Carbon Tax Set To Devastate Saskatchewan Farms Group Says

With the federal government announcing further planned increases to the carbon tax in December 2020 a farmer advocacy group is sounding alarm bells about the impact it will have on Saskatchewan agriculture.

An impact the Agricultural Producers Association of Saskatchewan (APAS) says analysis shows will massively impact Saskatchewan farm costing this province’s producers hundreds of millions of dollars. An amount that is unsustainable and lead to farm failures.

“Our updated numbers show that the cost of producing wheat could go up to over $12.50 per acre in 2030 due to the carbon tax,” APAS President Todd Lewis said in a statement. “This cost increase is carried entirely by farmers and can’t be passed along to our customers. 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. It’s unsustainable for our members.”

In December 2020 the federal government announced plans to increase the carbon tax significantly from $40/tonne in 2021 to $170/tonne in an effort to meet Canada’s commitment to reduce greenhouse gas emissions - including carbon dioxide - by 30 per cent below 2005 levels by 2030. The tax is set to rise to $50/tonne in 2022 and then increase $15/tonne annually until 2030.

Raising the carbon tax is seen as a means to reduce fossil fuel use through a consumption tax - making fossil fuel use more expensive.

The move is being fought strenuously through the courts and lobbying by the SaskParty government.

An area crop in July 2020 - MJ Independent file photo

APAS said although farm fuel for agricultural production is exempt from the carbon tax that the devastating economic blow for producers comes from other inputs farmers are forced to pay the carbon tax on and are not recovered through financial rebates.

Other inputs where farmers are unable to recover the carbon tax through rebates are - fertilizer, grain drying, heating and electricity, rail freight and trucking.

Potential Costs Producers Face With A $170/tonne Carbon Tax - SOURCE Agricultural Producers Association of Saskatchewan

The indirect costs to producers are something they cannot pass back to buyers and will have to be absorbed by producers, APAS said in the release of their study. Although the study has only looked at the impact on wheat the advocacy group is at the present time studying the impact of the increased carbon tax on other farm commodities - crops and livestock production.

“The carbon tax is designed to provide incentives to reduce energy consumption, but these dramatic cost increases will decrease our ability to adopt the new technologies that help us do just that,” Lewis also said in his statement. “In some cases, producers will pay for efficiency gains like high‐capacity grain hopper cars through their freight rates, and yet those cost savings will go to the railways.”

APAS also sees an additional negative effect of the increased carbon tax with producers converting present carbon sinking grasslands into croplands in an effort to increase cash flow.

For a look at the methodology used by APAS in their study click here.