Welcome, everyone, to meeting 28 of the House of Commons Standing Committee on Agriculture and Agri-Food.
Pursuant to the order of reference of Wednesday, February 24, 2021, and the motion adopted by the committee on March 9, 2021, the committee is resuming its study of Bill , an act to amend the Greenhouse Gas Pollution Pricing Act, regarding qualifying farming fuel.
Today's meeting is taking place in a hybrid format, pursuant to the House order of January 25, 2021. 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. The webcast will always show the person speaking rather than the entirety of the committee.
I'd like to take this opportunity to remind all participants to this meeting that screenshots or taking photos of your screen are not permitted.
To ensure this meeting runs smoothly, I would like to share some rules with you.
Before you speak, please wait for me to recognize you. If you are participating via video conference, click on the microphone to unmute it. The microphones of participants in the room will, as usual, be monitored by the proceedings and verification officer.
I remind you that all comments from members and witnesses should be directed to the chair. When you do not have the floor, please mute your microphone.
Before welcoming our witnesses, I'd like to ask the members to remain in the meeting once the second panel is over. We'll go over the press release for the processing capacity report and approve the budget for the study of Bill . This will only take a couple of minutes.
Now I'd like to welcome our witnesses. We have today, for our first panel, from the Canadian Horticultural Council, Aaron Coristine, chair of the energy, environment and climate change working group; and Linda Delli Santi, chair of the greenhouse vegetable working group. From the National Farmers Union, we have Katie Ward, president and farmer.
With that, we'll start our question panel. With the first panel, we have six minutes each, and we'll start with Ms. Rood for six minutes.
I jumped over the opening statements. I'm sorry about that. Let's go back to the Canadian Horticultural Council and whoever wants to take the opening statement for five minutes.
Good afternoon, Mr. Chair and members of the committee. Thank you for the opportunity to appear today to provide testimony on Bill . My name is Aaron Coristine, and I'm the science, regulatory affairs and government relations manager at Ontario Greenhouse Vegetable Growers.
Today, I'm here to represent the broader fruit and vegetable sector as chair of the Canadian Horticultural Council's energy, environment and climate change working group.
By way of introduction, the CHC is an Ottawa-based national association representing over 14,000 fruit and vegetable growers across Canada involved in the production of over 120 different crops with $5.4 billion in farm cash receipts in 2019.
Canada's fruit and vegetable growers are committed to being a part of the climate solution while also playing a major role in food security and Canada's economic recovery.
CHC and our members have consistently and actively engaged with the federal government to ensure carbon pricing policies connect the dots between the cost of carbon pollution and desired behaviours and outcomes versus unintended impacts and overall lowered emissions. Our consistent request has been for federal leadership to ensure that carbon pricing exemptions and relief are extended to the full range of farmers, including greenhouse growers, across all main fuel types, including natural gas and propane, used in common agricultural machinery.
In short, carbon pricing policies need to better reflect the modern agricultural practices across Canada, support increased security of food production and sovereignty, and minimize competitiveness impacts across provincial boundaries and with our major international trading partners.
CHC is interested in more information on the delivery of the government's commitment in budget 2021 to return a portion of the proceeds generated from carbon pricing directly to farmers in backstop jurisdictions. With regard to concerns with other GGPPA definitions, CHC supports Bill and its expanded definition of “qualifying farming fuels” to include natural gas and propane.
Although it falls beyond the specific scope of this bill, we also believe it is critical to amend other definitions in the GGPPA to ensure Bill achieves its intended outcomes. More specifically, in the legislation “eligible farming machinery” is defined to explicitly exclude property that is used to heat or cool buildings. As a result, certain farm machinery, when used to heat and cool buildings would, regardless of the fuel type, necessitate regulatory inclusion as a “prescribed property” to attain carbon pricing relief.
Thank you, Aaron. I'll continue on.
My name is Linda Delli Santi. I'm the executive director of the B.C. Greenhouse Growers' Association, and chair of the Canadian Horticultural Council, greenhouse vegetable working group.
My greenhouse career started in 1982 when my husband and I built our first greenhouse. I was the grower and operator. We grew beefsteak tomatoes for 14 years and then red bell peppers for another 14 years.
The B.C. carbon tax on fuel was started in 2008. The greenhouse sector was able to get relief of 80% of carbon tax paid in 2012. Unfortunately, the carbon tax took its toll on our family farm. We stopped growing at the end of 2009. At that time, I was already the CHC greenhouse vegetable working group chair and, in 2010, I became the executive director of the B.C. Greenhouse Growers' Association.
