Proceedings of the Standing Senate Committee on
Agriculture and Forestry
Issue No. 51 - Evidence - Meeting of May 8, 2018
OTTAWA, Tuesday, May 8, 2018
The Standing Senate Committee on Agriculture and Forestry met this day at 6 p.m. to study the subject matter of those elements contained in Part 5, insofar as that Part relates to farming, of Bill C-74, An Act to implement certain provisions of the budget tabled in Parliament on February 27, 2018 and other measures.
Senator Diane F. Griffin (Chair) in the chair.
The Chair: Welcome, everyone, to this meeting of the Standing Senate Committee on Agriculture and Forestry. I’m Senator Diane Griffin, from Prince Edward Island. I’m chair of the committee. I’m going to ask the other senators to introduce themselves, starting with the deputy chair.
[Translation]
Senator Maltais: Senator Ghislain Maltais from Quebec.
[English]
Senator Doyle: Norman Doyle, Newfoundland and Labrador.
[Translation]
Senator Petitclerc: Chantal Petitclerc from Quebec.
[English]
Senator Woo: Yuen Pau Woo, British Columbia.
Senator R. Black: Robert Black, Ontario.
The Chair: Thank you, folks.
We’re continuing our study of those elements contained Part 5 of Bill C-74, An Act to implement certain provisions of the budget tabled in Parliament on February 27,2018 and other measures, insofar as that part relates to farming.
For our first panel, we have two guests with us. From the Agricultural Producers Association of Saskatchewan, we have in the room Mr. Todd Lewis, President. By video conference, we have from the Keystone Agricultural Producers of Manitoba, Dan Mazier, President.
Thank you for accepting our invitation to be here this evening. We will start with Mr. Mazier. The floor is yours.
Dan Mazier, President, Keystone Agricultural Producers of Manitoba: Thank you, Madam Chair and members of the committee, for giving me the opportunity to provide feedback on the carbon tax for industrial fossil fuels. The Keystone Agricultural Producers is Manitoba’s general farm policy organization, representing over 7,000 farm families. I am also a grains and oilseeds farmer from northeast of Brandon, Manitoba. We’re a community called Justice.
Let me start by stressing that agriculture is a very high-input industry. To put this in perspective, the total cost of inputs during seeding season in Manitoba, which is happening right now, is approximately $2.6 billion. That includes seed, fertilizer and equipment fuel. These inputs are not only expensive but are often carbon-intensive to produce.
Input costs have gone up dramatically over the past two decades, in part because of the mergers of agricultural input companies. Also, the lack of competition has meant these companies have charged what farms can bear to pay rather than the price at which companies can afford to sell. These mergers are still going on. We’ve just seen two major ones, and there is another large one in the works. This will reduce competition even further.
Farmers, especially young farmers, are already concerned about the high cost to farm in Manitoba. Now, they are extremely worried that a carbon tax on fossil fuels will drive the cost up considerably.
The carbon tax for companies involved in shipping and fertilizer production, among others, will be passed on to farmers. For example, one truck company implemented a 1 per cent carbon tax surcharge at the start of 2017 in Alberta, where there is already a price on carbon. It will increase to 1.5 per cent in 2018 as the Alberta carbon tax increases.
Here is another example: Railways currently charge a carbon tax surcharge of 4 cents per mile on all shipments to, from, or within British Columbia. There are similar amounts in other provinces that already have a carbon price.
I stress that grain and livestock prices given to farmers are set globally, based on world market demand. Manitoba prices cannot be altered to pass on additional production costs and taxes to customers.
Farmers are well aware of climate change and the need to mitigate it. We have seen weather extremes from climate change cause havoc to our production and marketing systems, and research tells us that we’re going to get wetter springs — although you wouldn’t believe it this spring — and falls, and drier summers. The irony is that as we adapt to climate change, we often invest in more carbon-intensive tools like grain dryers or irrigation systems.
However, there is a solution: investment in new technology and research that will reduce agricultural greenhouse gas emissions. Precision agriculture is an example of this technology. It uses field data to adjust the fertilizer applied to fields of varying characteristics, and can greatly reduce the amount of applied fertilizer.
We need these revenues from the carbon price invested into technology. Manitoba farmers, and in particular young farmers, want transparency in the carbon pricing system so we can see where the revenues are going.
Keystone Agricultural Producers recommends the Senate insist the Government of Canada implement a program that monitors and reports on the macroeconomic impacts of the carbon tax on consumers and industries, including an assessment of costs passed on. In particular, for the agriculture sector, we want to know if it drives down the farmers’ profits.
We also ask the Senate demand a measurement of greenhouse gas reductions associated with the carbon price.
Current estimates in Manitoba put reductions at just over 1 million tonnes cumulatively from 2018 to 2022. Many stakeholders are unsure about whether these reductions will be realized without supplemental programming to provide incentives for reduction practices.
In closing, I reiterate the price farmers receive cannot be increased. If farmers become unprofitable, the Canadian economy and the environment will be harmed.
I’d like to thank you for your time and attention, and I look forward to taking your questions.
The Chair: Thank you for your presentation. We’ll now move on to Mr. Lewis.
Todd Lewis, President, Agricultural Producers Association of Saskatchewan: Good evening. I farm with my father, brother and nephew south of Regina in Gray, Saskatchewan. The Agricultural Producers Association of Saskatchewan appreciates this opportunity to comment on the legislative proposals relating to the greenhouse gas pollution pricing act.
As Saskatchewan’s general farm organization, we serve as the voice of thousands of farmers and ranchers, who manage over 40 per cent of the cultivated farmland and 35 per cent of the total pasture land in Canada.
The careful management and stewardship of these lands means Saskatchewan producers are a strategic asset in the effort to address climate change.
Saskatchewan producers generate 30 per cent of Canada’s agricultural exports, worth over $15 billion annually. Our activities support tens of thousands of jobs all across Canada.
We believe if Canada is to meet its target to increase agricultural exports while meeting its commitment to reduce greenhouse gas emissions by 2030, federal policy must recognize both the economic impact of carbon pricing and the essential services provided by managing carbon on the agricultural landscape.
APAS maintains our opposition to the imposition of carbon pricing policy on Saskatchewan agricultural producers. We need to be very clear: The carbon backstop policy applies mainly to Saskatchewan and to our members who make up a very large part of Canada’s agricultural industry.
The fundamental premise of carbon pricing is it serves as a market pricing signal to reduce consumption of fossil fuels. Agricultural producers do not set the prices for their products, and have no ability to pass along increased input costs. Carbon pricing fails to function as a price signal in the value chain, and becomes an additional cost burden on a sector that already operates on narrow margins. Producers already seek out every viable opportunity to reduce costs because they cannot pass them along.
I would refer senators to the graph I have provided, showing the historical relationship between farm revenues and farm profit margins. Producers are spending more to produce more, while retaining a smaller percentage of gross revenues. Those margins are used to pay for new technology, to invest in our family businesses and to prepare for the transfer to the next generation of agricultural producers.
Bill C-74 defines a farmer as “a person that carries on a farming business with a reasonable expectation of profit.” The provisions contained in this bill work to make that definition less credible. The proposed exemption for farm fuels partially recognizes the cost issue. The current exemption does not cover a whole range of unavoidable farm business costs that will increase with carbon pricing. These include rail transportation, the single largest cost for prairie grain producers; natural gas for drying grain and heating barns; truck transportation; fertilizer and chemicals; as well as electricity.
