Federal carbon tax on agriculture is crushing our competitveness

Damaging to the exporting of crops, John Van Hierden says.

Alberta is a centre for advanced agricultural practices and irrigation, yet the federal carbon tax stands as a formidable challenge.

It is particularly damaging to the province's competitiveness in exporting crops, including the export hay market. Designed to reduce carbon emissions, this tax inadvertently threatens the viability of our most vital agricultural exports by inflating farm and freight costs, eventually eroding market share.

The carbon tax's effect is severe on all operations that produce crops or add value to primary crops. This sector's reliance on energy-intensive processes such as seeding, harvesting and baling, which are powered by diesel-fuelled machinery, means that every uptick in fuel costs driven by the tax directly diminishes profitability, forcing farmers to raise prices in the domestic market.

Value-added operations are saddled with the tax that increases freight, drying and utility costs directly. The damage extends across all ag sectors, including potatoes, sugar beets, canola, peas and specialty grains. These crops undergo additional processing to enhance their market value — cleaning, sorting and packaging — all of which consume significant energy, now more costly due to the carbon tax. Grocery prices have to increase to cover the carbon tax burden.

This tax places Alberta's agricultural export producers at a stark disadvantage. Our main competitors, notably from the United States, are not subject to such fiscal burdens. They benefit from lower production costs, affording them a competitive edge in pricing their products on the international market. As a result, Alberta's value-added crops are at risk of being priced out of the market, potentially costing not only immediate sales but also relationships with global buyers.

Alberta's value-added crops are at risk of being priced out of the market.

Over the past decades, agriculture exports have contributed billions of dollars to Canada's balance of trade, facilitating import of other products to enhance our standard of living. If Canada cannot export our produce due to the carbon tax, global buyers will purchase crops from countries with much less developed and sustainable agricultural practices.

The broader implications for Canada's economy are profound. The agriculture sector is a significant employer and a cornerstone of our economy. As the carbon tax drives up production costs, the entire value chain from farmers to exporters is affected. This is not merely a sectoral issue but a provincial one, as these challenges can lead to job losses, decreased agricultural output and reduced economic activity across related industries.

Given these challenges, there is an urgent need for policy-makers to revise the carbon tax framework for agriculture. Measures such as exemptions or rebates for agricultural energy use can provide immediate relief to producers of hay and other value-added crops. Such changes would not only prevent the demise of these exporting industries but also support Canada's environmental goals by enabling sustainable practices that are economically feasible.

It is crucial for government officials to recognize the unique demands of agricultural production and processing. A constructive dialogue with industry stakeholders could lead to innovative solutions that support both environmental sustainability and economic growth. This dialogue should aim to align the carbon tax with the realities of agricultural production, ensuring that our policies foster competitiveness rather than hinder it.

The federal carbon tax, in its current form, significantly threatens the competitiveness of Alberta's value-added agricultural exports. The situation requires a balanced approach that incorporates strategic adjustments to the tax policy, ensuring that our agricultural sector remains robust and competitive on the global stage. Immediate action is necessary to reform the carbon tax to support not just the environment but also the people and industries that feed it.

Let us advocate for a policy that is fair, equitable and conducive to the growth of Alberta's vital agricultural sector.