The carbon tax has kicked in, but producers are still trying to figure out its impact — and what can be done to ease the hit on the bottom line.
“Everything we buy — whether it is in inputs, fertilizers, freights, parts, machinery — all of those service providers to us are all impacted. Their costs go up,” said Greg Stamp of Stamp Seeds near Enchant.
“If their costs go up, are they able to pass it on, if they want to maintain the same margin they’re having? For farmers, it becomes tough because how do we maintain margins?”
Kevin Auch, chair of the Alberta Wheat Commission is also concerned.
“If all those other items go up in cost, it comes off our bottom line before we ever make a dollar,” said Auch, who farms at Carmangay. “With a thin-margin business like farming, that could be a concern if those numbers are too big. We just don’t know what they will be at this point.”
One exemption made for producers is that there is no tax on dyed fuel used in tractors and other farm equipment. But producers, like everyone else in Alberta, now pay 4.5 cents of tax on every litre of gasoline and six cents on every litre of diesel, effective Jan. 1.
Stamp says this could make a difference in staffing costs at his farm.
“If my staff is driving to and from work with her car, she’s paying more for fuel and everything she is buying will be going up,” he said. “She will be in a tighter position. They may want to be paid more, which is fine. Costs go up for everybody and they have to cut back or try and make more money.”
Other costs are also set to go up, said Stamp, a delegate for Alberta Barley.
“A lot of our irrigation cost is electricity. So if electricity and transmission costs keep going up, it’s going to make our irrigation costs very high. Seed cleaning also uses electricity, so as that keeps going up, it brings the cost of cleaning up.”
Auch is concerned about rising fertilizer costs in the province. Both urea and anhydrous ammonia are produced in Alberta using natural gas. Auch would prefer to have fertilizer produced and used locally.
“If we’re importing fertilizer because our homemade fertilizer becomes more expensive, then you have extra freight costs on there. But if those freight costs are less than the carbon tax, it will happen. We will be importing fertilizer.”
And this approach could actually add to producers’ carbon footprint instead of reducing it.
Team Alberta, a group representing the four biggest crop commissions, has met with the government to discuss an improved carbon offset system for farmers, as well as other concerns about climate change and carbon tax.
“We want the government to understand that agriculture is actually part of the solution,” said Auch, an active member of the lobby group.
“If you’re going to tax us, reward those who are doing the sequestering (carbon through no till) as well,” he said. “If we’re sequestering more carbon than what we’re using, we shouldn’t be penalized at all. If what you’re trying to achieve is removing carbon from the atmosphere, well, we’re doing that.”
Many producers have adopted these practices because of environmental and economic benefits. But some may need incentives to choose some of the lower carbon practices, and that could be an area where the government could step in and assist, said Auch.
“Incentives for adopting more sustainable and environmentally friendly practices is one example where you could mitigate some of the damage from the tax. But we don’t know the numbers right now. The bigger concern is how this is going to affect our costs before we make a dollar.”
Team Alberta has met with Agriculture Minister Oneil Carlier and Environment Minister Shannon Phillips. One of its requests is a seat for the agriculture industry on two government bodies, Alberta Climate Change and Emissions Management Corporation.
Carlier’s ministry has moved to help the greenhouse sector, which will receive carbon tax rebates of about 80 per cent on natural gas used for heating. A few months ago, the government also bumped up funding for a Growing Forward 2 program which offers grants to offset part of the cost of upgrades such as more energy-efficient lighting and solar panels for barns.
“What I’m hearing from producers right across the province is to ensure we can find those efficiencies and make sure the system works for everyone,” Carlier said in an interview.
Carlier has said producers will be able to take advantage of programs offered to all Alberta residents, such as programs that will make housing more energy efficient.
“Part of the carbon levy is to incent people a little bit more to find those personal efficiencies,” he said.
All of the money collected from the carbon tax will be going back into Alberta’s economy to try to find efficiencies and to make every industry, including agriculture, ready for a more environmental economy.
“There is a lot of work that producers right across the province and the country have been doing and we’d like to continue working with them to continue the good work they already do,” said Carlier.