These are all unavoidable key input costs with very few fuel alternatives. I would like to repeat my point: farmers and ranchers already work very hard to identify cost savings, such as energy costs, because we cannot pass those costs along to our consumers. We already do our best to produce more with less energy.
Saskatchewan producers sell mainly to export markets, and we are located far from export position. Many of our competitors face no carbon tax. Carbon taxes on our input costs simply increase our production costs and make us uncompetitive in the world market. This is unfortunate because the federal government has also identified agriculture as a key sector to grow the Canadian economy through increased exports.
All through the formulation of the federal carbon pricing backstop, APAS has raised concerns with the direct and indirect cost impacts of carbon pricing on agricultural supply chains, and requested the federal government conduct and release a detailed cost estimate for the sector. We have also requested the review of carbon pricing for trade-exposed industries scheduled for 2020 be conducted prior to the implementation of the carbon pricing backstop.
We have not seen a response to these recommendations. Decisions are being made without information on the potential risks and consequences. We also strongly believe it is time the federal government recognize agriculture as a big part of the solution to carbon, and not as a problem.
The Global Climate Action Agenda proposes that an annual increase in sequestration in agricultural soils of 4 parts per thousand would halt the total annual global increase of CO2 in the atmosphere. This is an opportunity to address climate change that must not be ignored or undervalued. The recognition and development of agricultural carbon sinks will be essential if Canada is to achieve our Paris Accord obligations.
The Pan-Canadian Framework on Clean Growth and Climate Change includes measures across the economy to reduce emissions, including increasing stored carbon in forests, wetlands and agricultural lands.
Agricultural producers are currently major players in carbon sequestration. Saskatchewan crop producers currently sequester 8.5 megatonnes of carbon through improved management practices every year, and prairie pastures sequester over 2 billion tonnes. The value of current agricultural sequestration must be recognized by decision makers.
The lack of a national system of carbon offsets will hinder the development of this opportunity. It also puts additional administrative burden on backstop jurisdictions to develop their own systems and, in turn, overlooks agriculture as a potential resource to help address climate change.
Federal leadership on the development of a national offset policy is required to make the most of agriculture’s full potential to mitigate and offset greenhouse gases. We hope the federal government will move forward with the creation of a robust Canadian offset system that will recognize the contributions agricultural producers are making and provide further opportunities for emissions reductions.
APAS welcomes the opportunity to address the draft legislative proposals relating to the greenhouse gas pollution pricing act. We respectfully request the federal government reconsider both the punitive financial impacts on producers and the enormous potential we have as producers to help meet our carbon targets. Thank you, and I look forward to your questions.
The Chair: Thank you to both presenters. We’ll start with questions, beginning with the deputy chair, Senator Maltais.
[Translation]
Senator Maltais: Mr. Mazier, you talked about input costs, and the fact that you are a prisoner of two or three large companies when it comes to buying your seeds. Are seeds possibly subsidized on the U.S. side? Do you know anything about that?
[English]
Mr. Mazier: I have no idea what’s going on in the U.S. as far as carbon prices or seed subsidies. I don’t know.
[Translation]
Senator Maltais: Last week, we heard from your environment minister and your agriculture minister. They are completely against the carbon tax, and they have already challenged it in court. Reference was also made to a modulation tax on farmers, depending on their need for gas for drying, their need for gasoline or fuel for their tractors, but the government refused. One important thing you said is that the carbon tax must be used for research and technology. I think your government is making quite a significant effort in this area. For the farmers you represent, would a tax, not on carbon, but solely for research on new technologies to eliminate GHGs, be acceptable to your members?
[English]
Mr. Mazier: The Province of Manitoba actually has a carbon tax. They’ve gone down a carbon tax path versus a cap-and-trade system. We have exemptions further to Todd’s presentation. We found out a couple of months ago we are exempt on grain drying, space heating for barns, forestry, and mining. Those kinds of things are all exempt from the carbon tax on fuel. Our government has been pretty proactive in trying to mitigate the implications of the carbon tax.
During our research and advising the government, we were asking them, whatever money that was being collected, to make sure it was plowed back into research and technology so the industries could take advantage and actually make a reduction. At the last budget, they made an announcement that they were going to take the carbon dollars and reduce taxes in Manitoba. We don’t know what that means, as to how it reduces greenhouse gases, but it kind of goes in the direct opposite way of what industry was advising them, to make sure that money was going back to us, that is, whatever was being taxed. That doesn’t seem to be the case. They seem to be redistributing the tax in general and making sure that industries are getting a tax reduction versus actually reducing their carbon output.
Senator Maltais: Thank you, Mr. Mazier.
[Translation]
Mr. Lewis, you have talked a lot about the seed problem and the fact that you are penalized because you do not have the choice to buy from different companies. The price is set by the companies, but the selling prices for your grains are not set in advance; they are set according to the market in the fall when you can sell them. Would a flat tax disadvantage you or would you prefer a modulated tax? Or would you rather not pay tax at all?
[English]
Mr. Lewis: You gave me the third answer there.
With a broad-based tax like the carbon tax, what’s being proposed is across all parts of industry, and farmers are big consumers. The input costs don’t matter. Something as simple as petrochemical plastics affect farmers, right from the jugs our chemicals come in, to baler twine for livestock operators and plastic grain bags. All these will increase in price. We can’t get that back. That comes directly off our bottom line. It’s not unusual for a farmer operator who’s using grain bags to spend $20,000 a year on those bags. If the price goes up, even 1 or 2 per cent, that’s a significant hit against his bottom line.
We’re high inputs with very low margins, so when you start trying to exempt different products, and so on, there are so many things we use that won’t be exempted that it will hurt our profit margins. It’s not just profit margins, either. Actually, lots of years in agriculture, we don’t have profits.
In southern Saskatchewan last year, probably a majority of the farmers were in a net loss position. These are tough years. As Dan mentioned, it’s very dry in the southern part of the Prairies this year, and we’re going to be hoping for rain. We talk about climate change, and we blame climate change for dry seasons, and so on, but at the same time, the new technologies that have been developed — that is, prior to anybody talking about carbon pricing — the seeding technologies, and so on that we use, grew a crop last year that was the second biggest handling in the history of Western Canada. When we talk about research dollars going towards new technologies, farmers have invested in those new technologies and will continue to invest. The research has come from government and producers also put up their fair share of money for research through their checkoffs.
[Translation]
Senator Maltais: You have just said that you receive 20,000 bags of fertilizer or other products that you use on your farm and that those bags are made of plastic; what do you do with those plastic bags afterwards?
[English]
Mr. Lewis: I was referring to a grain bag. That’s one bag that will hold up to 10,000 bushels. It’s one huge piece of plastic that looks like a great big long sausage in the field. Those plastics are recycled. We currently have a recycling program in Saskatchewan, a pilot project. Those products are put back into the recycling stream. It’s very good plastic. It’s thick and it’s virgin plastic, as they call it. Within the recycling industry, it’s valuable. It’s another good example of what farmers have done to limit their carbon footprint. It has been very successful.
[Translation]
Senator Maltais: Are you paying for recycling or is it the seed producer?
[English]
Mr. Lewis: At the end of the day, we pay for it. If the manufacturer is going to pay for it, they will put it on to the price of the bag and we pay for it. We pay for its transportation back to the recyclers. At the end of the day, the farmers do pay for it.
[Translation]
Senator Maltais: If you recycle — and you represent a lot of farmers — the government should pay you.
