DECEMBER 2023 17 following sectors: • Oil & Gas: 28 percent; • Transportation: 22 percent; • Buildings: 13 percent; • Heavy Industry: 11 percent; • Agriculture: 10 percent; • Electricity: 7.7 percent; • Waste and others: 7 percent. If you do the math, we come up to 98.7 percent, but obviously, Statistica didn’t include all of the other sectors with small percentages. The agency defines heavy industry as including emissions from non-coal, non-oil, and non-gas mining activities, smelting and refining, and the production and processing of industrial goods such as fertilizer, paper, or cement. For waste and others, “others” include emissions from coal production, light manufacturing, construction, and forest resources. So what’s the big deal? Well, Canadian farmers are paying carbon taxes—charged to any individual or business that uses carbon-based energy such as natural gas, diesel, and gasoline. The tax or fee is charged for every tonne of greenhouse gases (GHGs) that is dispersed up into the atmosphere. But Canadian farmers complain—rightly so—that having to pay this carbon tax affects the way they do business because competing countries in agriculture don’t have to pay a similar carbon tax. For Canadian farmers, they say that paying a carbon tax shrinks their profit margins and dilutes their global competitiveness. Do carbon taxes work to reduce GHG emissions? Sweden has been using a carbon tax since 1991— yes, for 32 years. Sweden’s Ministry of Environment has estimated that its carbon tax has caused a decrease in GHG emissions by 20 percent—and this does not include any regulation changes. It was farmers not wanting to be penalized by the constant payment of a carbon tax that has caused many of them to find alternative farming methods that reduce their GHG emissions. While it may seem at the outset that the solution is simple for farmers who don’t want to pay a carbon tax—change the way you farm—it’s not that easy. As noted, Canadian farmers are concerned about shrinking profit margins—and Canadian ag retailers should be, too. Many of the inputs that ag retailers provide are things that contribute to a farm’s GHG emissions. As well, these inputs cost ag retailers carbon tax fees. Examples of such contriubutors include seeds, herbicides and pesticides, farm equipment and parts, and the shipping of such things to your shop—these are things that will cost the ag retailer carbon taxes, and because the costs need to be recaptured, it will mean higher costs to the farmers. It will mean that farmers will seek higher prices for their yields (as they always do!) but may not achieve them because other global competitors can provide the same products without having to be burdened by a carbon tax. And anything that utilizes commercial transportation to leave the farm—such as a truck, train, or ship—will be carbon taxed. It’s not just transportation. It’s also expected that producers of electricity required for heat, irrigation, and seed cleaning will incur costs that will be passed on to the consumer (i.e., the farmer). And fertilizer! There’s already a global availability shortage thanks to the Russian war against Ukraine, which also involves Russian ally Belarus, as all three were big suppliers of global fertilizers. But Canada has a large supply of fertilizer, except that it’s expensive. Canada has large supplies of oil and gas, yet consumer costs are high. Why? Taxes. It’s the same for fertilizer. Albert produces urea and anhydrous ammonia fertilizers. However, in the production of both, natural gas is utilized. Since natural gas is a fuel, it comes under the carbon tax fess charged to the manufacturer. As such, production of urea and anhydrous ammonia fertilizers is subject to a carbon tax. Luckily for fertilizer providers, global politics (war), playing catch-up after a global pandemic (factory shutdowns), and a global supply chain disruption (ports closed and backed up), fertilizer has been in hot demand—if you can get it. Loyal Canadian farmers would, of course, prefer to buy Canadian. But if they can’t because of the added carbon tax cost and have to buy exported fertilizer because that fertilizer had to be shipped, it increases a farmer’s carbon footprint. Because farmers are slaves to the whims of agents and buyers setting the price for their yield, they are unable to pass on any additional input costs. So, for Canadian farmers who already work against razor-thin margins, additional input costs and carbon taxes greatly affect the bottom line. So what’s a Canadian farmer to do? As long as the carbon tax remains in place—and Sweden’s near 30-year use is proof enough that the
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