Carbon tax crunch: Farmers cite competitive disadvantages

B.C.’s climbing carbon tax may be an irritant to consumers when they pay at the pump, but to farmers it is becoming a heavy levy.

Marcus Janzen of Calais Farms in Abbotsford says the carbon tax puts B.C. greenhouses at a competitive disadvantage.

Tax rates

B.C.’s climbing carbon tax may be an irritant to consumers when they pay at the pump, but to farmers it is becoming a heavy levy.

The carbon tax on gas sits at 5.56 cents per litre, rising to 6.67 on July 1, in the last of an annual Canada Day hikes set out in the current legislation. It will represent an additional $3 to $4 per fill for most consumers.

Marcus Janzen’s carbon tax bill is a much higher than that.

He runs a greenhouse on Townline Road, and has 20 acres of sweet peppers “under glass.” The facility is heated by natural gas.

“This year, when the carbon tax rises to $1.50 per gigajoule (from $1.25 now), we’ll spend upwards of $175,000 to $180,000 on the carbon tax – that no other jurisdiction pays,” said Janzen.

Labour and energy are a greenhouse operator’s two largest costs, so a heavy energy tax is a burden, he explained. His energy costs have risen 35 per cent because of the tax.

The B.C. government introduced a revenue neutral tax on carbon emissions in 2008 as part of its Climate Action Plan. It was the first jurisdiction in North America to implement a carbon tax. The levy is designed to reduce the amount of greenhouse gas emissions generated by the burning of fossil fuels including gasoline, diesel, natural gas, coal, propane and home heating fuel. The tax will rise to $30 per tonne by July 2012.

Janzen said B.C.-based companies are making huge greenhouse investments in Northern California, because of the present tax regime.

“The competitive situation in B.C. is getting to the point where producers feel they’re better off elsewhere.”

He recently expanded his Abbotsford business, but said he won’t be doing so again.

“If we’re going to expand beyond this, we’ll look to Alberta and the U.S.”

He said the carbon tax will diminish greenhouse industry expansion, and works against the Liberal government’s job-creation goals.

Linda Delli Santi, executive director of the B.C. Greenhouse Growers Association, has been lobbying government for an exemption from the carbon tax. She has encouraged her 40 member greenhouse operators to contact their MLAs.

She explained how having carbon dioxide in greenhouses optimizes plant growth and is critical to the business. What’s more, greenhouse vegetables are one of B.C.’s few agriculture products that are mostly exported, and 60 to 65 per cent of the province’s crop gets shipped.

“We’re at a huge competitive disadvantage,” she said. “We’re up against product that is produced without a carbon tax.”

She said the situation would not be so dire if other provinces and countries had followed B.C.’s lead into a carbon tax system.

“The rest of the world didn’t follow suit, is one of the problems,” she said.

What’s more, the cap and trade carbon system being developed for North America is “going nowhere slow.”

She said B.C. greenhouse growers have already invested $150 million in expansion in the U.S. in recent years, and there are plans to double that.

She pointed out that when Australia instituted a carbon tax in November, it was applied nationwide, and agriculture was exempted.

Delli Santi is encouraged by the fact the government recognizes agriculture as an industry where employment opportunities could be expanded as part of its BC Jobs Plan research.

“We’re on their radar. They’re doing their research. They may do something,” she said.

There are similar stories in other sectors of agriculture, and the B.C. Agriculture Council is also lobbying the government for a full carbon tax exemption for farmers.

“It’s one of the issues we’ve identified for keeping our industry competitive,” said executive director Reg Ens.

He said the poultry industry – a key industry in Abbotsford – is hit hard, as natural gas is needed to heat barns. And the grain sector feels the impact – a canola producer in B.C. pays more to operate equipment.

“Everyone gets hit by it, to various degrees,” said Ens.

His group is working to show government what effects the tax has had. Harder to quantify is the greenhouse gas emitted by importing agriculture product to B.C.

Peppers are produced in Mexico, often using natural gas from Canada, and trucked all the way to B.C.  Also, flowers are shipped from Ecuador to Miami, and then trucked to B.C.

“Look at that carbon footprint,” said Ens, adding that there are numerous similar examples.

He doesn’t have stats, but by such anecdotal information it appears growing competitively priced food locally would cause fewer emissions.

“We question whether the tax is even having the impact it was intended to have.”

Agriculture minister Don McRae, in Abbotsford for the past weekend’s Pacific Agriculture Show at Tradex, said it’s an issue he is hearing from farmers, but there is no immediate exemption planned.

“We can’t afford to mortgage our children’s future,” said McRae.

He clarified he is not against giving farmers a carbon tax exemption or break, in principle, but said government can’t afford a lot of carbon tax exemptions if it is going to balance the budget.

“You start writing cheques for millions of dollars and it turns to billions of dollars.”

He added there is an awareness of the issue in cabinet.

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