Our industry faces considerable challenges—including labour shortages and insufficient financial protection—which have been exacerbated by the COVID-19 pandemic. Carbon pricing intends to reduce emissions, but in practice it also creates a competitive disadvantage between farmers across provincial jurisdictions and on the international stage.
In our northern climate, farmers rely on heating and cooling using a range of fuel sources across production types, including greenhouses, livestock farms and machinery such as grain dryers. Quickly transitioning away from carbon-based fuels isn't always an option nor a simple choice on the farm. Vegetable greenhouse facilities for example are equipped with computerized climate-controlled systems to provide optimal growing conditions. Most growers rely on natural gas boilers for a consistent, cost-effective, sustainable and on-site source of key combustion by-products. Both heat and food-grade carbon dioxide are provided for the plants to breathe and grow. With advanced combined heat and power systems, even the electricity for supplemental lighting is generated.
Farmers have a long-standing history of innovating and improving efficiencies. To further incentivize reductions to greenhouse gas emissions, the move to a low-carbon economy needs to recognize the environmental co-benefits that farmers provide. It needs to support them with legislation that addresses the full range of primary agricultural production, which is not currently in a position to transition away from fossil fuel consumption.
In conclusion, throughout the pandemic, Canada's agricultural sector has stepped up and continued to provide secure and healthy food sources to Canadian families.
We thank you for the opportunity to speak today and look forward to your questions.
I'm sorry if I went a little over.
Thank you and good afternoon, Mr. Chair and members of the committee. Thank you for inviting me to present today. It's a welcome break from the lambing barn.
My name is Katie Ward and, in addition to being a sheep and hog farmer in the national capital region, I'm in my third term as president of the National Farmers Union. The NFU is Canada's only national direct membership general farm organization, representing thousands of farmers from coast to coast, engaged in all commodities across a wide range of scales—everything from market gardens to large-scale export grain operations—and utilizing a variety of practical approaches from organic and biodynamic through to regenerative and conventional.
No farm organization has thought longer and deeper about climate change and reducing agricultural emissions. The NFU has been advocating for climate change mitigation and adaptation policies for over two decades. Climate change and emissions reduction was the theme of our 2003 national convention, but our policy and educational work on the connections between agriculture and the climate crisis goes back as far as 1997.
In 2019, the NFU published a discussion paper entitled “Tackling the Farm Crisis and the Climate Crisis”, which laid out a road map for a 30% reduction in agricultural emissions alongside policies to increase net farm incomes. The NFU has called for a transformation of Canadian agriculture: a future with lower emissions, more farmers, higher net incomes, lower debt, more use of renewable energy, more young farmers and production systems based on agroecology, food sovereignty and protecting and regenerating soils, water and biodiversity.
The NFU is the only farm organization that intervened in support of the federal government in the Supreme Court challenge on the carbon levy. I bring this up to clarify that, while we do not advocate having a carbon levy on farmers and the fuels we use on our farms and ranches, we do strongly support the constitutional right of the federal government to implement strong and effective national measures to rapidly reduce greenhouse gas emissions.
In 2018, we became one of the founding members of a coalition called Farmers for Climate Solutions, which advocates for agricultural practices and policies that reduce greenhouse gas emissions from agriculture as the most effective way for farmers to avoid paying a price for emissions. In 2019, delegates at our 50th annual convention passed a policy resolution supporting a rebate on fuels such as propane and natural gas for dryers and other agricultural uses such as barn heat, because we believe that farmers face enough of a challenge to our bottom line already and that the erratic weather patterns caused by climate change, which disrupt our harvest catastrophically as happened in 2019, should not mean that farmers face financial penalty on top of the weather risks that impact our very livelihood.
I would like to thank the government for the rebate announced in last Monday's budget for the backstop provinces where the federal pricing is in effect. A simple rebate mechanism would be for farmers to document eligible or non-household use of natural gas and propane and attendant carbon levies paid and to request a refund, perhaps as part of a tax or GST filing.
In light of the budget announcement, it may be that Bill is no longer needed, especially since we understand that the budget rebate mechanism may cover barn-heating fuel usage in addition to grain-drying fuel usage and would, therefore, be more expansive than the bill under consideration here today.
