Highlighting the carbon tax’s effects

Nov 21, 2019

The Western Canadian Wheat Growers is encouraging farmers to share their energy bills

By Diego Flammini
Staff Writer
Farms.com

A Prairie farm organization is calling on all Canadian farmers to share how much the federal carbon tax is affecting their operating costs.

The Western Canadian Wheat Growers (WCWG) launched its No Farm Carbon Tax petition on Wednesday. Farmers are encouraged to add their names to the document. The organization will send the petition to the federal ministers of agriculture, environment and climate change.

An additional element of the petition asks farmers to disclose how much the carbon tax contributes to their monthly energy bills.

The organization will keep a running tally of the carbon tax portion of bills and share that information with federal ministers.

“In some instances, the carbon tax results in as much as 43 per cent of extra costs on top of what the monthly bill would’ve been without the tax,” Gunter Jochum, president of WCWG, told Farms.com. “That’s not sustainable.”

Maryam Monsef, Canada’s new minister of rural economic development, should also be monitoring the situation, Jochum said.

“Does (Canada) want farmers to be profitable and keep farming?” he said. “Farmers are the ones living and working in rural Canada, and the carbon tax is going to eat away at any profits farmers could’ve used to reinvest or spend in rural communities.”

Part of the frustration related to the carbon tax is a lack of fuel options.

The tax applies to propane and natural gas, which are the two primary resources used for grain drying.

Without any alternatives, farm costs will continue to increase.

“There’s no other option for us to switch to,” Jochum said. “The federal government is taxing us to get us to use a different source (of energy), but there isn’t one. We can’t dry grain with solar panels, so our expenses go up.”

The carbon tax could also affect ag exports.

The federal government has set a goal of exporting $75 billion of agricultural goods by 2025.

But if Canadian farmers are paying more to produce their crops, it could price Canada out of export opportunities, Jochum said.

“We can’t compete on global markets if we’re saddled with extra costs compared to places like the U.S. and Australia where they don’t have a carbon tax,” he said.

Video: Will the 2025 USDA December Crop Report Be a Market Mover/Surprise?

Historically, the USDA December crop report is a non-event or another dud report as the USDA reserves any final supply changes to the final report in January of the following year in this case 2026. But after the longest U.S. government shutdown in history at 43 days and no October crop report will they provide more data/surprise and make an exception?
Our China U.S. soybean purchase tracker is now at 26.6% or a total of 3.2 mmt but for traders it’s taking too long to unfold.
The final Stats Canada production report was bearish canola and wheat projection a record crop in both (it adds to the global glut of supplies) and bullish local corn and soybean prices in Ontario/Quebec thanks to a drought. It will not help the fund flow short-term, the USDA may need to offset it?
A U.S. Fed interest rate cut of another 25-basis point next Wednesday (probability 87.1%) could help fund flow and sentiment in stock and ag commodities into year end.
More inflows into Bitcoin this past week saw prices rebound back above 90,000 with support at 82,000 and resistance at 96,000.
A V-shaped bottom in cattle suggest the lows are in after Mexico reported another new world screwworm case. Lower weights, seasonal demand and higher U.S. beef select/choice values with a continued closure of the Mexican border to cattle will result in a resumption of higher cattle futures into yearend.
Australia is expected to produce its 3rd largest wheat crop ever at 36 mmt adding to the global glut of supplies.
Reports of ASF in hogs in Spain the largest pork exporter in Europe could see the U.S. win more pork export business long-term.
If the rains verify into next week of 3-5 inches for Brazil it would go a long way to fixing the dry regions from the last 2-months, but the European weather model has been wrong for the past 2-months!
Natural gas futures are surging to the 3rd price count as frigid hold temps set in.
CDN $ is also surging to end the week on a very resilient economy and better employment numbers suggesting no interest rate cuts next week.
Finally, the CFTC report showed funds were net buyers of soybeans but sellers of corn, canola and wheat. In real time the funds have gone back to selling as they take some profits.