Farms.com Home   Ag Industry News

Farmers adjust to the federal carbon tax

Farmers adjust to the federal carbon tax

The tax came into effect on April 1

By Diego Flammini
Staff Writer
Farms.com

Several Canadians woke up April 1 to the implementation of a new tax.

The federal carbon tax came into effect in the four provinces without pre-existing carbon pricing policies: Saskatchewan, Manitoba, Ontario and New Brunswick.

Ontario operated under a cap and trade policy before Doug Ford’s government ended it in July 2018.

The federal tax will start at $20 per tonne and increase by $10 annually until it reaches $50 per tonne in 2022.

The new levy will add almost five cents to a litre of gasoline and about four cents to a cubic metre of natural gas this year. The cost of propane, butane and aviation fuel will also go up.

The tax will not apply to gasoline and diesel purchases that are stored on farms and used in machinery.

Producers are concerned with how the federal tax will affect their operations as well as other Ontarians.

All consumers will feel the effects of the carbon tax, said Arnie Small, a cash crop producer from Brant County.

The carbon tax is “absolutely stupid, crazy and a waste of money,” he told Farms.com. “The cost of lots of things is going to go up. It’s all going to increase the cost of production and is eventually passed on to the consumer.

“Take tire companies. Their costs are going to go up, so a tire that cost $800 now costs $820. Who pays that? We do. And from a food perspective, all the costs along that supply chain are going to go up, meaning the prices in the grocery store are likely to go up too.”

The federal government is promising annual rebates for households in Ontario and the other three affected provinces.

But Small isn’t confident the feds will hold up that commitment.

“They’ll take $10 from you and give you back $2 because they’ve wasted the other $8,” he said.

Some producers are more optimistic, however, as the Canada Revenue Agency is allowing farmers to apply for tax exemptions using form L402.

The potential exemptions and the removal of tax from fuels stored on-farm should be enough to manage life with the carbon tax, said Mike Kraemer, a beef and cash crop producer from Bruce County.

“I don’t know if the tax will affect much because we can claim it on the farm,” he told Farms.com. “We shouldn’t notice it too much that way in the operation.”


Trending Video

Did Bears Win Thanksgiving, Will Bulls Get Christmas?

Video: Did Bears Win Thanksgiving, Will Bulls Get Christmas?


Did the bears win Thanksgiving (although this week had green on the screen), and will the bulls get Christmas? Bears won thanksgiving thanks to a USDA Nov crop report dud that stalled the bullish grain momentum for a brief period. But a bullish lower yield surprise in the Dec crop report could reignite the rally.
2026 U.S. winter wheat planting is nearly complete at 97% while crop conditions improved by 3 points to 48% good-to-excellent. US corn & soybean harvest is complete.
High corn demand, which is off the chart, and more Chinese soybean demand could support a Christmas rally.
Nasdaq had it’s worst November since 2011.
A U.S. Fed rate cut in December will help fund flow and sentiment.
Bitcoin held a long-term support at 80,000 and that's positive for fund flow and sentiment. It should help stock prices and Ag as we go into December.
Fertilizer prices continue to climb as we look ahead to 2026. Farmers may rely more on the nutrients that they already have in their soils.
South American Weather remains critical as the soybean reproductive stage starts from late Nov to late Feb depending on planting date.
Will a Russia-Ukraine peace deal happen by year-end?
CFTC data as of showed more managed money fund sell-off as of October 14th.