[English]
Mr. Lewis: That’s a nice thought, but we haven’t gotten there yet. At the same time, I don’t think farmers are looking for government with their hands out for any of these things. Those are bags we use and we’re happy to put them back into the recycling stream. When those bags originally started years ago, there were lots of burned plastics. It was common practice. That isn’t common practice anymore. Farmers don’t burn chemical jugs. It all gets recycled. We try very hard. It’s been a culture change, put it that way, over the last number of decades, and we’re getting there more and more. People are very aware of air quality and those issues.
Senator Petitclerc: Thank you so much for being here. This is very instructive. My question will be for Mr. Mazier, but Mr. Lewis, feel free to add to it.
I wanted you to expand. You said in your opening comments we should insist the Government of Canada implement a program for monitoring and reporting on the economic impact of the carbon tax on consumers and industry. That resonated with me. Is it not happening already? Does it not exist? I suppose that also involves data collection.
I want to hear you a bit more on that. If it’s not happening, how do you see that being articulated and coming to life?
Mr. Lewis: I can answer the question. It’s very important. We asked for a costing from the Department of Agriculture a number of times. It’s our understanding the costing is being worked on, and there will be consultations I think as early as next week. We’ll be involved in some initial consultations. Those numbers are important. At the same time, this bill is going to go forward, putting the price on these fuels, before we know the actual costs. That’s why it’s so important the estimates come first and not the tax first — not these issues being slid in the back door, because we don’t know what the intended or unintended consequences of a tax like this will do to our bottom lines.
Senator Petitclerc: The way I see it, you will not have baseline data or information to compare.
Mr. Lewis: I think that’s correct. That’s what we’re looking for. The federal government has consulted on some of these issues. It’s such a big, complicated package we need more time to find out what the true effects could possibly be.
Senator Petitclerc: I don’t know, Mr. Mazier, if you can —
Mr. Mazier: I can answer that. Manitoba invited us in. When they were talking about implementing the tax in general, they brought us into the offices and said, “We want you to be part of the solution.”
We went to our members. We came up with some recommendations for the government. What resonated with us was “Don’t make it another tax.” Everybody knew they had to do their part, I guess, and the tax was a mechanism, a way we can start doing something. We can start paying for a lot of these programs, especially environmental goods and services programs or programs like that, that could make a difference and start us in a different direction.
One of the other recommendations that was so important was everyone wanted transparency. They wanted to know how those dollars were going to be gathered, they wanted to see it on every bill, and they wanted to see where it was going to go in the government.
That still resonates today, and people are pretty adamant. Even in the environmental community, I would say, if this is just another tax grab, I think we’ve done a lot of work for nothing. It’s too bad if we do go down that path. I think transparency would go a long way to reassuring those naysayers or those doubters that we can make a difference. It would prove to everyone that we can make a difference and prove where the money is going. Everyone is really quite concerned about that.
Senator Petitclerc: Thank you.
Senator Doyle: I’m wondering, Mr. Lewis, about your competitors in the marketplace. Are there places to which you sell agricultural products that also have carbon levies? Are your competitors, say in the marketplace of America, the Russians or what have you, subject to carbon levies? Have you looked at these competitors overseas, the Europeans or even the Americans, to find out what their practices are with regard to carbon levies, et cetera?
Mr. Lewis: Yes. Certainly when you look at the leading exporters of the world, especially in Western Canada, for coarse grains, for instance, wheat, durum, one of our big competitors are the Americans. The Australians are another big competitor. Most of our grain goes into Indonesia, that area, India, and places like that. Australia, for instance, pulled back from their carbon tax. I think they just disassembled their program.
Certainly the Americans don’t have a tax like this currently under the Trump administration. Our understanding is they’re out of the Paris accord.
European countries do have these taxes, but in most of our markets they’re not a major competitor. Their biggest competitor for our grains are countries like Kazakhstan and Russia, which certainly don’t have carbon taxes.
Generally, agriculture in Western Canada is competing against countries that don’t have carbon taxes in place in most cases.
Senator Doyle: Again, you have approached the federal government on this, and they have agreed to an assessment?
Mr. Lewis: We’ve asked for some kind of costing. We’re assuming they have costing measures. They’ve done some investigation of what the revenue will be. There is going to be a cost. We haven’t been notified of what those costs are or been able to look at those costing estimates. As Dan says, we feel it’s important that this is a transparent tax, and before we go down this road, we have an idea of what the government thinks it is going to cost us.
Senator Doyle: So I’m clear, that would include a costing of the entire supply chain? If you’re buying farm machinery or tires or fertilizers or cardboard, anything that might have to do with your farming operation, you want to know how that will affect the cost of an ear of corn or bushel of wheat.
Mr. Lewis: Yes. It won’t affect the price we receive for it, but it will affect the price of growing it. That’s the issue. The price of that ear of corn or the bushel of wheat or a pound of beef, that’s set internationally. Any extra costs will come out of our pockets. It’s going to be the cost to produce that product.
Senator Doyle: Would it go to the consumer eventually? You’ve got to pick it up somehow.
Mr. Lewis: Primary producers don’t though. It will be picked up by the people who sell it, certainly, but after it’s gone through the system. We don’t have that opportunity. If we do try and add that cost, they will just go to one of our competitors. That’s the reality.
Senator Doyle: You don’t have a mechanism to retrieve it?
Mr. Lewis: No. Ontario is a great example. If Ontario corn is too expensive, there is a lot of corn in Ohio that can come across the border quite easily.
Senator Doyle: Thank you.
[Translation]
Senator Dagenais: Thank you to our guests. My first questions are for Mr. Lewis. When the government put in place the terms and conditions of a carbon tax through Bill C-74, were you consulted on your concerns about the carbon tax? Has the government consulted you?
[English]
Mr. Lewis: As far as Bill C-74, no. There was no consultation on the proposed Greenhouse Gas Pollution Pricing Act.
[Translation]
Senator Dagenais: Today, there is a lot of talk about the importance of communicating with Canadians. We hear that there is a lack of communication sometimes. Has the government provided you with real and concrete information about the redistribution of carbon tax revenue? Has it provided you with any information about the fact that it was going to tax you on carbon, but that it was going to give you the money back in such and such a way? Have you had any explanations?
[English]
Mr. Lewis: No, we haven’t. The politicians in Regina and Ottawa have been going back and forth. We certainly haven’t had any indication from the federal government as to what the implementation of the tax will mean. To be fair, there is a lot happening at a higher level right now between the provincial and federal governments. We certainly haven’t heard any of that.
[Translation]
Senator Dagenais: My questions are now for Mr. Mazier. Since you cannot raise the price of your crops and since the carbon tax will increase your costs, have you quantified your loss of revenue?
If there is an alternative to the carbon tax, in your opinion, could you do other things to fight greenhouse gases effectively without necessarily paying a carbon tax? Because you are certainly going to be losing revenue.
[English]
Mr. Mazier: If you are going to gather a tax, there are solutions. If we’re not going to earmark dollars for environmental action, where are we going to get the money from? That’s always been the question. If we’re going to implement a tax in our provinces, and if it does go back to these revenues for environmental issues, that’s okay. I think Canadians are generally all right with that, but this is appearing to be like a tax grab.
You asked Mr. Lewis about the cost and consultation in our province. Our province, since they were engaged in it, was much more aware and let us know what these potential costs could be in Manitoba.
For example, a $25 flat flee in Manitoba will bring in taxes of $250 million a year. How they split up that revenue is yet to be seen. Some of it is going to environment. Some of it is going back to lower taxes.
We were consulted pretty thoroughly. It was the province that decided to do that since they were engaged in the discussion.