I want to note, however, that we are here today to talk about removing a measure, admittedly flawed, that could reduce on-farm emissions. While it is necessary to ensure that farmers are not financially penalized while low-emissions technology catches up to the extreme weather challenges we're already facing as we grow food here in Canada, it is more necessary to introduce a suite of measures to partner with farmers, support farmers and incentivize farmers to reduce emissions so that agriculture is not increasingly seen as a high-emissions sector, while other parts of our economy are reducing their emissions on the way to our Paris targets.
Last Monday's budget introduced a number of very positive programs and spending measures that the NFU and Farmers for Climate Solutions have called for, and we're grateful to see financial support for farmers and ranches to actually implement practices that will reduce farm-related GHG emissions. Assistance to transition to low-emission technology and practices on our farms means that we don't have to face the financial risk of such a transition on our own and helps to level the playing field when we're in competition internationally with farmers receiving far more agri-environmental support, such as in the EU and the U.S.
Given market demand and potential border pricing measures under discussion internationally, everyone knows that we must go further, so we need additional programs to support farmers.
I'd like to highlight for you what we are suggesting could be called a Canadian farm resilience agency, or CFRA, modelled on the prairie farm rehabilitation administration, which the federal government administered across the prairie provinces for 70 years—
Thank you to the witnesses for being here today.
My first question is for the Canadian Horticultural Council.
I understand that many producers rely heavily on gas and propane, and greenhouses are exempt. You touched on this. Coming from the produce industry with a potato background, I know there are a lot of heating costs in the winter to heat the produce that is in storage over the course of the winter so that it doesn't freeze. Right now costs include the carbon tax.
I'm curious if you have any idea what the typical annual cost to horticulture producers would be of a carbon tax on propane or natural gas for that, even an average number.
That's okay. I'll move on, because we're running out of time.
I'd like to direct a question to Ms. Ward.
We had the pleasure of having a conversation before, and I appreciated that conversation. You touched on some of the points about reducing agriculture emissions in Canada, but we know that agriculture and farmers have done a lot of things already on their own, even over the last decade, to reduce emissions.
You mentioned to me before that you are a member of a larger organization that is part of a group of about 200,000 members or so. It has 182 organizations in 81 countries, so I'm wondering if you can comment here.
We're focused on Canada, but we only have 2% of the world's emissions. What are you doing as part of those organizations to help agriculture in other countries to reduce emissions?
My question is for Ms. Ward. Thank you for your actions in fighting climate change.
Although I too was pleased to see that the government at least acknowledged that this is an issue for farmers, it may in fact take them years, especially in a minority Parliament. It might be three or four years.
Could you not see putting this solution in place, Bill , to help farmers in the interim, as some are paying thousands and thousands of dollars, even if you do believe in the government solution?
Thank you to the witnesses for their testimony today.
I'll start with the Canadian Horticultural Council. In my riding of Kings—Hants, horticulture is one of the commodity groups that is very prominent.
Has the price on pollution encouraged producers, or incentivized them, to change some behaviour?
I'll tell you quickly the story I have, as it relates to greenhouses. I visited a number of farms in my riding that have looked at improving the actual infrastructure of the greenhouses, such that they actually spend less on things like propane or diesel heating.
Are those examples where at least this conversation regarding price on pollution has encouraged some adoption of change for your producers?
I'd like to take this one, because we're in the area I know, namely, greenhouses.
A lot of the things you are mentioning or envisioning, like screens, double screens to keep the heat in, using glass that has more insulation properties, etc., they have already been adopted by most of the large commercial greenhouses, at least in British Columbia and Ontario.
Those things have been adopted already, and it's not necessarily driven by the price on carbon as the price to do business. It made good sense for sustainability and emissions, and also for the bank deposits for the actual company.
Some of the things you mentioned, indeed, will have an intrinsic cost. Even on clean fuel standards, that potentially has some additional costs.
Where is CHC in relation to, let's say the United States, because there is going to be a dramatic change? We've seen it already in terms of the Biden administration working and seeing agriculture as a mechanism, not only to support economic growth but to be part of climate solutions.
In terms of alignment, do you have any position, broadly, on where the U.S. is going? You talked about international equivalency, and that's important for your export market.
Have you any broad stroke comments on where you see the United States going, and whether or not we can align policy in that regard?
I thank the witnesses for being with us.
I will continue with Ms. Ward.
Ms. Ward, in your opening remarks, you mentioned that you support the carbon tax, but you would like to see a fuel rebate. In addition, you mentioned that Bill may no longer be needed given the new budget.
