Carbon tax to cost 8 percent of net income this year, says APAS

The Agricultural Producers Association of Saskatchewan (APAS) says grain farmers in the province will send eight percent of their total net income to the federal government in the form of a carbon tax this year.

“Federal Minister of Agriculture Marie-Claude Bibeau has asked the agriculture industry for evidence of what the carbon tax is costing Canadian farmers,” says APAS president Todd Lewis, who farms near Gray, Sask. “We’ve responded with estimates that are backed up by producer bills in 2019.”

The cost review published on Monday takes into consideration the major grain farm expenses not currently exempt from the carbon tax. This includes grain drying, rail transportation, heating and electricity, and hauling crops off the farm.

The provincial farm group estimates that, on average, a farm family managing a 5,000-acre grain farm will pay approximately $8,000 to $10,000 in carbon tax this year.

In two years, when the carbon tax increases to $50/tonne in 2022, this bill will go up to $13,000-17,000 for the same household — the equivalent of a 12 percent decrease in net income, APAS says.

“It’s comparable to having 12 percent of your pay cheque disappear,” says Lewis. “Farmers don’t set our prices, so those increased costs are coming directly off our bottom line.”

“APAS’s numbers reflect my personal experience down to the penny,” says APAS vice-president Bill Prybylski. “This past year was unprecedented in terms of the role grain drying played for farmers in our province. Without using propane to dry our grain, the wet fall would have meant losing a huge portion of our crop.”

APAS notes the cost of rail transport will also have a carbon tax factored in, as does trucking grain to market — an unavoidable option for the vast majority of Canadian farmers.

On a per-acre basis, APAS pegs the average cost for a grain farm at $2.38/acre for 2020, with that number rising to $3.80/acre in 2022.

Here’s how the numbers add up for the major carbon tax expenses in 2020 (2022 in brackets):

  • Electricity — $0.06/acre ($0.15/acre)
  • Heating — $0.15/acre ($0.39/acre)
  • Grain drying — $0.51/acre ($1.26/acre)
  • Rail freight — $0.88/acre ($1.60/acre)
  • Truck freight — $0.16/acre ($0.40/acre)

APAS notes there are other indirect costs that will be passed on to producers, as the carbon tax is applied to transportation of fertilizer and other inputs, transportation of livestock and livestock feed, processing and handling (by elevators, mills, and crush plants), manufacturing machinery, and custom field services. These costs are not included in the calculations.

The group is advocating, on behalf of Saskatchewan farmers, for a carbon tax exemption on all farm expenses, including those from 2019. “Our hope is that this is the evidence the minister is looking for,” says Lewis, “and that the federal government will step in to help farmers.”

Minister Bibeau thanked APAS for sharing the report when asked about it in Question Period on Monday.

“I am always open to listen to more information. I am working hard with my provincial colleagues, as well as with the industry, to find optimal practical solutions to support our farmers,” she said.

(A more detailed outline of the calculations is available on APAS’s website.)

Related: Manitoba paying $1.7 million on carbon tax on corn drying alone

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