On the other hand, Saskatchewan was just saying no to the tax and they were exposed. It was a different situation in Saskatchewan. This is why they never had the conversation. In Manitoba, meanwhile, we were having that conversation about what it meant to us.
It’s just a different approach, but it is different. I think the biggest point is it’s different for every province in this country. That’s the problem. We’re being levied against this carbon tax at different rates across this country. That is a fundamental problem.
[Translation]
Senator Dagenais: You are right, it is different in each province. In fact, there will be an election in Ontario this year and the next premier may not want to pay a carbon tax. You are next to Saskatchewan, which has already announced that it will challenge the constitutionality of this tax. Did you not want to join forces with Saskatchewan to not pay the carbon tax? You could come together and protest in Ottawa, for example.
[English]
Mr. Mazier: Yes, to have an environmental policy — and this is back to provincial jurisdictions — so each province can decide what they want to do. This is how they sold it in Manitoba: If you don’t choose the Manitoba plan, you choose the Trudeau plan. That’s the way it was sold in Manitoba. We ended up not going up to the $50 a tonne. That’s not part of the plan. Twenty-five dollars a tonne for five years with carbon reduction.
In Manitoba they’ve taken a different approach. They actually call it a green plan, and I encourage the Senate to look that up — Manitoba’s green plan. There are different steps to carbon reduction. Carbon pricing is just one component of their green plan. I think it’s a million metric tonnes reduced. That is just the first step.
Another big step in the reduction of 300,000 tonnes is the introduction of biofuels, increasing them from 2 per cent, where they are currently, to 5 per cent. Those are anything from our biodiesels and things like that. If we introduce those, that means more canola production would go into the fuels and that would displace some carbon pricing.
There are some made-in-Manitoba solutions. That’s the way that our province has decided to go about mitigating this carbon problem. It’s just a different approach.
Meanwhile, Saskatchewan has a different carbon balance. I would encourage you to read the green plan of Manitoba. It even compares P.E.I. to Manitoba, all the provinces and Manitoba, what their carbon balances look like. It is an interesting concept. It shows the carbon landscape across Canada.
[Translation]
Senator Dagenais: Don’t you find that imposing a tax is the easy way out? There may be different approaches to reducing greenhouse gases. What will the government do with the tax money? We don’t know. A lot of taxes have been imposed for some time and we do not know what happens with the money collected. Don’t you think that saying a tax will fix part of the problem is an easy shortcut to reducing greenhouse gases?
[English]
Mr. Mazier: Yes, I do agree with that. This is why they left it up to the provinces. Federally, they said this is the bare minimum, this is the backstop program.
What surprised me is Manitoba came out with a $25 flat tax and the federal government quite quickly said no, that’s not good enough. They said you have to increase those carbon taxes. They didn’t even understand. That’s an indication to me that they’re just looking for carbon tax dollars. They’re not looking to actually make a difference. That’s too bad. I thought it was too quick a response to not look through the Manitoba plan. Maybe there is a different solution out there for the province.
I agree, heavy-handedness, but somebody had to make the first move, I guess. We’ll see what happens.
[Translation]
Senator Dagenais: As you say, they want money. Aren’t you concerned about having to pay in two places? At some point, you will pay in Saskatchewan, and because you are not paying enough in Saskatchewan, you are going to pay the federal government.
[English]
Mr. Mazier: That’s why we want the transparency. That’s why we think the Senate should set up that system.
Senator Oh: I have a supplementary question. This environmental issue is supposed to be a global issue. Everyone should come in to help on carbon tax. The U.S. is not doing it, Australia is pulling out, and we are moving forward. This looks like it is no longer a global environmental issue. It looks like it’s a tax grab. Can you comment on this? If we are not careful, we will price our product out of the market. There won’t be any environmental issues later on. Can you comment on that, please?
Mr. Lewis: I can. I think farmers and ranchers have done a good job already. It speaks to your question. Our technology in Western Canada is exported around the world to lower the carbon footprint of grain and livestock production. Good management practices with livestock and feeding—there’s been lots of research done on it—to limit the production of methane gas with new feeding practices and pasture management as well to grow better pastures.
When you grow a good pasture, you have a bigger root system, and roots are what sequester carbon. That’s a pretty simple thumbnail sketch of how the carbon sink works.
Ranchers in Western Canada are producing more beef per square mile or acre now than they ever have. It’s through improved management practices and using less water to do it. Those things have all been happening without a carbon tax.
I couldn’t agree more when you say we’re going to price ourselves out of our marketplace. There is increasing competition constantly for our products on the world market. The products we’re competing against often aren’t as good quality or as food safe as Canadian products. At the end of the day, it’s about price. We are fortunate we have some good trade agreements in place, some new trade agreements, but if the price isn’t right, our competitors are going to walk into those marketplaces.
Senator Oh: Australia has better FTAs with some of the Asian countries. They are ahead of us.
Mr. Lewis: That’s right.
Senator Oh: You are still catching up with the rate they got before us.
Mr. Lewis: If we’re behind on price, it’s not going to help us any.
Senator Oh: Any comment from you, Mr. Mazier?
Mr. Mazier: I agree. We don’t want it to be a tax grab. I think that would really hurt the movement. The intent, I think, is to get the conversation going in the direction of “what we are going to do about the greenhouse gas emissions problem?” If it isn’t taxation, what is it? We’re going with what we’ve got right now. If there is a better idea out there, let’s hear it.
It’s kind of funny. All this noise coming out of Alberta, they’ve been under attack on the carbon tax system since 2006. They were one of the first provinces in Canada to implement it, to industry. All of a sudden now they don’t think it’s a good idea because it’s imposed by the federal government and not the provincial government. That’s an observation.
But I agree. I don’t think it would be a good idea. If it turns into a tax grab, it will be too bad. I think it will be a very big missed opportunity.
Senator Oh: Maybe this should be a company overhaul and take a look at revisiting this problem. Thank you.
The Chair: I’m going to take that as a comment, not a question. We are going to move on to the next senator.
Senator Ataullahjan: Thank you for being here this evening. My question was asked by Senator Oh. I would like to talk to you specifically, Mr. Lewis, about Saskatchewan.
The farmers of Saskatchewan are already hurting with the issue that you have with lentils exported to India where the duties have been increased so much. This is going to hurt them more. We know that 40 per cent of Canada’s cultivated farmland is in Saskatchewan, as are 99 per cent of Canada’s chickpeas and 90 per cent of lentils. We’re seeing issues there. There are issues with India, and there are the issues where they’ve increased the taxes from 40 to 60 per cent. You had the issue of the two ships that had to be sent somewhere else. There is talk with Pakistan, too, about the fumigation.
This tax is an added burden — something else for the farmers to worry about. I’m really concerned, because like you said, this is an additional cost upon a sector that already operates on narrow margins.
What is the message we’re giving to our farmers?
Mr. Lewis: Situations like the tariffs in India or fumigation issues with our other customers are things that can change. They might have a bad monsoon season over there, and that market will open again.
However, the one thing you can be sure of is once a tax is imposed, it never goes away. That’s why farmers are so concerned about this. They don’t want to see another tax put in here, because it is always constant. Markets can change, and we can find new markets, but once a tax is in place, it’s in place. That’s the big concern.
Our membership has done its work and continue to do its work to produce more products with a lower carbon footprint. The facts are there. There’s lots of research that’s been done in Saskatchewan, such as around sequestration. There is more work to be done there to recognize what is being done in pasture land and croplands.
Technology is always improving, and it’s always about driving efficiencies. The goal when you become more efficient is you end up having lower energy costs and a lower carbon footprint.