What is your organization's official position on the passage of Bill C-206?
Yes, I'm here. I was just listening to the translation.
In terms of heating, it was briefly touched upon. There's a lot of research and development going into bio-based fuels being more circular of an operation, utilizing them in the greenhouse industry, or maybe even grain, by burning some of that organic material to provide the fuel. Pyrolysis is another avenue that's being actively researched.
We're putting investments in, hopeful that the upfront costs, which we are not only willing to pay but that go with our initiative to identify and develop avenues, will have a net reduction in our carbon footprint. Even though it is an exorbitant upfront cost, we remain steadfast in our mission and commitment to identify these avenues, whether it's heating or lighting, to minimize our impact and optimize our operations.
Thank you so much, Chair.
Thank you to our witnesses for contributing to our discussion on Bill today.
I'll start with the Canadian Horticultural Council. Mr. Coristine, you mentioned a few things. You were going over the existing Greenhouse Gas Pollution Pricing Act, and you did correctly mention that the existing definition section on “eligible farming activity” goes through a few definitions there. However, when it comes down to “eligible farming machinery”, it specifically excludes “property that is used for the purpose of providing heating or cooling to a building or similar structure”.
We've already been informed that Bill is pretty narrow, and it may be beyond our ability to expand it. If C-206, as it's currently written, is not going to apply to greenhouses.... I'm worried we're using this as a proxy for a larger conversation about the carbon tax, but I really want to focus on C-206. If the bill passes, can you tell the committee, as it's currently written, by just changing the “qualifying farming fuel” definition, are there any tangible benefits that will apply to your industry?
Thank you to the witnesses for being with us today.
I'll start with you, Mr. Coristine, from the greenhouse industry. If you are reaching us from the OGVG offices, you are a kilometre from my house. I believe we share an Internet provider. Please check on my place on your way home, because I'm in Ottawa this week.
Mr. Aaron Coristine: Will do.
Mr. Dave Epp: Okay.
I'm obviously from the area. I understand the industry fairly well. Can you give a sense of the scale of it for the rest of the people who on our screens here today? You have an 80% exemption right now, as the greenhouse sector, on the farm heating fuels. Can you put into perspective the 20% that the greenhouse industry is still paying the carbon tax on? Can you put some dollar amounts on that? I'm familiar with the scale, but many people might not be.
Thank you to all the witnesses for your testimony. This is very enlightening and very helpful, so I hope I have time to talk to everybody.
Ms. Ward from the National Farmers Union, we're talking here about easing the climate crisis by lowering the input uses and emissions, and how we can make that go a long way to boosting farm income because we know about the low margins. Farmers have that potential to remain productive and profitable at the same time even while they are reducing the use of purchased inputs.
However, as we have discussed today we know they can't do it alone. As the government, we need to partner and support and, in your words, incentivize farmers.
That's why I'm proud of one of the reasons our budget is allocating $10 million to help transition to clean energy from diesel farm fuel equipment, what we're talking about today, and that plan also mentioned to return $100 million in funds directly to the farmers through carbon pricing.
The partnership is so the farmers don't have to face that transition to lower emissions alone, and you mentioned that. I do appreciate reading your report “Tackling the Farm Crisis and the Climate Crisis” because one of the recommendations you had on the recommended policies was data collection. I wonder if you can help us, because you referred to on-farm energy use data being scarce or missing and more measurements of GHGs being needed to calibrate and verify the modelling.
To conduct these ongoing farm energy and emissions audits, what kinds of solutions would you suggest we can use so that we can take that data and move forward and work together?
Thank you so much, Mr. Chair.
Ms. Ward, in my two and a half minutes I'm going to ask you two questions and then give you the remainder of the time to answer.
First of all, in the existing act, we already have gasoline and diesel fuel that are exempt. They are “qualifying farming fuels”. Do you have any thoughts on those two fuels because, of course, they are used quite a bit in farming activities and it seems to me that Bill is just following that precedent and then allowing natural gas and propane.
Second of all, if you can also.... I think it's important. We keep on talking about the cost of the carbon tax, and I think you just briefly answered this, but can you also just illustrate what the costs are if we don't address climate change, because I have heard at this committee in the three years that I've been sitting at it that farmers are on the front lines of climate change. Can you just give us a sense of what the economic costs of doing nothing in tackling climate change are going to be for farmers?
