Hon. Robert Black: Senator Wells, will you take a question?

Senator Wells: Yes, Senator Black.

Senator Black: For my clarity, did you say that you spoke with someone on Tuesday evening who was using a commercial grain dryer, but if this benefit or exemption came into being, they would build a dryer on their farm and stop using that commercial dryer, in which case the one they build is likely going to be a new one and likely high-efficiency? Am I correct?

Senator Wells: Thank you, Senator Black. Yes, she showed me a picture of a grain dryer. I did not know what a grain dryer looked like until I saw the picture.

Yes, it would. It was new. They showed the tanks of propane and all that would go with it. It clearly would be more efficient, and that is also a saving. I do not know. They are one hour north of Ottawa. North Gower is about a half-hour south of Ottawa. I don’t know the state of the equipment in North Gower, but something brand new would certainly be more efficient than something that exists now.

[Translation]

Hon. Robert Black moved the adoption of the report.

He said: Honourable senators, I rise today to speak to the twelfth report of the Standing Senate Committee on Agriculture and Forestry on Bill C-234, An Act to amend the Greenhouse Gas Pollution Pricing Act.

I am pleased to advise that we held seven meetings. We heard from 24 witnesses and received 21 written briefs. I would like to add that, in comparison, the other place only held five committee meetings on this bill.

As an overview of what happened during those seven meetings throughout our study, I offer the following:

Three amendments were proposed, and only one was adopted during clause-by-clause consideration. The amendment adopted — put forth by Senator Dalphond — limits the bill to grain drying equipment only by excluding the heating and cooling of barns, greenhouses and other structures.

Upon presentation of this amendment, a point of order was raised by my Canadian Senators Group colleague Senator Burey, deeming that amending Bill C-234 in this manner was destructive to its original principles and goals, and was, therefore, out of scope. After debate on the point of order, I, as chair, ruled in favour of the point of order. However, the chair’s ruling was defeated in a vote of 5 yeas; 7 nays; and 2 abstentions. The amendment was then debated, voted upon and adopted: 7 yeas; 6 nays; and 1 abstention.

The report also now includes four observations, with a fifth observation being withdrawn, as it was very similar to one that was approved.

Honourable colleagues, I will now remove my committee chair hat, and assume my perspective as a senator appointed to this chamber because of my agricultural background. As you know, I take every chance that I can to highlight this very important industry, and so now I am wearing my proverbial farm hat.

I will begin by saying that presenting this report is a challenging task for me. I’m highly disappointed — as the chair and as a lifelong “agvocate” — that I must table this report, and now have to speak against it.

Colleagues, as I have said, there were two parts to this bill — farm heating and cooling, and grain drying — and now there is one. The amendment adopted in this report by our colleague from the metropolis of Montreal effectively removes half the bill by excluding the heating and cooling of buildings and structures.

I believe, as does the industry, that this amendment changes the initial intent of the bill, which was to provide carbon tax relief for farmers. The bill, as it now stands, establishes an unjust precedent within our industry. Our farmers work tirelessly to produce food that feeds our nation and the world, and they are facing increasingly challenging circumstances.

We heard over and over again in committee how much the industry needs this carbon tax relief, especially as we move into the colder months when farmers will be required to heat their barns, greenhouses, et cetera. Climate change, labour shortages, trade disruptions and the lasting effects of the COVID-19 pandemic have taken a toll on our agricultural sector. Additionally, agricultural commodities are already facing a rise in costs of production for things like inputs, supplies, machinery and transportation.

As a nation, I believe that we must do everything in our power to support our farms and ensure they can continue to thrive in the face of these significant challenges. Removing the heating and cooling of barns and other structures does the opposite of this.

While some alternative, greener options may be available for the heating and cooling of barns, the current challenges faced by the industry do not allow for producers to have the capital to afford these greener options, as they require astronomical investments usually amortized over 20 or more years.

The transition to more sustainable and environmentally friendly practices in agriculture is a goal we all share, including the industry. However, we must also understand that this transition requires time and significant investment to build the necessary infrastructure, and to scale up emerging alternative technologies.

Moreover, witnesses during the Standing Senate Committee on Agriculture and Forestry proceedings underlined that emerging technologies, which would provide alternatives, are at least eight years away from commercial viability. Let me repeat that — alternatives are at least eight years away from commercial viability.

