Carbon tax costs corn producers much more than government’s $819 per year calculation, Grain Farmers of Ontario says

By Connor Lynch
ST. ISIDORE — How much has the carbon tax cost farmers, particularly corn farmers who had whopping drying costs last fall? Well, it depends who you ask.

Federal Agriculture Minister Marie-Claude Bibeau told reporters last month that according to data submitted by ag organizations across the country, the cost of the carbon tax was as low as $200 per farm per year in some provinces but as high as $819 per farm on average per year in Ontario.

Using Grain Farmers of Ontario data, a farmer growing 500 acres of corn would lose almost $2,500.

GFO chairman Markus Haerle said he was “stunned” when the government came out with its cost-estimate, especially since the GFO and other farm groups supplied the data. Haerle was left wondering,“Why does government even do anything?”

Haerle, who farms and runs a grain elevator at St. Isidore, figured the carbon tax has already cost him $8,500, in both direct and indirect costs. The Canadian Federation of Independent Business estimated that the carbon tax costs its farm members on average $16,000 a year.

The GFO’s carbon tax estimate for Ontario farmers last year was $12 million, which works out to about $5.48 per acre of corn. But Agriculture Canada estimated the per acre cost at closer to $2.

Why the discrepancy?

GFO chief economist Rob Gamble explains that the feds put together their cost estimate a little bit differently than the GFO. It all depends on how you spread out the numbers.

Because corn needs more drying than other crops, the GFO focused on how much costs increased per acre of corn to get their per acre cost. But, Gamble said, the feds appear to have taken those increased cost estimates per acre of corn and spread it out across acres of all crops. In 2019, about a third of crop acreage in Ontario was corn. The $2 estimate of costs per acre in Ontario is about a third of the GFO’s estimate.

The problem isn’t that the federal number is wrong, per se. It’s that it’s disingenuous, argued GFO chair Markus Haerle. Not all commodities are created equal when it comes to the carbon tax, and suggesting that corn farmers are fine because the costs, on average, are low, isn’t reasonable. Corn is a higher input crop, there’s a carbon tax on those inputs, and corn requires more drying.

And, of course, the carbon tax isn’t static. It started at $20/tonne in 2019 but will hit $50/tonne by April 1, 2022. One major fuel supplier in Canada pegged its propane price to go from 3 cents/litre last year to 7 cents/litre by 2022; diesel to go from 5 cents/litre to 13 cents/litre; and 4 cents/litre for gasoline to hit 11 cents by 2022, Haerle said.

Simply put, producers can’t download those growing costs, or avoid them. They have to eat them. “The marketplace won’t give us the offset.”

As for GFO’s next step, Haerle said they were “exploring other avenues,” on not only the carbon tax, but Business Risk Management and compensation in general. “We’re assessing where and how we have to push on those issues.”