support of energy transition, and R and D to improve the processes?
You mentioned extending the three-phase network. Consideration could also be given to developing smaller infrastructures to deal with biomass, for use on a seasonal basis.
I'd like to know what you think about this.
Thank you so much, Chair.
Farmers for Climate Solutions, first of all, I appreciated your opening statement. I'm glad to see farmers, particularly members of your organization, putting themselves in a place of prominence in leading this conversation. I, too, believe that our agricultural producers have a key role to play over the next decade and beyond in showing what they can do to be one of our leading weapons in fighting climate change.
I want to drill down on this question of the alternatives to grain drying. I know my questions are very similar to what you've already been asked by my colleagues. Our previous round of witnesses, particularly the Grain Growers of Canada, were quite adamant that there are no viable alternatives to grain drying.
In your opening statement you did say that you support a price on pollution. I do as well. You also mentioned that you understood the financial crunch that many farmers have.
I'm trying to sort through the two different narratives here. I mentioned to our previous witnesses that there seem to be some grain drying systems that use crop residue as a fuel source. Are those some of the alternatives that we should be looking at, particularly with respect to this $50 million that has been earmarked in the budget to try to find more efficiency in this?
Any way that you can help illuminate this issue for us would be greatly appreciated.
Thanks. I don't know about illuminating issues entirely, but I'd love to contribute. Thanks for the question, Mr. MacGregor.
Listen, this question about alternatives existing in Canada is troubling. I'll provide one example. We have actually already had a Canadian precedent, a public program in Alberta called the efficient grain dryer program, which funded 39 retrofits to grain dryers in Alberta. The program was poorly funded or short term and not that well publicized, but retrofits are possible, are definitely happening and are an alternative that helps to at least reduce the carbon tax that farmers would be paying on grain drying.
You mentioned biofuels. There's a made-in-Manitoba solution scalable to any size of farm. It relies on biomass produced on-farm to dry grain.
These are the kinds of innovations that I think we all wish our sector had decades ago so that we could have adopted them even before the price on pollution came into place, but we didn't. It is with these kinds of programs that we're going to see the innovation we need in our sector.
In terms of helping to solve this issue, Mr. MacGregor, I think one key thing to keep in mind is absolutely that retrofits to existing grain dryers that help to reduce emissions also help to avoid the carbon tax. When it comes to biomass and systems that use biofuel produced on-farm, I think we proceed with caution. Of course, that eliminates the carbon tax. We need to be sure that the life-cycle effect confirms that it actually reduces overall emissions too. That's obviously the ultimate goal.
Overall, farmers who are in our network and who have retrofitted and who are using alternatives have significantly lower fuel bills now too. In the long run, this actually makes really strong economic sense.
Ultimately, the way I see it, there's no choice in front of us, right? Our sector is transitioning no matter what, because the market is demanding it domestically and internationally. From the biggest to the smallest buyers, we're seeing essentially everybody asking for lower-GHG foods. The role for government policy, I strongly believe, is either to better support farmers to stimulate that innovation to help support those steep upfront costs so ultimately we can lower our fuel costs, practices that make more economic sense, rather than....
Maybe I won't present a “rather than”, Mr. MacGregor. I'll just conclude by saying that ultimately the urgency of climate change requires all hands on deck, all policies possible. I think what we were seeing yesterday was a substantial investment that helps to minimize the financial burden of the price of pollution on farmers, using natural gas and propane while also directly supporting the transition to reduce emissions. That's a win-win. That's what we need to see.
I really appreciate the questions that my colleagues Mr. Lawrence and Mr. Steinley are asking on whether or not Canadians or farmers prefer a rebate versus an exemption. I can assure them that if we ask Canadians whether they prefer paying taxes or not, they'd say they don't. It's a matter of fact, but unfortunately, we do have to pay some taxes in this country and probably any country around the world, but that's not to the point here.
I just want to start off by saying we're not trying to penalize farmers; we're trying to change the suppliers. The suppliers are the issue, not the farmers.
Fawn.... I'm calling you Fawn because I think the last time I saw you was actually on a farm where you guys were showing me rotational grazing and how that was working really well in Vankleek Hill in my riding.
The study that you looked at with the $25 per head impact per animal, did that take into account—obviously, if variables don't change—our continued use of the same supply of natural gas or propane and whatnot?