I'll touch on your first question briefly in terms of the impact of gas and diesel usage on our farms and ranches. It's our primary usage for our equipment, for our combines, our tractors and a lot of the other equipment that we use on our farms and our farm trucks, but there are interesting alternatives coming out. We have been holding an NFUniversity webinar series over the course of this winter and our most recent webinar was on electrification of farm equipment. There are some really interesting possibilities coming up, even aftermarket upgrades you can do to your diesel equipment that are going to allow you to use biodiesel without a whole bunch of the knock-on problems and challenges that come with it.
I think the real thing that we need to address...because innovation is going to catch up with us. Farmers are early adopters and we just need the incentives to jump on board with that. The EU is outspending us in terms of agri-environmental payments to farmers by multiple factors of 10, which really does disadvantage our Canadian farms.
The cost if we don't address the climate crisis is kind of incalculable. If you talk to crop scientists it's not just extra carbon and our longer growing seasons are going to mean we can grow more food. It's going to mean heat waves that are going to impinge on the growth capacity of our plants, droughts that are going to severely impact the rate of gain of our animals out on pasture, let alone the hail and windstorms, the tornados and all the other extreme weather.
I talk to young farmers who are just getting into farming right now and they've never known a simple, calm growing season. I'm one of the last.
Thank you, Mr. MacGregor.
Just before I thank the panel, I want to switch my hat to that of a small commercial greenhouse grower. In my years of growing, 30 years ago we installed a biomass burning system. We've installed curtains to keep energy. We've removed our motorized fans to replace them with natural ventilation, because in a greenhouse that's your main cost.
If there had been rebates instead of incentives to help me move towards that, I don't know if I ever would have done it. I did it because it was money back in my pocket directly. I think that's how it needs to move forward for us to have the incentive to think ahead to what's new in energy conservation. That's my two cents as a greenhouse grower.
Now, I'll put back my hat as the chair and I will thank the panel for being with us today. From the Canadian Horticultural Council, Mr. Aaron Coristine and Linda Delli Santi, thanks so much for being here. Of course, Ms. Katie Ward from the National Farmers Union, thanks so much for being here. It's great.
We'll break for a very short time. Please go get your coffee or whatever and come back ASAP because we want to try to get a few minutes for business.
Thank you so much.
We'll start with the presentation and the testimony.
For our second panel, I want to welcome, from the Canadian Canola Growers Association, Mr. Mike Ammeter, chair, and Mr. Dave Carey, vice-president, government and industry relations. From Dowler-Karn Limited we have Mr. Dan Kelly, chief financial officer. Welcome.
We'll start with a five-minute opening statement, and we'll go with the Canadian Canola Growers Association.
You have five minutes. You can split it or whichever way you want to deliver it. Go ahead.
My name is Mike Ammeter. I'm the chair of the Canadian Canola Growers Association. I farm at Sylvan Lake, Alberta, which is an hour and a half north of Calgary. I grow canola, pulses, wheat and barley on 1,400 acres. With me today is Dave Carey, CCGA's VP of government and industry relations.
CCGA is the national organization representing Canada's 43,000 canola farmers. Canola is Canada's most widely seeded crop, generating the largest farm cash receipts of any agricultural commodity, earning Canadian farmers over $10.2 billion in 2020. Canola farmers export over 90% of our crop. The industry we support contributes 207,000 jobs and $29.9 billion to Canada's economy every year.
Canola farmers are committed to a sustainable future and have established goals to support that commitment. By 2025, they will reduce their fuel usage by 18% per bushel, increase land use efficiency by 40% per bushel, sequester an additional five million tonnes of CO2, use 4R nutrient stewardship practices on 90% of canola production acres and continue to safeguard the more than 2,000 beneficial insects that call canola fields and surrounding habitat home.
CCGA is pleased to support Bill . While we were pleased to see the budget include a commitment to return part of the funds collected from the price on carbon to farmers, we view this bill as a more direct and efficient way to provide farmers with an exemption for propane and natural gas used on farm for grain drying and irrigation.
For my farm, grain drying is important because it allows me to get my crop off the field when time is short at the end of the harvest season and the weather turns to rain and snow. Sometimes I cannot wait for my crop to dry in the field. When a crop sits in the field with excess moisture, it loses quality and volume, which in turn means I will have to sell it at a discount. If wet grain is put into storage, it can spoil in a matter of days.
