Federal carbon tax system could hit Saskatchewan farmers hard: APAS

Click to play video 'Federal carbon tax system could hit Saskatchewan farmers hard: APAS' Federal carbon tax system could hit Saskatchewan farmers hard: APAS
WATCH: Saskatchewan farmers are concerned about the federal government's plan to gradually increase its carbon pricing system – Jan 10, 2021

Saskatchewan’s largest farm group says the recently announced increases to the federal carbon tax will take hundreds of millions of dollars out of their pockets by 2030.

The president of the APAS (Agricultural Producers Association of Saskatchewan) says the impact could be serious enough to put some of them out of business.

“In some years it may be the difference between making money and losing money,” said Todd Lewis, head of the APAS.

“So, if we continue with these added costs it could really put the sustainability of a lot of operations in question, especially young producers just starting out who are not established.”

Read more: Supreme Court reserves judgment in Canada’s carbon tax cases

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In December, the federal government announced the carbon levy would gradually rise to $170 per tonne on fossil fuels, up from the current $40 per tonne. It’s all part of Ottawa’s overall goal to gradually reduce the country’s greenhouse gas emissions.

While farmers get some exemptions on fuels they use, a lot is not covered. If harvest occurs during a wet fall, for example, farmers have to dry the harvested grain — otherwise, it spoils and becomes almost worthless. That means they have to use a lot of propane or natural gas, none of which is exempt from the tax.

“If we didn’t have grain dryers (in 2019) there would have been millions of acres of crop left to rot (because it was such a wet year),” said Lewis.

The APAS adds that farmers also have to pay higher costs for trucking and rail transportation because of the tax.

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The APAS released its analysis on Jan. 7. The report says farmers cannot pass the higher costs onto their customers because most of their crops are sold in international markets. And their competitors in those markets do not pay a carbon tax.

“Farmers and ranchers in Saskatchewan will have to bear the cost of charges,” said Lewis. “We are price takers, not price makers.”

A former Liberal MP, who is critical of the tax, argues consumers will also get hit. Dan McTeague with Canadians For Affordable Energy says because fossil fuels are used in the production and transportation of almost everything, the tax will raise the cost of almost everything.

“It will drive up the cost of living to intolerable levels in Canada unless you are absolutely rich,” said McTeague.

The federal government says the tax is intended to be revenue-neutral and the majority of consumers will get back as much, or more than they pay. Money is also rebated to groups like hospitals, schools and municipalities. The goal is to provide an incentive for individuals and businesses to look for cleaner, more efficient energy options.

A federal spokesperson added that one option it is looking at is a greenhouse gas offset system, which would give farmers credits for the carbon that is captured by growing their crops. The statement adds that the federal push for more biofuels could also create new markets for farmers.

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A Saskatchewan environmentalist believes another part of the problem is that the province is fighting the federal carbon tax in court instead of designing its own carbon levy that could be more sensitive to the needs of farmers.

Read more: Federal carbon tax cost SaskPower customers $83M in 2019-20, says annual report

Peter Prebble with the Saskatchewan Environmental Society says there are six provinces that have created their own carbon levy.

“Clearly farmers have suffered during falls when a lot of expenses has had to be incurred with respect to grain drying,” said Prebble. “Some kind of exemption would be good public policy. If it was something the government of Saskatchewan was running, they could implement.”

Prebble added that climate change is causing a growing amount of damage in Canada, and the carbon levy is one way to try to change that.

Lewis says the APAS is still trying to figure out the carbon levy’s total impact.

“It’s a tax where there is a lot of hidden costs,” said Lewis. “It’s hard to put down on paper.”

He says the APAS will continue to work with the federal government on getting more exemptions for farmers.

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A ruling on Saskatchewan’s challenge of the carbon tax is expected to take place at some point during the year.

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