APAS optimistic bill may lead to carbon tax exemption for grain drying

A Saskatchewan farm group is optimistic that a private member's bill will lead to an exemption from the carbon tax for grain drying and heating on farms, which are dependent on natural gas.

Bill C-206 has passed its second reading and will be reviewed by the Standing Committee on Agriculture and Agri-Food before returning to the House of Commons for its third reading. If the bill passes through the House it will allow for carbon tax grain drying exemptions. 

The bill was introduced by Northumberland—Peterborough South MP Philip Lawrence and seconded by Provencher MP Ted Falk. It received support from all Conservative, NDP, Bloc Quebecois, and Green Members of Parliament. 

The Agricultural Producers Association of Saskatchewan (APAS) has supported the passage of Bill-C-206, which would exempt on-farm natural gas and propane use for grain drying and heating from the carbon tax. APAS has been pushing for carbon tax exemptions since the tax was introduced by the federal government. 

“Our members have been very concerned about the impact of the federal carbon pricing system on unavoidable energy inputs like fuel to dry grain or heat livestock facilities,” said APAS President Todd Lewis. “We have been calling for the federal government to recognize these impacts and provide relief through exemptions, or rebates at the very least. We would like to thank the members of the House of Commons that heard the concerns of producers.”

Cost estimates developed by APAS in 2019 and updated in 2021 showed a $1.04 per acre production cost increase for wheat, rising to $4.44 per acre by 2030. 

The APAS estimates were calculated using key indirect costs that are not exempt from carbon taxation, such as rail and road transportation, electricity, and grain drying. These costs would be even higher in years like 2019, when most of the grain and oilseed crop required grain drying due to a wet harvest.

“We have argued for years that producers cannot pass these additional costs along to our customers, and that they further reduce our financial viability,” Lewis said. “This additional cost of carbon taxation does not help to solve the problem of carbon emissions.” 

In December 2020, the federal government announced that the carbon tax will increase to $170 per tonne by 2030. In January, APAS released updated estimates of the impacts the carbon tax will have on agriculture.  

“Our updated numbers show that the cost of producing wheat could go up to over $12.50 per acre in 2030 due to the carbon tax,” said Lewis. “This cost increase is carried entirely by farmers and can’t be passed along to our customers. We’re looking at a reduction of net farm income by hundreds of millions of dollars in Saskatchewan alone, and the modest rebates provided by the federal government won’t make up for these losses. It’s unsustainable for our members.

“The carbon tax is designed to provide incentives to reduce energy consumption, but these dramatic cost increases will decrease our ability to adopt the new technologies that help us do just that. In some cases, producers will pay for efficiency gains like high-capacity grain hopper cars through their freight rates, and yet those cost savings will go to the railways. Our members expect us to stay on this issue until our concerns are heard.”

Lewis isn’t only worried about the economic impact of a carbon tax, but APAS has concerns that it will actually cause a negative environmental impact as well. 

“When you add costs to a producer’s bottom line it creates incentives for them to convert grasslands and other natural carbon sinks into cropland just to remain viable,” he said. “That works directly against the goals of the policy. Agricultural producers have waited decades to see some recognition of our environmental stewardship, and we have seen a lot of lip service, but not much concrete action.”

With the bill passing through its second reading in the House, Lewis sees it not only as a big step for the agriculture community, but a big step in members of parliament gaining a better understanding of grain drying and how impactful the carbon tax will be on it.

“The C-206 passing (second reading) is good news, especially with the people voting in favour of it being all the opposition parties and even one member of the Liberal caucus did as well,” he said. “I think having support from all parties is pretty significant—even the Green Party is on our side with it. 

“Obviously we’ve gained some traction and understanding around how important grain drying is and there really are no alternatives to using propane and natural gas to dry grain. I think that was a real positive and after the bill passed the government has said they’re going to look at grain drying so there’s been some movement there as well whether it be with a rebate program or an exemption or whatever they’re going to come up with. It’s very positive on both sides and we’ve seen all political parties in Ottawa recognize that it’s an issue.” 

Since the introduction of the carbon tax, Lewis and APAS have made lobbying for exemptions a priority and now they’re beginning to see the hard work come to fruition.

“We’ve had a long sustained lobby on this and I know we’ll continue to push it every chance we (get to) talk to decision makers,” he said. “It goes to show with the passing of C-206—especially in a minority parliament—how important this is to be in touch with all parties down in Ottawa. You never know where support might be needed and it’s always good to talk to opposition and government members and that’s something we’ve really strived to do over the years. We want to approach everyone in Ottawa to tell them what we’re lobbying on and what our concerns are and certainly in a minority parliament it’s paid some dividends.”

Seeing their efforts pay off has been huge for APAS says Lewis, and it only furthers their drive to continue to ensure there’s a stronger understanding of agriculture and the negative impact a carbon tax can have on Canada’s producers. 

“Farmers support the ag groups and certainly our membership has given lots of feedback about Bill C-206 and also another bill about farm transport,” he said. “Those are both good examples of long-term lobbying efforts that we’ve been doing for a number of years. 

“Sometimes it seems like you’re out there just spinning your wheels, but we’re finally getting some traction—especially on the carbon pricing model. It’s so important to get these exemptions right to start with and we look forward to continuing to tell agricultures story when it comes to things like carbon sequestration and carbon sinks on both pasture land and crop land in Saskatchewan, we’re world leaders and hopefully we’ll see some traction on that—same thing with clean fuel standards. The carbon file is getting to be more and more relevant and of course agriculture is really part of the solution.”

The environmental changes in modern agriculture over the last few decades have been vast and Lewis thinks there’s starting to become a better grasp by decision makers of just how important these changes have been.

“I think there is a general understanding now,” he said. “We saw last week, members of parliament from coast-to-coast—it’s safe to say that two to three years ago they didn’t even know the grain was dried—voting on this. There’s more and more understanding around modern agriculture and what we have done for the environment and there’s lot of opportunities for recognition of what we do. We’re always trying to make improvements, nobody is saying that agriculture can’t improve its carbon management, but at the same time, we’ve been doing it for years and we will continue to with or without carbon pricing.”