Carbon price worries farmers, fertilizer makers

Saskatchewan's Wall pitches alternative carbon plan

Stubble on a harvested oat field near Winnipeg. (Shannon VanRaes photo)

Winnipeg/Toronto | Reuters — Canada’s plan to price carbon emissions may weaken the farm sector in one of the biggest grain-shipping countries, raising farmers’ costs and discouraging investment in fertilizer production, industry groups say.

Ottawa this month promised a price on carbon emissions by 2018, and will let provinces choose a tax or cap-and-trade system. Carbon pollution will cost $10 a tonne in 2018, rising gradually to $50 in 2022.

At $50, it would raise fertilizer prices $2 per acre for farmers, and some experts peg the total farm cost at $6 an acre, according to CIBC bank.

“Everyone is paying attention to this, especially in a downtime for the economy,” said Robin Speer, executive director of Western Canadian Wheat Growers, which has gathered 2,500 petition signatures opposing the price.

Reduced tillage and more fuel-efficient machinery have made farming more environmentally friendly, and crops absorb carbon from the air and leave it underground, Speer said.

Agriculture accounted for 10 per cent of Canada’s 2014 total greenhouse gas emissions, according to Canada’s environment department.

Nitrogen fertilizer producers, among major polluters in western provinces, are leery of a carbon price. Agrium and CF Industries will be subject to Alberta’s carbon tax of $20 per tonne when it takes effect next year.

Higher costs will discourage expansion and shift production elsewhere, said Garth Whyte, CEO of industry group Fertilizer Canada. Provinces should instead credit fertilizer makers for reductions in nitrous oxide, a production byproduct, he said.

Fertilizer producers can justifiably argue they need provisions to stay competitive, and farmers should also receive support, said Keith Brooks, programs director at Environmental Defence.

“You want the price to influence everyone’s behaviour but we don’t want it to mean farmers can’t make a living,” he said.

At a committee meeting on Tuesday, Liberal government legislators rejected an opposition motion to study how the carbon price will affect the farm sector, Conservative legislator David Anderson said.

Ottawa’s carbon price does not directly impose costs on pollution from farm vehicles or their fuel, and the government lets provinces choose how to use carbon revenue, said Caitlin Workman, spokeswoman for Environment Minister Catherine McKenna.

Saskatchewan Premier Brad Wall on Tuesday pitched an alternative approach to carbon pricing, focusing instead on clean energy technology and renewable power — for example, boosting Crown electricity firm SaskPower’s use of renewables such as wind and solar to 50 per cent of its generating capacity by 2030.

Wall’s plan also called for recognition of “emission-reducing carbon offsets,” such as from hydro exports from British Columbia, Manitoba and Quebec and from the “carbon stored in Canada’s vast forests, wetlands and farmland.”

It also calls for support of research into new crop varieties that can better withstand climate change and that can fix greenhouse gases into soil.

British Columbia gives farmers an exemption from its carbon tax on farm fuel purchases. Alberta plans to do the same. Ontario’s emissions cap does not cover agriculture.

Reporting for Reuters by Rod Nickel in Winnipeg and Alastair Sharp in Toronto. Includes files from AGCanada.com Network staff.

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