That’s where farmers are at — our membership, anyway. We’ve always said the best way to invest in new technology is to leave money in farmers’ pockets; it’s not trying to run it through the government and get it back through research dollars or whatever. Farmers will pay for that research. A lot of the research happens at the field level. You mentioned chickpeas. That crop didn’t even exist three decades ago. It was farmers who made that investment. Lentils, canola — those are all made-in-Canada crops. All the best lentil seed comes out of the University of Saskatchewan in Saskatoon. Canola was invented in Saskatoon.
We need these crops. Farmers will invest in new technologies. We don’t need the government. They can certainly support it, but we don’t have to give them a tax so they can give it back as research.
Senator Ataullahjan: On our trip to Pakistan, we heard about when Canadian canola was introduced into Pakistan, how it changed all of a sudden. Everyone is using canola thanks to Saskatchewan.
You talk about a carbon backstop policy. For the benefit of our viewers who might not know what that is, can you give us a short explanation?
Mr. Lewis: From our understanding, the backstop policy is going to be put onto the provinces that aren’t using a carbon model that fits the government’s model. I believe Manitoba is in on the carbon backstop, because they’re only saying $25 a tonne. Saskatchewan is at zero. I think our next presenters from Nova Scotia — I’m not sure why they’re offside on it, but I believe they’re being put into it as well.
I guess that’s why the Government of Saskatchewan is going to court on it. We try to steer clear of the politics and just say what Western agriculture, certainly agriculture in Saskatchewan, has achieved without a carbon tax. We’ll see how it plays out in the courts.
The Chair: We’ve heard a lot of good points here tonight. I will just do a quick summary: the creation of a robust offset system, the government to conduct and release a cost estimate for the sector, review carbon pricing for trade-exposed industries, invest in new technology and research, transparency so we can see where the revenues are going, monitor and report on macroeconomic impact, and measure the GHG reductions with the carbon price to see if it has changed.
Those were the main points I took from your two presentations. Have I missed anything?
Mr. Lewis: I think you have encapsulated it all there.
Mr. Mazier: Sounds good.
The Chair: Thank you for your presentations. What you have given us this evening may well be useful in other studies and work we have under way, as well as this particular study. It has been great to have had both of you here as presenters to answer questions. We thank you very much.
For our next panel tonight, we have two guests from Nova Scotia. The presentation will be made by Chris van den Heuvel, and Maxine Maclean will be here to help answer questions.
Folks, we’re very pleased to have you. We’ve just heard from Saskatchewan and Manitoba. It’s going to be interesting to see what the situation is in a part of Atlantic Canada.
I understand, Chris, you’re a director and past president of the Canadian Federation of Agriculture.
Chris van den Heuvel, Canadian Federation of Agriculture, Director and Past President, Nova Scotia Federation of Agriculture: Past president of the Nova Scotia Federation of Agriculture.
The Chair: Thank you. The floor is yours.
Mr. van den Heuvel: Thank you very much for the opportunity to be here today. As was mentioned, I’m past president of NFSA and a dairy farmer from beautiful Cape Breton Island in Nova Scotia. I’m here today with Maxine Maclean, who is our policy and communications analyst with the Nova Scotia Federation of Agriculture.
Once again, thank you for the invite here to speak today on Bill C-74 as it relates to the Greenhouse Gas Pollution Pricing Act.
I applaud and appreciate the work the government has put in to combat climate change. We’re aware the climate is changing. Many farms are suffering the consequences of climate change, and farms can play a significant role in the offsetting of carbon emissions.
Before I get into how the changes presented will impact farms specifically, I would like to highlight in a broad sense the implications the proposed addition of a fuel charge will have on all Nova Scotians. Currently, 36 per cent of Nova Scotia’s electricity is made up of coal. Assuming the applied rate will be proportionate to the quantity of greenhouse gas emissions of the respective products, it is safe to assume Nova Scotians will experience yet another hike in power rates.
Since 2001, our electricity rates have increased by more than 70 per cent. The efforts of our province to reduce our reliance on coal-generated electricity were recognized by the federal government in the Clean Growth and Climate Change Framework. Adding this fuel charge will only add to the financial burden on the farms in Nova Scotia.
I would like to highlight farm-specific recommendations around the amendments of the Greenhouse Gas Pollution Pricing Act.
First, an exemption for on-farm fuel use of gasoline and diesel is essential. Fuel use is highly inelastic for Canada’s and Nova Scotia’s agricultural sector. No matter how expensive it becomes, farmers have little choice but to use the same amount of fuel in order to produce our agricultural products. Fuel switching and adaptive technologies and practices have already taken place where they are possible. But agriculture is a high-capital, low-margin business, input efficiencies are strived for as much as possible as alluded to by our last presenter. They leave little room to manoeuver when costs of production rises whether it is due to market forces or government policies. The NFSA recommends to extend the exemption to the carbon price within the draft legislation to all on-farm fuels.
The definition of a farmer used within the draft legislation is seen as overly simplistic and could inadvertently disqualify legitimate farmers from receiving carbon price exemption charges on farm fuels. In reading the proposed definition, it would seem to exclude agricultural activities such as Christmas tree farming, greenhouses, maple syrup and others.
The proposed legislative definition is also different from other far more comprehensive definitions that the federal government uses such as for the Canada Revenue Agency. The CRA definition of a farmer specifically notes that its definition is not exhaustive. Therefore, the NFSA recommends the draft legislation incorporate by reference the CRA definition of a farmer as well as the relevant CRA interpretive guidance. This will provide far greater consistency across the government on what constitutes farming and will be easier to interpret for all.
The administration of the exemption should be as simple as possible. Farms and farmers are already inundated with red tape to be in compliance with transportation, food safety and animal welfare to name a few areas. To reduce the burden associated with this fuel charge exemption, we strongly recommend working with and leveraging the systems already in place for that particular province or territory. This section of the draft legislation requires additional reviews in order to build upon what systems are already in place and not needlessly introduce additional regulatory paperwork. It is possible to provide assurance of compliance with regulation in a more streamlined fashion through existing programs.
The addition of another layer of carbon pricing is concerning. While the proposed legislation is relatively easy to apply and to calculate in comparison to a cap-and-trade system, it is in fact another cost. Another price on carbon would further reduce the competitiveness against imports coming into Canada and further compromise our food security.
I’m cautiously optimistic cropping activity will be exempt. However, the transportation of food to processors or to the marketplace won’t be exempt. The additional costs have to be made up somewhere. The ethical dilemma of whether to raise the cost of food to offset the cost of protecting the environment is one that shouldn’t exist.
Though it doesn’t appear to be written in legislation, I would like to ensure that biological emissions are exempt from all forms of carbon pricing. Biological emissions are exceedingly difficult to measure. Any attempt to impose an external price on agricultural biological emissions could prove absolutely devastating for the industry, overly burdensome to administer, and inequitable when compared to natural and biological emissions in other sectors. Agricultural biological emissions are part of natural cycles and therefore should not be subject to a carbon price. However, efforts to reduce biological emissions through continued research, promotion of technologies and incentives should be encouraged and incentivized.
Farmers can play a significant role in offsetting carbon emissions and reducing the overall atmospheric carbon. The capture of methane and other naturally occurring emissions from livestock and waste for fuel and electricity should be encouraged and should in fact be the norm. The captured emissions can go on to be used to generate non-intermittent, renewable electricity with a proper supporting regulatory framework. I would encourage any funds generated by a fuel charge to be used to develop such programs for farms to further reduce greenhouse gas emissions and move towards carbon-neutral equipment and technologies.