In the last 15 years, my farm has experienced increased weather variability not seen since the 1960s. It has become more and more difficult to harvest my crops due to rain and snow, even at the end of the growing season. This means I have to run my natural gas grain dryer more often than not. That dryer is a piece of farming equipment that is central to my operation now. Since I purchased it, I have invested approximately $20,000 upgrading it to make it as energy efficient as possible. If there was a way for me to make my dryer more efficient yet, I would do so, but there isn't anything currently on the market that can help me reduce my drying costs.
I understand that the government's objective with the price on carbon is to change behaviour and to transition operations to an alternative fuel source. However, farmers do not have viable alternatives available to us.
Global competitiveness is critical to our industry. Canadian canola farmers are price-takers on a global market with no ability to pass additional costs on. These additional costs will impact our ability to remain competitive and will threaten the viability of our farming operations.
I appreciate the government's recent budget announcement that they will provide $50 million in funding for projects like retrofitting grain dryers. While these types of programs may be useful to farmers who have not already retrofitted their dryer, as I have done, this will not address the fact that our energy infrastructure in western Canada is carbon based. If there was a way to transition from carbon-based inputs, our industry would do so. Fuel is one of my largest input costs. To keep pace with international competitors, farmers are constantly looking to become more fuel and energy efficient, but in order to achieve the BTUs necessary to properly dry my grain, I require carbon-based energy.
There's been concern that Bill may not accomplish what it's intended to do. To ensure that it does, we recommend that fuel used in grain drying and irrigation be properly accounted for in the bill as exempt from the price on carbon.
CCGA remains optimistic about the future of Canada's canola farmers and their ability to continue to contribute positively to both a healthy environment and a healthy economy. Canadian agriculture should be viewed as a strategic partner in this dialogue. Canola farmers are committed to building on our environmental successes.
I would first like to acknowledge that I'm speaking from the traditional territory of the Anishinabe, Haudenosaunee, Ojibwa and Chippewa peoples. This territory is covered by the Upper Canada treaties.
I'm here today as the chief financial officer of Dowler-Karn Limited, a third-generation, family-owned company founded in 1943. We are distributors of gasoline, diesel and propane, serving our customers in southwestern Ontario for almost 80 years, with our head office in St. Thomas, Ontario. In particular, a significant portion of our customers are farmers, from small family farms to large operations, farming cash crops, livestock or a combination of both.
I am also the past chair of the Canadian Propane Association. The CPA represents the entire supply chain for propane: extraction, refining, distribution, marketing and delivering to end-users across Canada. We represent over 400 member companies that participate in the propane industry, from large refiners to independent distributors that serve Canadian consumers.
Propane is a low carbon-intensive fuel. It generates up to 26% fewer GHGs than gasoline, and 98% less particulate matter than diesel fuel. Propane is an abundant, 100% Canadian fuel that has been energizing Canadians across the country for decades. It is clean, affordable and readily available and can provide solutions today in the discussions for Canada's clean energy future.
In the spring of 2019, Dowler-Karn registered as a distributor under the Greenhouse Gas Pollution Pricing Act and has charged, collected and remitted the federal fuel charge since its inception on April 1, 2019. In that time, we have collected and remitted $19.8 million in respect of the federal fuel charge. In particular, we have collected and remitted approximately $1.7 million in the federal fuel charge in respect of propane that's been used in farming. These amounts come directly from the bottom line of farmers.
The original regulations in the act recognized the uniqueness of the agriculture sector and provided relief from the federal fuel charge for farm fuels, specifically exempting gasoline and diesel fuel directly used in farming. Although gasoline and diesel fuel are necessary for planting and harvesting crops, propane is just as vital to a farming operation. However, propane has not been granted the same relief as high-carbon fuels such as gasoline and diesel.
In the most recent budget, the announced some relief for farmers who are incurring the costs of the federal fuel charge for propane and natural gas. Although we applaud the government for recognizing the oversight, we have concerns with the proposal for a targeted rebate program.
Rather than providing a rebate to address the issue, we believe that propane should be afforded the same treatment as gasoline and diesel. Simply extending the exemption to propane would provide the following: an equitable treatment for a low carbon-intensive fuel as afforded to those that are much more carbon-intensive; relief for all propane used in farming operations, not just for drying crops; and removing the need for bureaucracy in managing the rebate program.