Bill C-234 includes a sunset clause to re-evaluate its context in eight years, ensuring justification for such an exemption. As a side note, colleagues, one of the other amendments voted down by committee aimed to reduce this sunset clause to three years, even though we heard loud and clear in committee that three years wasn’t long enough for such technology to become viable.

The industry clearly supported the eight-year sunset clause amended to the bill in the other place. In the absence of viable alternatives for heating and cooling, the amendment, which removed half the bill, doesn’t just impact farmers’ and ranchers’ competitiveness — it jeopardizes their future efficiency and sustainability by forcing them to bear tens of thousands of dollars in carbon taxes. The net result is limited available capital for farmers to invest in their operations and continue lowering their carbon footprint through, for example, innovation.

The carbon tax both delays and prevents investments in critical efficiencies that would improve the sector’s environmental performance.

As I said previously, we are only weeks away from winter, when farmers across this country will begin adding more heat to their barns, greenhouses and other structures. This is a crucial period in the agriculture sector because of the coming cold weather. During this time, drying crops properly at the correct humidity level is required to prevent commodities from spoiling.

Furthermore, heating barns for broiler chickens, egg layers, young dairy calves, hogs and more is necessary to keep farm animals healthy through winter — so it is an animal welfare issue as well. Yet this amended bill removes the heating and cooling of these structures from a carbon tax exemption, essentially eliminating half the bill.

Colleagues, this is not the first time a bill with similar intent has been presented in Canada. Numerous attempts have been made in both chambers to provide relief for farmers from the carbon tax, underscoring the importance of this issue to our nation — and significant concerns regarding it. In fact, this is the second bill to pass the other place and come to our esteemed chamber of sober second thought, and this may very well be the second time the industry will fail to benefit from these measures, even though their duly elected officials voted for and passed similar bills twice.

I have heard, colleagues — and I expect you have all heard as well — from hundreds of Canadians, consumers, farmers, producers and numerous others in the last week or so who are extremely disappointed with this report, and that the bill has been gutted and its basic intent removed.

Representatives from the Canadian Cattle Association said:

On behalf of Canada’s 60,000 beef farms and feedlots, including the 7,500 seed stock breeders, we request your support for Canadian agriculture by voting against the proposed amendments and allowing the bill, in its original form, to be tabled at third reading and passed into law without delay.

A representative from Grain Growers of Canada, which represents over 65,000 producers, said:

I am asking for you to reject the proposed amendment from the committee which would exempt the heating and cooling of buildings. This would not only further delay this crucial piece of legislation, especially as we approach the winter season, but it also does not acknowledge the current technological realities.

Larry Davis, a cash crop farmer in Ontario, said:

Not only does this amendment change the intent of the bill which had received multi-party support in the house, it also jeopardizes the bill’s passage by adding considerable delays and sending it back to the house.

Honourable colleagues, this is a small fraction of what I have heard from people across our great country over the past week. It’s evident that our agricultural sector has been greatly let down by this report. Further, they have been let down by our honourable colleagues who never attended one meeting of the committee to hear from witnesses about the need for this exemption, but instead were parachuted into the committee for clause-by-clause consideration only.

Farmers, ranchers and processors must maintain their competitiveness within Canada’s economy. The carbon tax disproportionately affects them, despite their role as stewards of the land and an essential part of this nation.

Moreover, the sector plays a crucial role in preserving Canada’s environment and the fight against climate change. In fact, many farmers have been actively employing various carbon‑sequestration methods to enhance farmland productivity, protect the land and continue to produce the great food we all get to eat 365 days a year. Yet we continue to look only at the sector’s carbon footprint and not the contributions that farmers and producers make to return and sequester carbon and contribute to climate change mitigation.

In the Standing Senate Committee on Agriculture and Forestry, we have heard testimony that many in the agricultural sector are already actively engaged in the fight against climate change. For example, Paul Maurice, a farmer in Tiny, Ontario, said:

We run a 35,000-bird broiler operation. We also cash crop 900 acres of corn, soybeans, cereal grain and hay in Simcoe County, Ontario. I acknowledge that we are all part of the problem but we, in the agricultural sector, are doing our best to be part of the solution and not the culprit, as many would have us believe. The best management practices that we implement in our operations far outweigh the carbon footprint that so many believe we create. The sequestration of carbon within our crops, and subsequently into our soils, seems to be a story that is put aside. As farmers, we are always looking for production efficiencies to remain competitive in our domestic and global agricultural marketplace.

