Carbon tax increase to $170/tonne will cost grain farmers $50/acre, GFO says

ST. ISIDORE — The federal carbon tax hike is going to cost grain farmers as much as $50/acre once it’s fully implemented in 2030.

Last month the feds announced the carbon tax would hit $170/tonne by 2030 as part of its increasingly aggressive efforts to curtail Canadian carbon emissions.

The government also announced, alongside the hike, $165.7 million for the agriculture sector to invest in “clean technology,” alongside nearly $100 million to establish a “Natural Climate Solutions for Agriculture Fund.”

Unfortunately for agriculture the problem can’t be innovated out, said Grain Farmers of Ontario chair Markus Haerle who farms at St. Isidore. A farmer averaging 170 bushel/acre corn, with a normal year of moisture, will be paying as much as $50/acre in carbon tax on drying that crop alone, and there’s no way around it. “That will become a line item in everyone’s farm that we have to assume in our cost of production,” Haerle said, because “we have no alternative fuels for crop drying than natural gas and propane and “we can’t store commodities at harvest moisture, especially corn, to keep for the marketing season.” The only option if you grow corn is to dry it, and there’s no way to do that with lower carbon emissions.

For Haerle, who also runs a grain elevator, his carbon tax bill last year was about $8,000, with the carbon tax at $30/tonne. All else being equal, that means his carbon tax bill will hit at least $40,000 by 2030, not counting the invisible costs added throughout the supply chain.

And with farmers’ hands tied when it comes to passing costs along (since prices are set by the Chicago Board of Trade), the only alternative is an exemption, such as the greenhouse industry has. But there’s yet to be any movement on that front, despite the GFO working on it actively for over a year. Said Haerle: “We’re still pursuing to get an exemption on the carbon tax for the grain sector. We haven’t explored all our avenues, but we won’t back off on that ask.”