Once again, I thank you for inviting us here today. I and our policy coordinator, Maxine, would be happy to entertain any questions you may have.
Senator Mercer: First of all, welcome. It’s always good to see you.
This is a scary topic. As a resident of Nova Scotia and someone who heats his home by electricity, I’m one of the victims of the continued increase in the price of electricity in Nova Scotia and the unfortunate fact we don’t have hydro generation, and that we haven’t perfected tidal power. By the time we do, we would have spent so much money that it will cost us.
In your presentation, you’re worried about this compromising food security. Could you give us a broader explanation as to how that would happen?
Mr. van den Heuvel: Thank you very much for the question. It’s a serious topic. When you look at any form of pricing that’s going to be imposed on farmers, oftentimes we don’t have a mechanism. I was listening to the previous presenter talking on this very subject.
We often don’t have a way to recoup those costs. Unfortunately, the only way is to raise food prices. When you do that, all of a sudden we are at a competitive disadvantage when you compare it to other countries and other jurisdictions that may not have carbon pricing and these sorts of things being imposed.
All of a sudden, if your local farmers are aren’t able to produce safe and secure food — here in Canada, we have one of the safest, if not the safest, food supplies in the world. If we have to start relying on food imports to meet those demands — it’s all fine to say we want to be green and want to do this. It’s an important subject. We realize that, and we strive for that ourselves. At the end of the day, price rules. If we have to compete against jurisdictions that aren’t having these types of things imposed, it’s going to hurt our pocketbooks. It’s going to hurt the pocket books of consumers. Now, all of a sudden, we’re placing ourselves in a precarious position from a food security perspective.
Senator Mercer: Putting the pressure and putting the price on our primary producers is — you have no room. You have no flexibility in how to absorb it. The only way you can pass it on is to the consumer, which will contribute directly to inflation but also to higher food prices.
I’m frustrated by this, in talking to you about it in particular, because I’m the principal shopper in my family for groceries. I’m very loyal to the farmers of Nova Scotia and insist that my local market try to deliver only Nova Scotia products when they’re available. It’s going to be harder for them to do that and remain competitive. Do you think there’s an alternative?
Mr. van den Heuvel: That’s a great question and one I really don’t know the answer to. Maxine, I don’t know if you want to weigh in on that. You’ve been doing a lot of research.
Senator Mercer: You’ve got the edge.
Mr. van den Heuvel: That’s why she’s here, to answer the tough questions, right?
Maxine Maclean, Policy and Communications Coordinator, Nova Scotia Federation of Agriculture: In terms of having an answer to an alternative, I guess it comes back to if there are programs and supports and incentives in place, just as Chris mentioned, to be able to offset some of these costs. We talked about, if this backstop and the funding and the tax is in place, helping those who can’t otherwise afford to adopt new technologies without some major investment. If you look at agriculture, it’s a capital-intensive industry. Your margins are very narrow. It comes down to having those social programs.
Senator Mercer: My final question, Chris: I have other questions, but I want to allow my colleagues to ask questions.
Your initial intervention was talking about the definitions used, what the definition of a farmer is, and you mentioned Christmas trees. As I know, and perhaps our viewers don’t know, production of Christmas trees is a huge business in Nova Scotia and in New Brunswick and Quebec. It’s a very important industry. If you don’t call those people who grow Christmas trees farmers, I don’t know what you call them.
We need to address this issue of definitions in a serious way.
You did recommend we use the CRA definitions of farmers. In the CRA definition of farmers, would that capture Christmas tree farmers, maple syrup farmers?
Mr. van den Heuvel: Yes, it would.
Senator Mercer: Is there anybody else that the current legislation is missing? I picked up maple syrup and Christmas tree farmers.
Mr. van den Heuvel: That the proposed greenhouse gas legislation is missing? I can’t think of any off the top of my head. That’s why we picked those particular ones. That goes to show the uncertainty of the whole situation. When you leave broad-stroke legislation out there, it becomes open for interpretation, ambiguity. What does it mean to be a farmer? Does growing a consumable item, like a Christmas tree, qualify, versus growing a tomato for food consumption? There’s ambiguity there. On Christmas trees, as we know today, there might be products that come out down the road, two years or five years, that we’re not even thinking about right now, that the current draft legislation is simply not going to address.
Senator Mercer: We continue to see the changes in the market. We just changed a piece of legislation the other day to reflect the change in the demand for soybeans worldwide because, 15 years ago, we weren’t big in soybeans, but now we are. We have to anticipate this, and we have to anticipate agriculture. Agriculture evolves because you respond to the market, but you also respond to the environmental situation you find yourself in.
Ms. Maclean: I’m also going to make a comment on the CRA definition of a farmer. We often talk about red tape and regulatory burden when it comes to agriculture and farmers. To have another farmer definition out there that farmers have to look up — okay, am I a farmer under this program — just adds another barrier in order to be able to qualify for something like an exemption. If you can streamline as many processes as possible — the farmer definition would be one — streamline them with already existing definitions. Same with the fuel tax exemption. Fuel tax exemptions already exist. Use similar paperwork, and apply it with what’s already in existence. That way, you can cut the red tape every farmer has to face.
Mr. van den Heuvel: A quick comment to answer your question. You’re absolutely right; we can’t focus on just what we know now. Here’s the problem, as I and a lot of leaders within the agricultural industry see it, not just as it relates to the greenhouse gas pollution draft legislation but as it relates to agricultural legislation and policy in general: What’s the long-term strategic plan? Where are we going? This isn’t about four-year election cycles — I’m sorry — as it often boils down to. That’s really unfortunate. It can’t be about that. We have to look five, 10, 15, 25, 50 years out in order to understand where we want to be and what the path forward is to get there. That’s the important thing. I applaud you for thinking about that and understanding that we have to be forward-thinking.
[Translation]
Senator Maltais: Welcome, Ms. Maclean and Mr. van den Heuvel. I am very happy to see you here. We are hearing about you every day, because Senator Mercer praises your products. He’s a great champion for you. In fact, our committee has previously visited some farms in Nova Scotia with Senator Mercer. We were very impressed with the ingenuity of the farmers.
Most of your products, be they eggs, produce or wine, are exported to the United States. You are close to the U.S. However, they do not have a carbon tax. I imagine that, if you had to apply this tax on your products, you would be billing someone else; otherwise, the producers would have to work even hard. This tax could make you less competitive for your buyers. What good will it do then?
We know that farmers in Nova Scotia do not have large areas like the western provinces. They are small, fragmented farms that are limited in size. Whether it’s orchards, vineyards, carrots or blueberries, you are limited by the size of your land. What will be the long-term impact on the future of agriculture in Nova Scotia?
[English]
Mr. van den Heuvel: Thank you very much for the question. You’re absolutely right, especially when you look at the recent policy initiatives coming out of, in particular, the U.S. We’re close to the U.S. marketplace.
When they pull out of something like the Paris Accord and pull back on their commitments to what climate change means, that signals to us they don’t have any intentions or real incentives for their producers to move forward. If we’re forced down this road, you’re absolutely right, that will have a clear and dramatic effect on increasing prices. With free trade agreements, if they still exist next week, that’s going to have an impact on our products, there’s no doubt about it, and not just with the U.S. We have the CPTPP, the CETA agreement and other agreements. Any jurisdiction that doesn’t have these forms of carbon taxes imposed on them, we’re going to be at a distinct disadvantage.