Currently, we charge the federal fuel charge at the time of invoice and then remit same to CRA at the end of the following month. We are reimbursed when the farmer pays his invoice, including the federal fuel charge. Should propane be exempt from the FFC, as is the case with gasoline and diesel, there would simply be no charge on the invoice. The farmer would issue a form L402 exemption to Dowler-Karn, which we would keep on file.
Should a rebate program be instituted, we would need to invoice the farmer, charging the FFC, which they would pay to us and we would remit. At some point in the future, the farmer would then be required to submit a rebate application, which would need to be reviewed, approved and processed by CRA, which would then issue payment to the farmer for the same FFC they paid at the time of purchase. The rebate would then be subject to audit. This much bureaucracy doesn't seem necessary when an exemption would meet the same goal.
Another issue facing farmers centres around the focus on propane for grain-drying purposes only. Propane used in farming extends beyond simply grain drying, as livestock and dairy farmers use propane to keep their livestock warm in winter. In fact, Dowler-Karn sells as much propane to heat barns for livestock as we sell for grain drying. Some regions of Canada may have greater needs for propane to dry crops, but the need for heating barns is just as critical. Imagine the impact on a poultry operation with hundreds of chickens if they couldn't keep the barns warm in the dead of winter.
In addition to barn heat, propane is also used for backup power generation, protecting farm operations against power outages.
We at Dowler-Karn and the CPA support the approach prescribed in Bill , and believe it is the most efficient, cost-effective and reasonable approach. We applaud the government for recognizing the need to correct the regulation, but believe an exemption for a much cleaner, cheaper fuel is the more equitable approach.
I'd now be happy to take any questions.
Thank you, Mr. Chair.
Yes, that's completely fair to say.
Our money comes from the crops we grow when we sell them. Having an extra cost is the Achilles heel, if you will, of the crop sector, of agriculture like that. I am a price-taker. I cannot add a surcharge if I sell a load of grain and I need another $100 to cover my costs. I can't do that. That just does not happen. Therefore, that comes out of my pocket.
As I said before, we're always doing this juggling act, so, yes, if I have fewer dollars, it might mean my upgrade will be next year.
Yes, actually it can be literally days or weeks. Probably our worst harvest in recent memory was in 2019. Some of you may have seen that it had the tag line or the name “harvest from hell”. We were just on a mad scramble.
Typically you try to keep ahead of the harvesting combines with the dryer, but sometimes you can't so you end up putting your grain in your bins from the combines, but it's not really in a condition for long-term storage. It's a mad scramble, because you are trying to get this grain back out of the bin because you don't have much time. You pull it back out. It goes off to the dryer, and then it goes back into the dry bin.
Typically harvests should wrap up in October. In 2019 I was drying grain in November, December and January. I would go get a load here and a load there, run it through the dryer, and try to keep on top of that.
It's an awful lot of work and an awful lot of time.
The number would be based on 2018 usage rates and prices. That is the analysis we did internally.
We are now in the final stages of getting third party analysis done by the accounting firm MNP, which will be canola-specific using verified third party methodology that will look at everything. We're here talking about Bill specifically, but as soon as the price of carbon goes up, the price of freight goes up, the price of custom-haul trucking goes up and the price of everything goes up, so all of that will be accounted for.
The $18 billion is not on the back of a napkin. We stand by it, but we will have a robust report from MNP very soon that articulates all of those things.
I know we are talking about Bill , but, Mr. Ammeter, would you welcome partnerships with investments from the government to say, “Okay, let's look at the pain points where the carbon tax is costing you”?
Obviously, what we're trying to do is not necessarily to penalize you. We're just trying to decarbonize the economy.
Would you welcome some investments in partnerships in order to find some new technologies to try to decarbonize the agricultural sector?
Thank you very much, Mr. Chair.
I thank the witnesses for being with us today.
I'd like to ask a general question as we begin. I gather from your testimony that neither of you have any desire to depend on the government for a rebate, and that you would prefer to have a basic exemption, because that would allow you to retain the means to carry out innovation.
Mr. Drouin said something similar. In order for the transition to happen, you have to do research and development. Mr. Ammeter, if there were a transition partnership investment program, I would imagine that industry would be very happy to participate. Is that correct?
Part of the issue with our industry is getting people to understand who we are and what we do.
There's been a great deal of development and technological advances in the propane industry. When we look at the level of emissions that come from propane being burned today compared to what it was before.... When you take a look at the advancement in vehicle usage, you see that we now have school buses that are running on propane. We now have fleet buses that are running on propane. We have large courier companies that are using propane. There are great advancements that have been made.
