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Calls mount for grain drying exemption on carbon tax

Manitoba’s government and farm groups hope that Ottawa will be swayed by hard numbers on grain drying carbon tax cost

[UPDATED: Jan. 30, 2020] Maurice Melnyk of Penner Farm Services doesn’t need anyone to tell him that carbon tax hit farmers hard this fall — he’s seen enough grain drying bills.

Dryers are Melnyk’s business, being the grain-handling sales specialist at the Blumenort farm dealer. The carbon tax has been a common complaint among his customers.

“Because of their costs that they incur through fuel and gas and grain drying and so on, it’s a huge cost for them to pay and with lower grain prices these days, higher fuel costs, it hits them,” he said.

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Fuel for grain dryers has become one flashpoint among many in Manitoba’s continuing spat with Ottawa over carbon tax. In 2017, Manitoba announced it would be pursuing its own carbon tax plan, one that set a $25-per-tonne flat rate rather than the federal plan, which started last year at $20 per tonne and would eventually ramp up to $50 per tonne by 2022. The federal government rejected Manitoba’s plan and the federal rate took effect in Manitoba in 2019. That same year, the province announced it was taking the federal government to court to challenge the tax.

Now, Manitoba Premier Brian Pallister is asking the federal government to take another look at that original plan, including an as-of-yet unannounced flat tax rate.

Grain dryers are yet another point of disagreement. Pallister has promised that his plan would extend farm fuel exemptions to cover grain dryers, something that would be popular with farmers, given conditions in 2019 that have led many to dub it the “harvest from hell.”

“It’s the kind of thing that matters to producers, clearly,” Pallister said. “You don’t dry grain for fun.”

Farmers are well aware of the challenges last harvest. Wet weather and early snowstorms left producers scrambling to take in tough crop, while wide swaths of crop still remain unharvested. Grain dryers fired up early and stayed fired up for weeks. On top of corn, normally dried anyway, farmers were also forced to pile in loads of wheat, canola and other crops to salvage grain quality.

Corn also faced larger-than-normal drying costs, Melnyk said.

For many, the 10 per cent moisture producers would normally take out of corn was a distant dream.

“This year, it’s been 15 and sometimes more than 15 per cent moisture that they have to take out of the corn, so their fuel costs, their running time (is up)… They used way more fuel than they would normally use this year,” Melnyk said.

Keystone Agricultural Producers pegged carbon tax for grain drying at $1.7 million for corn growers alone last fall.

KAP began collecting carbon tax expense information from its membership in late 2019.

Its current data suggests corn producers paid an average $3.69 on grain drying per acre, and that the average farmer growing 500 acres of corn paid an estimated $14,145 on fuel for dryers, $1,722 of which went to carbon tax. The organization based the numbers on member information from October to December, as well as Manitoba’s corn acreage.

“We also recognize that there is a significant amount of grain drying that has happened for canola production and wheat production,” KAP president Bill Campbell said.

According to Campbell, those numbers present enough of a chunk out of Manitoba’s farm economy to validate an exemption.

“We do not have alternative methods of getting our crop into storage condition,” he argued, pointing to corn moisture contents in excess of 35 to 40 per cent this fall.

Campbell also said the carbon tax puts Canadian grain at a competitive disadvantage compared to the U.S.

Those numbers are preliminary, KAP admits, although Campbell says they are “pretty confident in the numbers that we have received.”

KAP called on producers to bring their fuel bills to the KAP booth at Ag Days, running Jan. 21-23 at Brandon’s Keystone Centre, to help bolster the data.

Green Party weighs in

The Green Party has also come out in favour of a grain drying exemption. Kate Storey, the federal Green Party agriculture critic and past president of the Manitoba Organic Alliance, also pointed to conditions this fall, conditions she experienced first hand as an organic grain producer.

In conversation with the Manitoba Co-operator, Storey argued that a grain dryer should not be held separate from other farm equipment such as tractors, and that fuel for a dryer should therefore be exempted, much like other farm fuel.

A carbon tax is designed to “change behaviour,” she added, but argued that farmers have few alternatives to grain dryers and therefore have few options to change behaviour to.

From the sales desk

Melnyk does have a business interest in the case, he noted, since any increase in fuel cost may impact the appeal of grain dryers.

“Some of the larger farmers are going to obviously have the money to spend on grain dryers, extra combines, infrastructure to their farm,” he said. “It’s the smaller guys who are probably taking the biggest hit of them all — so the guys who are doing, say, 2,000 acres or 1,500 acres. Those guys run on a limited budget and any time you get hit with a tax or infrastructure costs, you may not be able to make that investment.”

Many of his customers are looking for natural gas dryers because of fuel cost, he said, although Manitoba’s lack of infrastructure makes that a challenge.

The sales representative expects efficiency to take centre stage as producers look to reduce their costs.

Storey has also called for more research into energy-efficient dryers. The Green Party is asking the federal government to look into long-term strategies to reduce grain drying energy use, on top of an immediate exemption.

By the numbers

Both KAP and the provincial government say they would use KAP’s numbers to make their case with the federal government.

Campbell says he hopes to send in those numbers soon. KAP will bring its reports to the Canadian Federation of Agriculture annual meeting later this year.

“Hopefully there will be some form of dialogue,” Campbell said. “We have been requesting MP engagement when we go to Ottawa at the end of February and hopefully they will allow us the opportunity to visit with them and present these numbers at that time.”

At the same time, he said, current conversations with the federal government have been frustrating. Both the province and the federal government have informally requested the carbon tax cost information, Campbell said, but KAP has received no formal request to submit or validate their findings to Agriculture and Agri-Food Canada (AAFC).

*Agriculture and Agri-Food Canada says the decision of a grain dryer exemption will ultimately lie with the Ministry of Finance and Environment and Climate Change Canada.

“However, we recognize that this harvest season has been challenging for farmers and we are working with partners to find practical solutions,” a representative from AAFC said.

AAFC pointed to existing exemptions on farm fuel, as well as incentives for small and medium businesses targeting energy efficiency.

Minister of Agriculture and Agri-Food, Marie-Claude Bibeau, will also be meeting with stakeholders in coming weeks, including a trip to Winnipeg in February, the ministry said. Her office says they are in conversation with KAP to see if a meeting can be arranged.

“The government has committed to do an early review of the pollution pricing system in 2020 focused on competitiveness issues in trade-exposed industries, such as agriculture,” AAFC told the Manitoba Co-operator over email.

*UPDATE: Agriculture and Agri-Food Canada comments were added.

About the author

Reporter

Alexis Stockford is a journalist and photographer with the Manitoba Co-operator. She previously reported with the Morden Times and was news editor of  campus newspaper, The Omega, at Thompson Rivers University in Kamloops, BC. She grew up on a mixed farm near Miami, Man.

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