New economic study to estimate cost of carbon tax on Ontario agriculture

March 11, 2021

By: The Working Forest Staff

GUELPH, ON – The Ontario Federation of Agriculture (OFA) has engaged Agri-Food Economic Systems to conduct a financial assessment and analysis of the cost the federal carbon tax burden will have on Ontario’s agriculture industry.

The Understanding the Cost Burden of the Federal Carbon Tax on Ontario Agriculture study is currently underway with a targeted completion date of late April 2021. OFA will receive a final report following the completed assessment.

“This analysis will help to raise awareness of the significant financial impact the carbon tax will have on our farm businesses,” said Peggy Brekveld, OFA President. “The federal government needs to understand and work to lessen the negative impacts of the carbon tax. It is negatively impacting the ability for farmers in Ontario to compete in both domestic and international markets.”

OFA continues to advocate for the federal government to broaden the agriculture exemption under the carbon tax by including natural gas and propane in the list of qualifying farming fuels under the federal Greenhouse Gas Pollution Pricing Act. OFA has advocated revising the definition of eligible farming machinery to include “machinery used for the purpose of providing heating or cooling to a building or similar structure” to ensure that agricultural activities of grain drying and the heating of livestock barns can be exempted from the fuel charge.

The need for a broader agricultural exemption is made more urgent given the federal government has pledged to more than triple the price of carbon by 2030 under the proposed Healthy Environment and a Healthy Economy Plan.

“Mandated pricing of carbon is a significant development impacting Ontario agriculture, potentially requiring a broad range of adjustments,” said Dr. Al Mussell, Founder and Research Lead of Agri-Food Economic Systems. “This study will estimate the explicit costs of the tax on energy use for which agriculture has no exemptions and will also estimate the burden of implicit costs embedded in the prices paid by farmers for various inputs. This study will also include an assessment of the costs of mitigation in response to carbon taxes.”

OFA looks forward to reviewing and sharing the results of the final report as part of the organization’s advocacy efforts to reduce the carbon tax burden on farm businesses. 

 

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