The equipment that burns propane has been developing and advancing as time has gone on, and there has been a great deal of that. Where we see opportunities is for the government to look at new places for propane, such as northern communities, power generation. We're looking at power generation for small communities that may, perhaps, be off grid. In terms of replacing diesel in northern communities with propane, propane can be transported in exactly the same manner as diesel fuel for those communities. Those are the types of things we see as the opportunities of propane.
That's excellent. Thank you very much, and thank you to all the witnesses who have presented today, Dan, Mike and Dave.
I'm going to ask a few of my questions to the Canola Growers, because Regina has had a lot of influx of canola-crushing plants and a lot of good announcements lately, about 1.2 billion dollars' worth, so we are looking forward to being, as I said, the canola-crushing capital of Canada.
A question I'd like to walk through is that I don't think some of our colleagues realize how big these grain dryers are. Talking about biomass, I take Mr. MacGregor's point, but also then you don't calculate the machinery it takes to collect the biomass that's on the field and then transport that biomass to where the grain is actually located. These farms in western Canada aren't 1,000 and 2,000 acres. There are 30,000-acre and 40,000-acre farms, and they're trucking this product a long way.
As Mike said, you have the natural gas brought to the bins to be more innovative and to be more environmentally friendly.
Mike, I'd really just like you to walk us through the size of the bins, of these bushels that are being dried, and the size of the grain dryers. The fact is that they're not easily movable. You can't just decide one day you're going to pick up a 20,000-bushel bin and move it to a field closer to you.
Just walk us through a bit of how some of that infrastructure is permanent and not easily movable.
You are correct. It is not movable. It is designed to sit in one spot.
Ours is not a big farm. You alluded to the size of some of the farms that would probably be in your area. Ours is like a hobby farm. Yes, all these things are permanent structures.
If I were to adopt a grain-drying system to collect my straw and my crop residue from the previous year, it would start with the previous year. I would bale the straw. I am going to use a tractor and a baler and I'm going to bale the straw. Then I have bales all over my field and I am going to collect them with my tractor or my bale truck, and I'm going to drive them into my yard and I'm going to stack them. When it's time to use them—and heaven forbid that I have a fire off season and they all go up in flames, which has happened....
You wouldn't want to talk about that, because now I'd have another problem.
I don't know if I could comment on the costs per se. It's such a variable.
I've mentioned before that one of the things we do see in agriculture as well is weather cycles. We've had, I'd say, 10 to 15 tough years and it's quite possible that could turn around.
I know one of the things that we were told when I first heard of climate change, global warming, what was kind of posed for us on the Prairies.... Where I live, I'm actually very close to the Rocky Mountains. I'm high elevation. I'm 3,300 feet. It doesn't sound good by today's narrative, but that is good news for me if the climate warms a bit because I'm always struggling with a short growing season.
As far as using more and more grain dryers, I think people have them because they need to and they just recognize the value of them. The worst place to be is in the middle of a bad harvest and you aren't prepared with a grain dryer. You are very vulnerable. It can mean huge losses for your production.
Thank you, Mr. MacGregor, and thank you, Mr. Ammeter.
This concludes our second panel.
I really want to thank the Canadian Canola Growers Association—Mr. Mike Ammeter and also Mr. Dave Carey—for being here today.
Also Mr. Kelly from Dowler-Karn Limited, thanks for coming in today to share your thoughts on our study.
That will conclude this. I'd like the members to stick around for a few minutes so we can finish a few items of business.
We'll start with Bill . The officials have been invited. They've agreed to do one opening statement for all of them—not each. We have three departments. We have agriculture, environment and I believe we have finance as the third one. They'll have one opening statement and then we can go into the questioning rounds after that.
Hopefully that's agreeable to everyone. I don't know if there are any issues with that. If not, we'll adopt that model. I don't see any opposition.
The next thing we have to do is approve the press release.
I think you've all received a copy of the press release from the processing capacity report. If it's okay with everyone, we'll approve that and we'll release it as soon as we have a tabled report. Are there any comments on the press release? Is it all good with everyone?
Okay, I don't see any comments, so I think we're all good with that.
Finally, we have to approve the budget for Bill . I believe everyone has received a copy of the budget. It's pretty standard practice. The total is $3,350 for that budget. I don't know if we need a motion, but we need consensus to approve the budget.
Are we all okay with the budget? Just show your thumb or wave your hand....