As I’ve mentioned, farmers are finding carbon-reducing strategies and innovative new ways to produce food for Canada and the world. For example, carbon waste is being used to generate biofuels through the construction of things like anaerobic digesters. This innovation is being used by dairy farmers and others across the country, yet they are not being recognized for these innovations.

Farmers are progressive, determined and interested in engaging in innovative new technologies for the advancement of the industry. Farmers understand the importance of innovation and progressiveness in their fight against climate change. But this cannot be supported by limiting their fiscal capacities and forcing them to bear the burden of an unfair tax on their livelihoods.

Bill C-234, in its original state, offers a practical solution that would provide relief for farmers without compromising our environmental goals. This exemption would have had a significant positive impact on Canadian agriculture. It would have helped reduce input costs for farmers, thereby making it easier for them to invest in new technologies and infrastructure that will improve their efficiency and competitiveness — and lower their carbon footprint. It would also have encouraged the growth and development of the agriculture sector, which is essential for our country’s economic and social well-being, especially as our population continues to grow. We need farmers to be able to grow, innovate and expand to continue to feed Canadians and the world.

Furthermore, the exemption in the original bill would have been in line with this government’s commitment to support small businesses and rural communities. By exempting fuels used for farming, the government would be acknowledging the unique challenges faced by these groups and seen to be taking steps to address them. However, the current report before us, which removes exemptions for the heating and cooling of buildings, structures and greenhouses, threatens to undermine these objectives.

The bottom line is that it’s farmers who are being pinched. It’s farmers who are going into this winter and will be hundreds of thousands of dollars in the hole while trying to keep their farms and families afloat to feed you, me, our families and the world.

If a business owner’s bottom line is affected, he or she will do all they can to cut costs to prevent bankruptcy. How can we expect our farmers to see their costs increase and their bottom lines threatened without them passing along those cost increases to the consumer? Except farmers can’t do that, because they are price takers, not price makers.

Colleagues, I am sure you heard the announcement last week by the Prime Minister that they are doubling the pollution price rebate rural top-up rate and implementing a three-year pause to the federal carbon price on deliveries of heating oil in all jurisdictions where the federal fuel charge is in effect. As a senator who raises issues and concerns related to rural communities, I was very happy to hear this announcement and know it will help many rural Canadians as they struggle to pay their bills, heat their homes and put food on their tables.

Yet our farmers — who, of course, are also located in rural areas — will not receive this benefit when heating and cooling their farming facilities.

This would have been, and still is, a critical exemption that farmers need now that would help them survive and continue to feed us all.

Why are we burdening ranchers and growers with taxes, sometimes reaching tens of thousands of dollars — in some cases much more — and limiting their ability to adopt technology in the future? Why are we hindering our national food security and food sovereignty? Why are we causing farmers this grief and further delay?

Colleagues, having said all this, as a senator that many of my honourable colleagues come to with questions about agriculture, I turn to you now and respectfully request that you vote down this report. Vote it down for our farmers. Vote it down for your local producers. Vote it down to ensure that the increased costs don’t cause our food to continue to skyrocket and cost more. Whatever your reason, I ask that you vote this report down, return the bill to its original state and return it unamended to the other place post-haste so our farmers don’t have the burden of this carbon tax now.

With that, I’ll take off my agriculture hat and say thank you to the Library of Parliament analysts, the clerk and all the committee staff for their help.

Hon. Robert Black: Honourable senators, I rise today in the chamber of sober second thought to speak to Bill C-234, an Act to Amend the Greenhouse Gas Pollution Pricing Act, sponsored by Senator Wells. Thank you, Senator Wells, for your remarks and for answering all those questions.

Bill C-234 is an essential piece of legislation aiming to support our farmers. As an AGvocate, I am proud to stand here before you, and I will continue to do so going forward, to support our Canadian agricultural industry.

Before I dive into the specifics of the bill, I want to take a moment to emphasize the importance of Canadian agriculture. Our farmers work tirelessly to produce the food that feeds our nation and the world and they are facing increasingly challenging circumstances. Climate change, labour shortages, trade disruptions and the lasting effects of COVID-19 pandemic have taken a toll on our agricultural sector. As a nation, we must do everything in our power to support our farmers to ensure they can continue to thrive in the face of those significant challenges.

That brings me to Bill C-234.

