Boosting the carbon tax to $170 per tonne will push up the cost of producing and transporting wheat by $12.50 an acre, says the Agricultural Producers Association of Saskatchewan (APAS).
Three-quarters of that cost will come from the additional cost for propane for drying wheat and from a surcharge that CN and CP Rail will charge for moving Saskatchewan grain to port, according to calculations done by the farm group.
And that cost will be entirely borne by farmers, said APAS president Todd Lewis.
“We’re looking at a reduction of net farm income by hundreds of millions of dollars in Saskatchewan alone, and the modest rebates provided by the federal government won’t make up for these losses,” Lewis said in a news release. “It’s unsustainable for our members.”
The carbon tax is a levy on the amount of carbon dioxide emissions from a fuel or energy source.
The federal Liberal government plans to hike the tax each year (it rose to $30 per tonne on Jan. 1 from $20 previously) until it hits $170 per tonne in 2030.
For its analysis, APAS looked at the cost impact for growing and shipping a 62.5-bushel-an-acre wheat crop.
The biggest impact was on rail freight. The average length of haul from Saskatchewan is 1,850 kilometres, APAS said, and that means that currently, railway surcharges (to cover the carbon tax) are 1.77 cents per bushel (or $1.15 per acre). This will rise to 7.52 cents per bushel (or $4.90 an acre) by 2030, the farm group said.
The next biggest hit will be for grain drying, according to APAS. Its calculation assumes that the wheat crop will need to have three pounds of water per bushel removed and then looks at the amount of propane needed to do that. Currently, the carbon tax on that propane (again for a 62.5-bushel-an-acre crop) is 52 cents an acre. By 2030, that cost will be $4.44 an acre.
The remainder of the additional costs are trucking ($1.38 an acre by 2030 for taking a fully loaded Super B to an elevator 63 kilometres away), heating with natural gas ($1.30 an acre by 2030), and electricity (49.5 cents an acre by 2030).
That adds up to $12.52 per acre but doesn’t include other potential costs, such as extra costs for transporting inputs or fees that elevators or canola crushers might impose because they will be paying more carbon tax. (Production of fertilizer and certain other industrial products, such as steel, falls under a different, more modest pricing system because their competitors in other countries don’t face carbon levies.)
Federal Agriculture Minister Marie-Claude Bibeau has promised the government will spend some of the carbon tax to help farmers adopt new technology to cut their carbon emissions. The government’s climate plan released in December calls for investment of $165.7 million over seven years to support the agricultural industry develop “transformative clean technologies” and to help farmers adopt “commercially available clean technology.”
Lewis said his organization will be pressing Ottawa to provide relief.
“Our members expect us to stay on this issue until our concerns are heard,” he said.
The calculations used by APAS can be found at apas.ca/carbontax.