April 2, 2024 (Regina, SK) – On April 1, a 23 per cent increase in the carbon tax occurred, raising from $65 per tonne of CO2e to $80 per tonne of CO2e. This raises concerns within the agricultural community, particularly in regions like Saskatchewan, that are heavily reliant on export markets and facing unique challenges such as weather severity and long distances for market access.
The Agricultural Producers Association of Saskatchewan (APAS) has diligently monitored the impact of the carbon tax since its inception in 2019. Using a per-acre example of wheat production, APAS has tracked the cost implications on various production and marketing activities, including heating fuel, grain drying, and transportation from farm to elevator and ports.
According to the latest figures, a farm producing a 62-bushel-per-acre crop in the black soil zone could expect to incur an additional $7.24 per acre in costs due to the federal carbon price in 2024. Extrapolating this trend over time, these costs are projected to rise to $17.31 per acre by 2030, assuming the higher costs on inputs and services continue to increase with the $15 per tonne a year schedule set out in federal regulations.
Of particular concern is the disproportionate impact from certain cost elements. “Farmers always seem to pay, so we are very sensitive to the implications of the increase,” said Ian Boxall, APAS President. “Take, for instance, the estimated staggering 50 per cent increase allocated to rail transportation costs, a massive $57 million that Saskatchewan grain producers are expected to shoulder. This amounts to an overwhelming $21 million more than last year alone! Why should farmers pay the railway’s carbon tax?”
To illustrate the aggregate cost impact on farming operations, APAS applied these calculations to a hypothetical 5000-acre farm producing wheat, canola, barley, peas, and oats in the black soil zone. The results revealed a total carbon tax cost ranging between $22,678 and $30,033 under various production scenarios and specific grain drying requirements.
“These examples demonstrate how the increase in the carbon tax poses a significant impact to the financial viability of farming operations, particularly when our margins are tight or when there is a need for grain drying,” said Boxall “The rising grain drying costs, compounded by other carbon tax-related expenses, will have negative consequences for Saskatchewan farmers.”
The implications extend beyond direct production and transportation costs that can be tracked with public data. APAS highlights the additional indirect costs faced by producers, including increased input costs for fertilizer, chemical and machinery as well as the likelihood of processors and grain handlers passing down increased fuel, electricity, and emissions costs to producers.
In response to these challenges, APAS has emphasized the importance of exemptions contained in Bill C234, advocating for an exemption on heating fuel for grain drying and barn heating. Additionally, the organization has passed resolutions urging federal intervention to prevent railways from transferring the carbon tax burden onto producers through freight rate surcharges or allowable increases to the Maximum Revenue Entitlement (MRE) index.
“Saskatchewan farmers are disproportionately affected by these carbon tax increases due to our reliance on export markets, harsh weather conditions, and the extensive distances involved in reaching those markets,” emphasized Boxall. “It's imperative that policymakers consider the unique challenges faced by our agricultural sector and take proactive steps to safeguard its sustainability.”
For media inquiries, please contact:
Brook Thalgott
306.450.5053
Communications@apas.ca
