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By Alice McFarlane

Cost of Carbon Tax on Agriculture

Carbon tax increase hurts agriculture sector

Apr 3, 2023 | 5:03 PM

Saskatchewan farmers are facing more financial hardships with the increase in the federal carbon tax that took effect on Apr. 1.

The carbon tax increased to $65 per tonne. This is the first year of an accelerated price on carbon that continues rising by $15 tonne carbon dioxide equivalent until it reaches $170 by 2030.

The Agricultural Producers Association of Saskatchewan (APAS) President Ian Boxall said the carbon tax increase has a significant impact on agriculture.

“These additional costs come off our bottom line because we’re price takers who sell into international markets,” Boxall said. “The impact of these costs on our farm operations needs to be recognized to ensure we can remain competitive in international markets.

Boxall said Saskatchewan farms are going to pay over $40 million in carbon tax just to get their products to port. He said these farmers and ranchers are furthest from market access and bear significant costs from carbon surcharges on fuel to transport goods to market.

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On average, Saskatchewan grain production travels 1,150 miles to port. Published railway tariffs suggest a carbon surcharge of $0.1129 per railcar mile will be applied to rail shipments this year, which comes to over $36 million in carbon surcharges on 26 million tonnes of grain shipped to market access.

Boxall said that the same disadvantage applies to livestock where the majority of cattle are shipped out of province due to the lack of federally inspected meat processing facilities in Saskatchewan. As an example, 800,000 calves travelling 600 kilometres from central Saskatchewan to feedlot alley in Alberta equals over 9,000 semi-loads of animals. Boxall said there are fuel carbon surcharges on travel both ways.

“Farmers feel the impact of these costs in the prices they receive at the farmgate”, Boxall said.

The Canadian Senate will also soon be reviewing Bill C-234 to exempt carbon charges on propane and natural gas for barn heating and grain drying. Boxall added this is a cost that producers see on their bills every month and there are no available fuel alternatives with current technology.

“Farmers will easily pay more in barn heating or grain drying each month than they will ever see in rebates”, he said. “We see these costs in our monthly bills and are feeling them trickle down to us through higher input costs and reduced commodity prices throughout the supply chain. We need policy measures to provide exemptions and relief programs that recognize the competitive impact these costs are having on our bottom lines.”

On Mar. 20, Boxall spoke to the House of Commons Standing Committee on Agriculture and Agri-Food about the impacts of farm input inflation and the rising cost of food where he highlighted the importance of transparency throughout food supply chains.

He said the current policy needs to be recognized and account for the impact of the carbon tax on the affordability of food in grocery stores and reduced farm margins.

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alice.mcfarlane@pattisonmedia.com

On Twitter: @farmnewsNOW