The purpose of this bill is to amend the Greenhouse Gas Pollution Pricing Act to provide relief to farmers who are struggling under the burden of the carbon tax that was implemented in 2019. It imposes a price on greenhouse gas emissions in an effort to reduce Canada’s carbon footprint and meet our international climate change commitments. However, the tax has been a source of frustration and financial hardship for many Canadians, especially those in the agricultural sector who are already facing high costs and ever-narrowing profit margins.

Previous speeches and evidence provided in the other place regarding the carbon tax have highlighted the negative effects and impacts it has had on Canadian farmers. A 2020 report by the Standing Committee on Agriculture and Agri-Food suggests that the tax is increasing input costs for farmers, reducing their competitiveness and discouraging investment in new technology and infrastructure. The report also noted that the carbon tax is disproportionately affecting farmers in certain regions of the country, such as the Prairies, where the cost of transportation is higher, and the weather and temperatures are more diverse.

Another study by the Canadian Federation of Independent Business found that the carbon tax is costing farmers an average of $14,000 per year. That is a significant burden for many farming businesses that are already struggling to make ends meet. That study also found that the carbon tax is hindering the growth and development of the agricultural sector, which is a crucial component of our Canadian economy.

It is clear that the carbon tax is having a negative impact on Canadian farmers and that something needs to be done to address the issue. Bill C-234 offers a practical solution that would provide relief to farmers without compromising our environmental goals. The bill proposes to exempt fuels used for farming from the carbon tax for necessities like barn heating and grain drying. This exemption would have a significantly positive impact on Canadian agriculture. It would reduce input costs for farmers, making it easier for them to invest in new technology and infrastructure that will improve their efficiency and competitiveness over time.

It would also encourage the growth and development of the agricultural sector, which is an essential component of our country’s economic and social well-being.

Furthermore, the exemption would be in line with the government’s commitment to support small businesses and rural communities. By exempting fuels used in farming, the government would be acknowledging the unique challenges faced by those groups and be seen to be taking steps to address them.

There has also been discussion about the potential impact of the exemption on Canada’s climate change goals. However, this bill strikes an appropriate balance, in my mind, between supporting farmers and protecting our environment. It also includes measures to ensure that the exemption is being used appropriately by specifically naming which practices on the farm are to be included.

Furthermore, honourable senators, the bill was amended, and a sunset clause was added in the other place, as has been previously noted. Acknowledging that technological advancements will help the industry evolve further, the amended bill includes measures to ensure that the exemption will expire in eight years.

Colleagues, we all know that, with great innovation, Canada and the world might some day no longer be dependent upon fossil fuels, but until that time comes, they cannot pass the price of carbon onto those who put food on our tables.

As the MP for Huron—Bruce in the other place noted in the Agriculture and Agri-Food Committee hearings, farmers are price-takers, not price-makers; they are subject to the impacts of the market, the same as everyone else. Farmers and processors must remain competitive in Canada’s economy, and the carbon tax disproportionately affects them as stewards of the land and an essential part of this country.

As well, the sector plays a crucial role in the maintenance of Canada’s environment. Many farmers actively use carbon sequestration methods already to improve their farmlands. We are hearing about that during the Senate Agriculture Committee soil study. And yet we continue to look at the carbon footprint of the sector only, not to the contributions that farmers and producers make to return and sequester that carbon and contribute to climate change mitigation.

I would also like to mention that this is not the first time we have seen this bill. As we have heard, there were similar ones in the past. Many attempts have been made in both our chambers to provide relief for farmers from the carbon tax. Bill S-215 was tabled by our colleague the now-retired Honourable Diane Griffin here in the chamber in 2019, as we heard. That bill would have given provisions to the commercial drying as well, and it would have extended broadly to farmers and the entire sector.

In a 2021 brief submitted to the House Standing Committee on Agriculture and Agri-Food, the Grain Farmers of Ontario noted that in Ontario, combined crop propane and natural gas drying costs were $120 million in 2019, almost double a typical year’s cost of $63 million. In 2021, the carbon tax added an estimated 22% to the cost of drying grain, and this will continue to rise dramatically to 2030, when the cost of the carbon tax alone will reach 92% of the current value of the fuel used to dry the crop.

Another similar bill, Bill C-206, was introduced in the other place in 2020 by MP Philip Lawrence from Northumberland—Peterborough South, who stated in his chamber that the carbon tax is not neutral for farmers.