We've absolutely been in discussions with partners at the American Farm Bureau and the U.S. Cattlemen's Association, and a number of other organizations down there, talking about how we tackle climate change together. We certainly recognize the importance of policy alignment, particularly within the North American sphere. So we have been sharing our experiences in Canada with our American partners, and also with our partners around the globe.
It's really important. Over the last couple of years, when we look at how Alberta is doing, for example, in comparison to Texas, we've seen that we've become less competitive. I'm not going to attribute that all to climate pricing.
It's not that we're against it. It's just about how we compete in this global environment and make sure that we don't just push production to other jurisdictions. I know it's nobody's intention, but that's why we have these conversations about how to do this the right way.
I had one final question for Mr. Viau.
Mr. Viau, we are more or less on the same wavelength. The producers don't want to depend on the government. They would rather have an exemption at the source and a transition incentive that would make for more innovations.
I have a question for you. It does not necessarily represent my position. If we tax producers, we reduce their financial and investment capacity. Rather than tax them, we could allow them a temporary exemption, as allowed in Bill , which would give them a little more financial leeway. We could add an incentive, such as a modernization investment program.
As you mentioned, the budget announced yesterday includes a plan to invest $50 million on dryers. That's wonderful, but it's not much for all of Canada. That's often the problem with politicians. There's a lot of fine talk, but the amounts are minimal and rapidly run out. More resources would therefore be needed.
What do you think of this option?
Ms. Ross, I have two questions.
First, can you provide a little bit more detail on those retrofits you mentioned, if you know what they involved and maybe some of the efficiencies that were achieved? If you don't know, that's okay.
As for the other part of my question, you made reference in your opening statement to the other parts of the budget that were mentioned: helping accelerate emission reductions through nitrogen management, the adoption of cover cropping, rotational grazing, etc. In your view, looking at the critical next 10 years, what other policy areas can we be engaging in, particularly with regard to carbon sequestration? In your view, is there some kind of a reward system whereby we can analyze the status of Canada's soils, look at the techniques farmers are employing, and maybe give them a credit for the good job they are doing putting carbon in the soil, where we want it to be, and not in the atmosphere, where it's causing all this havoc?
Those are great questions.
The Chair: You have probably around two minutes left.
Ms. Karen Ross: For the first one, I don't know the technical answer. I can just say that for the Alberta program I flagged earlier, the average grant size was $6,000 for retrofits, and that led to about 40 retrofits in Alberta. That's different from the $25,000 I mentioned. I don't know if that means the technology was different, but it's something we should all look into, I suppose, me included.
For the second question, there is so much more to do. You're flagging soil carbons, so I'll go with that one. Absolutely, that's an incredible resource that farmers are responsible for protecting on millions of acres across Canada. It's better for production if we have better soil health; it's better for the climate; it's better for water and for biodiversity. There are so many great reasons.
Other folks here, including Fawn, have talked about the potential of offsets. This is an important opportunity on the horizon. I understand that two protocols are at least being prioritized. What we want to remember about offset protocols, though, and payments is that we want to be sure they're changing the status quo. Ultimately, to lead to real emission reductions, we need to be sure offset payments are actually generating new emission reductions. The investment we saw in the budget yesterday is so important if for no reason other than to create an important public bridge to incent behaviour change on our farms and to help share that upfront cost, so that if offset markets come into place, we'll be well supported to really scale up a transition to improve soil health.
You mentioned mapping. I think that's so important. We need to understand better the potential of our soil to sequester carbon as well as which practices have the highest impact. In our work for the budget submission, even though we worked with some of the best GHG scientists in Canadian agriculture, who have participated in the Kyoto protocol and who have been at this for decades, we still struggled to find enough data to be very, very confident in the megatonne reductions on parts. So more research is needed, paired with more incentives direct to farmers to adopt these practices.
Thank you, Mr. MacGregor, and Ms. Ross.
That concludes our second panel. These were very interesting conversations.
I want to thank the Canadian Cattlemen's Association, Mr. Bob Lowe and Ms. Jackson.
I'd like to thank the two Équiterre representatives, Mr. Marc-André Viau and Mr. Émile Boisseau-Bouvier.
Of course, Ms. Ross, thank you so much for your testimony.