The implications to Nova Scotia will be the same across the country. It will mean smaller profit margins on an already razor-thin industry. There’s no doubt about that. We really see it does put us at a disadvantage. We’ve tried to mitigate risk in our farms and businesses by becoming diversified. As you’ve mentioned, a lot of farms are fragmented and they form multi-commodities and whatnot. We try and help mitigate those things. But at the end of the day, those pieces are all part of a larger wheel, and any time you start to take spokes out of that wheel, it starts to have an impact on your business.
Ms. Maclean: We talked about international trade. We know the carbon pricing is being implemented provincially, even though it’s a federal mandate. Having said that, each province has a different program coming into place.
The agriculture industry is very interconnected, if you will. A lot of inputs come from other provinces, whether seed or fuels or plant protectants, crop protectants and such.
The other piece is if you look at Ontario — and this is what we hear from our members. If you look at provinces like Ontario and Quebec, the farms are larger in scale. They’re able to be much more cost competitive when they’re purchasing some of their inputs on a larger scale. In Nova Scotia we can’t really do that. We’re being priced out even against other provinces. In Nova Scotia, we do see some encroachment of Ontario and Quebec products coming into Nova Scotia. It’s hard to be at the same price point in Nova Scotia for our growers.
It’s provincial trade issues as well, not just international trade, that this carbon pricing has implications on.
[Translation]
Senator Maltais: Clearly, on the energy front, Nova Scotia is at a disadvantage in terms of electricity and fuels. Farmers are able to pay, but if they reach their limit, they shut down the operations and lock the door.
You talked about future prospects for the farmers in Nova Scotia. You do not provide them with future prospects by throttling them with an additional tax. My colleague Senator Mercer tried to sell Christmas trees in China. I’m not sure whether he managed to sell any. Farmers have a limit and, if they reach it, they close the books. Do you agree?
[English]
Mr. van den Heuvel: That’s right. There’s a fine line most farmers have to walk, and you’re absolutely right. You talk about Christmas trees and these policies being forced on us. As Mr. Lewis alluded to in the previous presentation, farmers are adaptive. We react to the marketplace. I’ll give you an example specific to the Christmas trees.
The Christmas tree growers in our province have been spending a lot of their own money, putting their own research dollars into developing a smart Christmas tree. This is a genetically modified, for lack of a better term, Christmas tree they will be able to bring to market faster and better, therefore reducing and helping all of these issues we’re talking about.
Farmers are creative. We do respond, and we don’t need these types of things being imposed upon us to realize we are stewards of the land, the air and the water. We want to protect and enhance and see these things for future generations.
[Translation]
Senator Maltais: You have a product that is very popular in Quebec: Honeycrisp apples. I hope you will continue to produce them. They are expensive, but they are of higher quality than other apples in Canada. I hope you will continue to provide us with them.
[English]
Senator Oh: Thank you for being here, Chris. Do you know anything about Nova Scotia working on the creation of a cap-and-trade approach to carbon pricing? Do you know whether your provincial government plans to implement carbon offset programs in the agriculture and forestry sector?
Ms. Maclean: That has been my area for a while. With the Nova Scotia cap-and-trade program, it’s a made-in-Nova Scotia, for-Nova Scotia program. Any of the offset credits aren’t able to be sold in markets such as Ontario, Quebec or California. All the credits have to be traded within Nova Scotia — I think there are 19 or 20 companies required to report and be in compliance with the program.
The program as it exists is only written in an act so far. It permits the cap-and-trade program to exist in Nova Scotia. We don’t have regulations yet. We don’t have anything in place indicating what the cost is going to be if you exceed your allotment of emissions or credits.
We also don’t know if they’re going to allow anybody who is not regulated to participate in an offset credit program. At one point we were told that yes, there will be an opportunity if the owners of the offset project are interested in selling in other markets other than Nova Scotia. That was supposed to be made possible. None of that is written yet, and it’s kind of up in the air, is my understanding.
With not having any firm details in place yet, it’s hard for farmers to make plans. That’s how the Nova Scotia program is looking. We really have no firm details. Regulations, in my understanding, were expected to be consulted on this spring at some point. We haven’t heard of any regulations coming down the line yet.
Senator Oh: Are your members worried about competitiveness with the international market? You mentioned earlier U.S. and Australia are pulling back. The group before you was saying they’re pulling back from carbon tax. Are you guys worried that eventually your costs will suddenly be higher compared to south of us? And how will you compete?
Mr. van den Heuvel: Absolutely. There’s no doubt we’re very worried. It’s a concerning proposition. Anytime you have any sort of a tax being put upon an industry, whether it’s ours or any industry, you have no choice but to pass on or absorb the cost. Those are your two scenarios.
Our margins are so thin we cannot afford to absorb those costs. The only two things that will happen is you will see farms shut down or the price of food increase. Those will be the two effects.
Senator Oh: That will affect ordinary people, every household?
Mr. van den Heuvel: Every household, not just farmers.
Senator Ghislain Maltais (Deputy Chair) in the chair.
Senator R. Black: I have just a couple of comments. First, thanks for raising the issue of the definition of a farmer. I think that’s the first we’ve heard of that. It’s good to have.
Also pointing out this policy will pit province against province. You mentioned that just a few moments ago. We’re writing a report. Give us three specific recommendations you would like us to include.
Mr. van den Heuvel: One would be that definition of a farmer. That’s important to have in there, clearly and concisely. Ensuring any funds generated — we want to reiterate this should not be a tax grab. If we are being forced to comply with regulation and policy, that money should go right back into programs and policies that help ensure we have carbon reduction and that farmers are getting recognition for their part. Those would be my top two. Maxine, would you want to comment on a third one?
Ms. Maclean: To add to the definition of a farmer, it’s more streamlining the current definitions as they exist.
Mr. van den Heuvel: I think the regulatory burden piece would be the third piece; ensuring that while we recognize these things are important, we want to take advantage of the processes in place to ensure we don’t force farmers to add another layer of red tape and paperwork. We want to do what we know how to do best, what we love to do, and that’s working in our greenhouses, our fields, in our barns and producing food for the other 98 per cent of the population. That’s what we want to do. Ensure the framework and the policies are in place that enables us to do just that.
Senator Gagné: I think it’s easy to turn carbon pricing into a populist wedge issue — you mentioned pitting provinces against each other. We also sometimes sloganize it — it’s a job-killing tax. We hear all of that. We just have to read the news and listen to people discussing carbon pricing.
Carbon pricing is a public policy choice for the government. Would you say that carbon pricing is less invasive than imposing government regulations? There’s a cost to government regulations. If you regulate the farmers, that’s also a cost to them. There is a business cost to regulations. Which is less invasive, carbon pricing or regulating farmers and businesses?
Mr. van den Heuvel: I fail to see the difference. Is carbon pricing not a form of regulation?
Ms. Maclean: Carbon pricing as a policy is broad in that it encompasses cap and trade and carbon tax. Cap and trade — in Nova Scotia we’re uncertain; even in Quebec and Ontario your carbon credits would be subject to the market. There are some demand and pricing issues when it comes to cap and trade. When it comes to carbon tax you know up front what you’re paying. If you burn or buy this much fuel, you can calculate the tax relatively easily.
From a planning perspective, it would be easier to calculate and plan with a tax.
With regard to the backstop, from what I’ve read of it, or the regulations that were put through, it seems like it’s going to be relatively easy to calculate. That is a plus.
Those would be my thoughts. If it’s being applied high up in the distribution chain, as long as there is a mechanism for the user to see how much of what they’re paying on their fuel bill is being put towards that backstop, I think that would help as consumers or as farmers to see the difference in pricing.
