The Ontario Federation of Agriculture (OFA) is in strong support of the Senate of Canada to pass Bill C-234 without further amendments. This Bill will provide much needed relief to Ontario farmers from the already high costs of energy inputs to their farm operations.
The OFA believes the fuel charge included as part of the Greenhouse Gas Pollution Pricing Act (GGPPA) adds cost to farm businesses that are already dealing with high-input costs. With no viable alternatives to propane and natural gas for grain drying and barn heating, and the high price for energy use, the charge collected on these fuels makes it even more difficult for farmers to manage business finances. There is also concern that the fuel charge is an ineffective mechanism to drive greenhouse gas emissions reductions in the agricultural sector.
A 2021 study by Agri-food Economic Systems found the explicit cost burden of the fuel charge on confinement livestock with seasonal heating requirements, grain drying, and greenhouse segments in Ontario to be approximately $31.3 million per year in 2021; this is estimated to increase to just over $156 million per year by 2030. The cumulative costs between now and full implementation in 2030 are estimated to be $890.8 million.
Even without the fuel charge, the high costs of energy inputs for grain drying and barn heat for livestock provides an effective price signal to producers to continually seek out efficiencies to reduce consumption and costs.
Farmers are and want to continue to be part of the solution to climate change. The OFA has been a leader in recognizing the potential threat that climate change presents to agriculture in Canada, and we believe that as managers of the carbon and nitrogen cycles, farmers can play a key role in mitigating the impacts of climate change. Removing the fuel charge on natural gas and propane will free up capital that Ontario farm businesses can use to continue to invest in more efficient machinery and processes that will further reduce greenhouse gas emissions.
OFA fully respects the legislative process required by both Houses of Parliament; however, it is critical that Bill C-234 is passed quickly by the Senate without amendment so the Department of Finance Canada and Environment and Climate Change Canada can move quickly to remove the fuel charge on natural gas and propane for agricultural use.