Manitoba’s official Opposition says the province should have fought harder to get a carbon tax exemption for grain dryers, following last year’s “harvest from hell.”
NDP Leader Wab Kinew has argued that the province failed to collect adequate data on carbon tax cost accrued by farmers, after saying it would do so in January.
“The province had an opportunity to get an exemption for the carbon tax on grain drying from the federal government and it didn’t, basically because it just didn’t do its homework and provide the necessary proof to the federal government,” he said.
Why it matters: Farmers in Manitoba say carbon tax took a significant financial chunk out of their wallets given the surge in grain drying last fall, while organizations like KAP point out that yet more tax increases are expected until 2022.
In June 2020, producer hopes for a grain dryer carbon tax exemption were dashed after Agriculture and Agri-Food Minister Marie-Claude Bibeau said carbon tax collected on grain drying was too small to warrant an exemption. An analysis done by her department estimated carbon tax for grain drying at $210 to $819 per farm, numbers hotly disputed by organizations like the Keystone Agricultural Producers (KAP).
Bill Campbell, KAP president, argued at the time that the AAFC estimates counted farms that did not dry grain, hiding the true costs for producers who did.
The NDP cited internal documents retrieved through freedom of information requests, including a June 15 letter from Manitoba’s deputy minister of agriculture and resource development, Dori Gingera-Beauchemin, to Chris Forbes, federal deputy minister of agriculture.
The letter included a breakdown of production levels, estimated percentage of required drying, fuel tax and carbon tax costs for six major crops.
The letter estimated Manitoba farmers paid $2 million to $3 million in carbon tax to dry grain last year, assuming that 70 per cent of farmers used propane and 30 per cent used natural gas. That carbon tax cost increased to about $5 million, once the cost of heating greenhouses, potato storage and livestock facilities were taken into account, the letter said.
The letter further cited an “immediate need to alleviate this unnecessary financial pressure to our producers in an effort to ensure the ongoing stability of the agriculture sector.”
Kinew, however, has argued that those numbers are “ballpark figures,” rather than, “concrete, crunchy numbers to present to the federal government.”
“Then, even after making that commitment that it would go out and do that work, the province failed to do so,” he said. “As a result, I think it’s fair to say that the province failed to make as strong a case on behalf of producers in Manitoba as it could have, and the end result is just basically that producers are going to be stuck with this bill.”
Agriculture and Resource Development Minister Blaine Pedersen said he is “perplexed by what the NDP is really trying to prove here, other than it doesn’t know anything about farming and it is trying to make stuff up.”
Pedersen cited the same June 15 letter.
“It showed grain-drying costs for corn, wheat, canola, oats, barley and soybeans,” he said. “It shows the fuel costs, a high and a low, and it shows total fuel costs, a high and low, and a carbon tax, again, a high and low, across these. Those numbers were provided to the federal government and, again, the NDP is totally wrong on its assertions here.”
Those numbers came out of his department, he said.
Bill Campbell, KAP president, said the numbers provided by the province to the federal government were credible.
“I think that there’s a bit of a range in there,” he said. “I think we need to understand the difficulty and complexity in retrieving those numbers, because different areas did not have to dry and different crops did not require as much drying, and yet some of them required a significant amount and when you start harvesting canola at 16 (per cent moisture) or wheat at 22, your costs increase quite a bit, and that would be more of an individual management decision that was made. To retrieve absolute numbers was a challenge.”
Who collects the data?
The province approached KAP to gather farm data on carbon tax cost in late 2019, Pedersen said.
“KAP is the one that’s got direct contact with its membership, with the farmers who are actually doing the grain drying, so we went to the source that could help us the best,” he said.
KAP released its initial estimates, based on corn, in January 2020. The organization estimated that grain drying cost corn producers about $1.7 million, based on grain-drying bills shared by farmers and data from the Manitoba Corn Growers Association.
KAP was still calling on farmers to share their bills at that time, in the hopes of building the case for an exemption.
Anecdotally, KAP knew that crops like canola and wheat would also have significant grain-drying cost, Campbell said. At the same time, farmers were still dealing with the aftermath of harvest while KAP was attempting to collect that initial data. The organization felt “pretty confidant,” in the numbers it ended up presenting based on corn and were, “willing to work with the department or achieve more numbers and clarity,” Campbell said, but had heard nothing else from the province on the topic since January.
Kinew questioned the argument that data collection efforts were turned over to KAP.
“If that was the case, then that information should have been included in the response to our freedom of information request,” he said. “It sounds more like that’s an excuse being given after the fact to try and explain why the province didn’t actually have some really concrete numbers on hand.”
Kinew also argued that a separate data collection effort, spearheaded by the province, would have provided a second voice in lobbying the federal government and would have been a better, “all hands on deck” response.
Campbell expressed KAP’s general frustration that the federal government decided not to grant an exemption for grain drying.
“KAP is still willing to work with both levels of government to achieve positive results, and we have had subsequent conversations with federal officials,” he said. “This has not disappeared by any means.”
Campbell expects the issue will flare again, given carbon tax increases that came into effect as of April this year and further increases expected in 2021. Carbon tax increased from $20 to $30 per tonne as of April 1, 2020, with another increase of $10 per tonne expected in both 2021 and 2022.