The federal carbon tax will lower total net income for the average Saskatchewan producer by about 8% in 2020, according to estimates released by a provincial farm organization.
The costing review undertaken by the Agricultural Producers Association of Saskatchewan (APAS) and backed up by actual producer bills in 2019, takes into consideration all major farm expenses not currently exempt from the carbon tax, including grain drying, rail transportation, heating and electricity, and truck hauling of crops off the farm.
For a household managing a 5,000-acre grain farm in Saskatchewan, the carbon tax is expected to translate into a $8,000-10,000 bill. In less than two years, when the carbon tax increases to $50/tonne in 2022, the bill will go up to $13,000-17,000 for the same household – the equivalent of a 12% decrease in net income.
“It’s comparable to having 12% of your pay cheque disappear,” said APAS President Todd Lewis, who farms near Gray, SK. “Farmers don’t set our prices, so those increased costs are coming directly off our bottom line.”
Starting on April 1, 2019, the federal government’s carbon tax, aimed at fighting climate change, was applied in Saskatchewan. The tax started at $20/tonne of emissions in 2019 and will increase by $10/tonne per year until it reaches $50/tonne in 2022. Although farm fuel is exempt from the carbon tax, APAS and other farm groups contend producers will still face significant cost increases on other fuel sources, like heating fuel, electricity generation, natural gas and propane for grain drying. Producers will also incur indirect costs as railways and other service providers pass the carbon tax down to producers through lower prices and higher input bills.
APAS Vice-President Bill Prybylski, who farms with his son, brother, and nephews near Willowbrook, SK said 2019 was particularly difficult year for producers due to the wet harvest season, which meant many crops had to be dried before being binned – an expense made worse by the carbon tax.
“This past year was unprecedented in terms of the role grain drying played for farmers in our province. Without using propane to dry our grain, the wet fall would have meant losing a huge portion of our crop.”Source : Syngenta