Fresh produce industry supports targeted carbon tax relief for greenhouse growers
This article has been edited to provide increased clarity following further analysis of the new legislation.
On behalf of fruit and vegetable growers across the country, the Canadian Horticultural Council (CHC) and the Canadian Produce Marketing Association (CPMA) thank the federal government for providing carbon pricing relief for farmers. By recognizing the unique nature of farming, the government has taken additional steps to ensure that Canadian farmers can continue to grow fresh, affordable fruits and vegetables throughout the year, while remaining competitive in a global marketplace.
Targeted relief for commercial greenhouse growers announced under the Greenhouse Gas Pollution Pricing Act (GGPPA) will see partial relief on the carbon tax applied to the natural gas and propane that is used to grow plants in a greenhouse. The targeted relief helps to level the playing field for Canadian greenhouse growers domestically, while at the same time keeping food affordable for Canadians. CHC and CPMA are particularly pleased that the government’s proposal includes upfront relief, through exemption certificates. While this relief is a step in the right direction, it currently only applies to certain Canadian jurisdictions.
On October 23, 2018 the federal government provided further details on their carbon pollution pricing system as legislated in the Greenhouse Gas Pollution Act (GGPPA).
- Provincial systems will apply in British Columbia, Alberta, Quebec, Nova Scotia, Prince Edward Island, and Newfoundland and Labrador. The governments in these jurisdictions are either already implementing or are on track to implement carbon pollution pricing systems that meet the federal benchmark.
- The federal pricing system for large industry will apply starting in January 2019, in Ontario, Manitoba, New Brunswick, Prince Edward Island, and partially in Saskatchewan. Saskatchewan has proposed a pricing system for some of its industries; the federal system will fill in the gaps in that province by covering the electricity and natural gas transmission pipeline sectors.
- The federal fuel charge will apply starting in April 2019, in Saskatchewan, Ontario, Manitoba, and New Brunswick because those governments have not developed a system to price carbon pollution, which meets the federal benchmark.
Many further details on how it will work were provided in this announcement that still need further member feedback and analysis. CHC is working with its members to respond to the invitation to provide comment to firstname.lastname@example.org by November 23, 2018.
Details of vital importance to farmers
The Greenhouse Gas Pollution Pricing Act (GGPPA), which was tabled on February 27 as Bill C-74, and enacted on June 21, 2018, outlined exemptions for farmers, through the use of exemption certificates for gasoline and light fuel oil (i.e. diesel) used in tractors, trucks and other farm machinery, for eligible farming activities.
Of particular importance in the recent October announcement is that targeted carbon pricing relief is now outlined for greenhouse growers, i.e.
- Partial relief (i.e. 80 per cent) of the fuel charge applied to natural gas and propane that is exclusively for the use in the operation of a commercial greenhouse for growing any plants, including vegetables, fruits, bedding plants, cut flowers, ornamental plants, tree seedlings and medicinal plants.
- The relief is proposed to be provided upfront through the use of exemption certificates, similar to other exemption certificates under the GGPPA. 20 per cent of the fuel charge applies to natural gas and propane that is delivered by a registered distributor to an eligible greenhouse operator, if the fuel is exclusively for the use in the heating of, or for the production of carbon dioxide for use in the operation of, a commercial greenhouse.
Important Remaining Concerns
The federal backstop is not harmonized across Canada.
- Farmers from BC, AB, QC, NS, PEI, and NFLD, who are already subject to provincial systems, or who are on track to meet the federal benchmark under the Pan-Canadian Approach to Pricing Carbon, continue to pay a carbon price.
- In Québec, farmers and greenhouse growers, have no fuel charge relief from the provincial Cap and Trade system.
- Greenhouse growers in British Columbia and Alberta receiving provincial relief of 80% of their natural gas and propane use, still have to bear the upfront cost until reimbursed.
- Greenhouse growers are still significantly trade-exposed and the imposition of a 20% fuel charge will continue to impact global competitiveness.
- The federal carbon price is slated to increase over time, therefore the 20% will grow in absolute value and has implications in the medium to long-term.
While there is now a precedent set both federally and provincially (BC, AB) to provide relief for farmers and greenhouse growers, we continue to ask for federal and provincial leadership to ensure carbon pricing exemptions are extended to the full range of farmers and their on-farm fuels across Canada.
The GGPPA has not seen an amendment of key definitions such as farmer, farming, qualifying farming fuels, eligible farming activities, and eligible farming machinery.
- These definitions currently do not fully align with the CRA definitions and guidance document (Income Folio S-F11-C1).
- The fuel charge exemption for farmers’ use of gas and diesel does not extend to natural gas and propane. Conversely, the fuel charge exemption for greenhouse operators’ use of natural gas and propane is not extended to other farmers.
- The eligible farming machinery definition does not allow for the fuel charge exemption to be applied when used for heating and cooling of a building. Such equipment is part of a wide range of farming activities (storage, grain dryers, heated livestock barns, etc.) and essential for the primary production of perishable fruit and vegetables, immediately post-harvest, during storage/handling/packaging, and for the reduction of food waste at the start of the value chain.
CHC is advising its members to express their concerns to their provincial Environment Ministers and MPs.
Why carbon pricing exemptions matter to fruit and vegetable farmers
Canada’s fruit and vegetable farmers and greenhouse growers grow highly nutritious, safe, and sustainable food that feeds millions of Canadians virtually year-round. There is immense pressure to remain competitive in the global marketplace which means the farmer’s position as a price taker leaves them unable to simply pass costs to consumers. While farmers are generally interested in renewable energy sources and are willing to adopt wind and solar energy options, there are situations where no viable options currently exist that would enable a transition to alternative fuels and/or to reduce fuel consumption. Canadian farmers continue to actively support Canada’s economic, trade, environmental and social goals.
CHC and CPMA will continue to evaluate how this announcement impacts farmers’ competitiveness in the global marketplace and the impact of carbon price increases over time. Additional concerns remain regarding the lack of relief for agricultural heating and cooling equipment. Canadian fruit and vegetable farmers, like other agricultural sectors, rely on heating and cooling to grow their crops and ensure that the harvested perishable products stay fresh, meet market requirements, and reduce food waste. Both organizations look forward to continued collaboration with Ministers MacAulay, McKenna and Morneau on this important issue.
“We are pleased that yesterday’s announcement supports a competitive greenhouse industry in Canada. I’ve seen first hand the results that this kind of protection has afforded growers in British Columbia. I have worked closely with the British Columbia government to develop a carbon pricing relief program that supports this province’s greenhouse farmers. Today I am pleased to see the federal government take steps to ensure more of our producers across Canada can continue to grow healthy fruits and vegetables in Canada for Canadians.”
Linda Delli Santi, Chair, Greenhouse Vegetable Committee, Canadian Horticultural Council
“CHC has been long advocating for relief for greenhouse farmers. This federal announcement is a big step towards a more predictable and stable business investment climate and reduced administrative burden. We look forward to seeing how the exemption certificates will be rolled out.”
Rebecca Lee, Executive Director, Canadian Horticultural Council
“We would like to thank the government for working collaboratively with us on ensuring relief for greenhouse growers. While more work remains to be done, we look forward to future engagement with the government on the carbon pricing scheme and our industry’s competitiveness.”
Ron Lemaire, President, Canadian Produce Marketing Association
For more information please contact:
Canadian Horticultural Council
Tel: 613-226-4880 ext 218 | Cell: 613-558-0083