While that comment has been and can be disputed — and is highly debated — what is not in dispute for the agricultural sector is that it is not revenue-neutral. Their prices are not set by themselves but rather by companies, governments and international markets. They cannot just push that cost along. It is coming directly out of the pockets of our farmers, and that is money they could be using to reinvest in their farms, invest in clean technologies and help support their families.

That is the idea behind Bill C-234.

In the Standing Senate Committee on Agriculture and Forestry, we are hearing testimony that many in the agricultural sector are already participants in the fight against climate change. They are finding carbon-reducing strategies and innovative and new ways to produce food for Canada and for the world.

For example, carbon waste is being used to generate biofuels through the construction of things like biodigesters — anaerobic digesters. Farmers are progressive, determined and interested in engaging in innovative and new technologies for the advancement of the industry.

This bill, honourable colleagues, represents a consensus of interests. Advocates from across the agriculture sector understand the need for this bill. The bill provides a great opportunity to improve and change fiscal policy that has hindered Canadian farmers and producers to date.

However, the bill is not perfect. Recently, I received a letter from the Ontario Agri Business Association that notes that many farmers in different provinces will be affected disproportionately by Bill C-234. For example:

 . . . approximately two-thirds of the corn grown in the province (by volume) is dried at commercial grain elevators . . . .

As Bill C-234 is currently structured, it has the unintended result of creating a significant cost of production imbalance amongst Ontario farmers due to the proposed exemption being exclusive to those farm operations that have on-farm drying capacity and no carbon tax relief for those farmers that make the business decision to dry their grain at one of the 357 commercial elevators located throughout the province.

Colleagues, the quote continues:

When grain is dried at commercial elevators in Ontario it is still owned by the farmer who produced it.

The commercial elevator provides the farmer an invoice for the propane or natural gas used to dry their grain to an agreed upon moisture level, prior to it being placed in storage or utilized by an end user.

The administrative process is very similar to when a farmer is invoiced for either natural gas or propane by the fuel supply company prior to it being utilized to dry grain on‑farm.

This is far different for those from Alberta, the letter goes on to note, where a significantly higher portion of farmers have on‑farm drying capacities.

Honourable colleagues, I would also like to bring attention to a concern discussed in the other place that I know will be and has been touched on throughout debate on this bill. If Bill C-234 passes, then farmers may be able to double-dip due to provisions in Bill C-8, the Economic and Fiscal Update Implementation Act passed in June 2022. The concern was raised that farmers would be able to benefit from the climate action incentive payment as well as from exemptions provided by Bill C-234.

Honourable senators, discussion took place in the Agriculture and Agri-Food Committee on this issue — a committee that holds a government majority with 6 out of the 12 seats. So if the government had any concerns about potential double-dipping, they had plenty of time and opportunity to amend the bill by their democratically elected majority on the committee. However, no action was taken beyond the discussion. With Bill C-234 now in our chamber, it is our opportunity to show support for our farmers so that the industry can continue to do what they do best: feed Canada and feed the world.

I want to be clear: The bill is not perfect, but I believe we need to work diligently to pass this bill as soon as possible before we rise for the summer recess. Our farmers need this relief now for this coming fall’s harvest and for future planning. If it is necessary, amendments can be made at a later time to make it better, as has been noted. Maybe they will even consider extending this provision to other sectors within agriculture, but that’s a discussion for another time.

Although Bill C-234 has space for improvement, honourable senators, we cannot overlook the opportunity this gives Canada’s agricultural industry. This bill has been supported by elected members from every party in the other place while acknowledging that it’s a building block upon which all of us as advocates can continue to improve in order to provide financial relief for farmers who are continually facing mounting pressures and increased costs.

To conclude, honourable senators, farmers understand the importance of innovation and progressiveness in their fight against climate change, but this cannot be done by limiting their fiscal capacity and forcing them to bear the burden of unfair tax on their livelihoods.

I’d like to thank my honourable colleagues for listening to me today and for continuing to support Canadian agriculture. I do hope you’ll join me in supporting this bill and passing it through all stages in this place as quickly as possible. It remains essential to the continued growth of Canada’s agricultural sector and to the Canadian economy.

Farmers want to continue to feed Canada and the world. Let’s not tie their hands while they do it. Thank you, meegwetch.

(On motion of Senator Dalphond, debate adjourned.)

On the Order:

Resuming debate on the inquiry of the Honourable Senator Boyer, calling the attention of the Senate to the positive contributions and impacts that Métis, Inuit, and First Nations have made to Canada, and the world.