Carbon pricing as a whole is complex. Cap and trade is the most complex piece and doesn’t allow for as much planning as taxing does.
[Translation]
Senator Dagenais: My thanks to our guests. As Senator Gagné pointed out, the carbon tax may be a political decision. You mentioned that we need to look beyond four years at a time.
When you realize that this carbon tax is more about an election than about agriculture, do you feel that the government is trying to satisfy an environmental lobby on the backs of farmers and promise anything even if it is not feasible in the timeframe they have set?
[English]
Mr. van den Heuvel: That’s a great question. I want to stress the fact that we too, as farmers, inherently believe it’s an important issue. There’s no doubt. I alluded to that in my opening remarks — climate change is upon us.
We, as farmers, are the ultimate stewards of the land, the air and the water. That’s our responsibility when it comes down to it. We feel it’s an important topic.
It is a public issue right now. The easiest way to mitigate that, to help ensure we feel like it’s not us versus them, is consultation. It’s this very process, but this has to happen a lot earlier. It has to be part of an overall strategic plan. It has to be less about the federal government saying we’re imposing this, go off and do your own thing. That’s what created these cross jurisdictional issues, whether provincially or internationally. There is no foresight there, no forethought, no consultations or getting everyone in the room to say what are your concerns about this? What are your issues? How can we mitigate that? Only until you get to that point are you going to be able to mitigate that us versus them mentality.
I hope that answers your question. I really see that as the issue. Climate change is important, no doubt about it. We want to be, and we are, a part of the solution. Let’s get agriculture involved from the start of the consultations. Whether it’s climate change, transportation or whatever the issue. At its core I bet you can trace those issues somehow through the value chain back to agriculture. That’s all we’re asking for. Get us involved early in the process.
[Translation]
Senator Dagenais: I would like to come back to the increase in consumer prices because, as you say, with one thing leading to another, the consumers are the ones who will have to pay. However, there will surely be a point where it will become impossible. How long can you wait before raising consumer prices? Have you assessed your potential losses? You are certainly going to suffer losses because of the tax.
[English]
Ms. Maclean: In terms of waiting to see how long it will take to increase consumer prices, I’m not aware of any studies. I would be happy to look into it and provide feedback if that’s something you’re interested in. I know when you’re talking about food security, pricing is often an issue.
[Translation]
Senator Dagenais: It seems that the provincial and federal governments do not have the same definition of a farm. In my opinion, a farm is a farm and a farmer is a farmer. Have you felt that the different levels of government do not view farms in the same way?
[English]
Mr. van den Heuvel: Yes, you’re absolutely right. Some parties may view farming as more important than others. I can’t speak to their policies or thought processes directly.
I think, as we have seen in the past, there are differences, as we alluded to, from the CRA perspective. The CRA definition of a farm, to other branches of government as they get out there. We often see differences not provincially and federally, but within their own government; that is, within different jurisdictions of government. When you’re talking department of environment, or department of energy, or natural resources, or whatever, there is a wide misconception and a wide variance of what actually constitutes a farm. I think that’s a big issue and has to be addressed in order for us to move forward on any of these issues and points.
Senator R. Black: I think you need to be clear, though, and we need to be clear and understand that you’re price takers. It will be tough for you to pass on any of those additional costs. They will get passed down the road, but you won’t get any more. You will have a hard time getting more for your product. Am I correct?
Mr. van den Heuvel: Absolutely.
Senator R. Black: I think we need to be clear on that.
Mr. van den Heuvel: Yes; absolutely.
Senator Mercer: You’re going to be a price absorber, though. You’re going to end up eating the tax.
I want to get more practical here. Has the federation sat down and talked together about a plan? Is there a plan to talk to the provincial government? Is there a plan to sit down with your 11 members of Parliament? If you want the minister to hear the message, you need to do that, namely, sit down with the premier and his cabinet as well to get the message out and help find the solution.
The answer is not going to be that you’re not going to have a carbon tax. We know that. The other answer is we’re not going to become the Americans and have subsidies and cheques from government.
I don’t know if you have heard the saying that I try to use at every meeting, but the most important piece of equipment on the American farm is the mailbox because that’s where the money comes in from the government.
Have you done that? You have 11 members of Parliament and 10 senators. All of them are willing to help and are concerned about the issue. Have you sat down and said how do we get the message to the minister? Being here doesn’t hurt. We’re really glad you’re here, because we have to respond and make comments on the legislation.
Ms. Maclean: On that note, we have met with ministers of the environment to express our concerns and to highlight some of the innovative work that has taken place on farms to reduce our greenhouse gas emissions.
Nova Scotia had an open consultation, I believe last year, on the proposed program for the cap-and-trade. We were very active. We made the submission and we were engaged putting together the program.
We have been engaged. We’ve been communicating with our members and hoping they would work with their MLAs in order to convey their messaging.
Senator Mercer: I would encourage you to go further and to try to get your 11 MPs in one room with the executive of the federation and talk about that. At the end of the day, you’re still going to have a carbon tax. How it’s implemented and how it directly affects you and Nova Scotia consumers is important.
I think there are some good news stories that you need to tell. I don’t know them all across the province. I know some. Yesterday morning, I bumped into a farmer from Masstown, Nova Scotia, a small egg farmer. I visited his farm. The committee actually visited his farm once when we were touring in Nova Scotia. He has a windmill on his farm. It goes directly to his bottom line. The capital cost is covered and that money is going right to the bottom line. It’s certainly helping with greenhouse gases.
Do we need to say to government, “Okay, we’re involved in trying to solve this problem. One of the ways we can help solve the problem is by getting off the grid and by using more wind and solar.” Solar is a little tougher in Nova Scotia, but we always have wind.
Ms. Maclean: If you’re looking at being carbon neutral, Chris can speak to the dairy farms, but with the amount of methane coming off some of the dairy farms there is no reason that can’t be captured and worked back into the electricity system. However, there are regulatory barriers in place that make it cost prohibitive.
Senator Mercer: My attitude is government can’t have it both ways. They can’t say here is the carbon tax, but we’re not going to give you any opportunity to get off the grid. Because if you’re off the grid, this is a major contribution to the cause.
My message is we have to get more active, all of us. I’m not being critical. I’m part of the problem as well.
Mr. van den Heuvel: I couldn’t agree more. Thank you very much for raising that issue. The unfortunate reality is that we’ve got partisan politics at play. They’re not allowing themselves to look at the bigger picture. I alluded to that already. There is no plan or foresight to say we’re doing this for the greater good.
Senator Mercer: Is that federal or provincial?
Mr. van den Heuvel: In our case, it’s provincial. That’s the unfortunate reality. We have to deal with it. We have an opportunity, you’re absolutely right, through collaborative efforts federally to say to the provinces in consultation: This is not just about imposing our will. It has to be a two-way street and consultations to determine what is going to work. Federally, we want you guys to do this. How can we do this? How can we reach the goals? We have to be talking and not sniping at each other. We have to be at the able. It’s too big an issue to allow these things to bypass and allow these things to get in between us.
[Translation]
The Deputy Chair: You are not the problem, you are part of the solution, Senator Mercer, and it is very important to the people of Nova Scotia.
Thank you for coming here. We have a province that is very important to Canada and that has a different agriculture sector than the western prairies, but it faces very specific problems. Since your market is American, we hope that the new NAFTA agreement will offer you some relief for the next few years.
Thank you for your testimony, which has been very enlightening. I wish you a safe return. Please don’t forget to sell a box of Honeycrisp apples to Senator Mercer so that he can share it with us. Thank you.
(The committee adjourned.)