The CAAR Communicator

August Issue – See All

The Value of Ag Tech to the Retail Channel

At the 2021 Canadian Association of Agri-Retailers Conference, Todd Ormann recently spoke about his business and commercial development with global Telus Agriculture partners and the value of ag tech to the retail channel.

The Value of Benchmarking Your Business

Benchmarking is the process of comparing and measuring business processes and performance metrics to industry leaders which will help the organization take action to improve its own structure.

What will lower clethodim MRL’s mean for Canadian Ag Retailers and Farmers?

Europe’s Standing Committee on Plants, Animals and Feed (SCoPAFF) recently adopted a regulation to set clethodim maximum residue limits (MRL’s) to the limit of quantification (LOQ) for the European Union. Clethodim is the active ingredient in BASF’s Select and Centurion, Loveland’s Shadow RTM, and NuFarm’s Statue, among other brands. Industry experts are not planning to change recommendations around products carrying the chemistry at this point.

Ag Retailer Tips for Safety

Robert Gobeil, Ag Health and Safety Specialist for the Canadian Agricultural Safety Association (CASA) recently provided insights about safety from an ag retailers’ perspective

Value of Ag Retail Voice to Advocacy. CAAR, its members, speakers and editorial are our voice

As an independent retailer TerraLink is regularly looking for information on what is happening at both the regulatory and the industry level. Located in the Lower Mainland of BC we are distant from the mainstream ag focused provinces and in south coastal BC there are only a few key dealers who keenly compete against each other, so basically, we are on our own.

2021-22 Membership Renewal is Underway

CAAR would like to thank all members who have already paid their membership fees for 2021-22!

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Banner for Carbon Tax Update: Impact on the Canadian Ag Industry

Understanding the Carbon Tax

Carbon taxes have a large impact on the profitability and operations of businesses. Jeff Harrison, CPA, CMA, Indirect Tax Partner at MNP LLP recently gave an update on what the carbon tax is and how it might impact the agriculture industry in the future.

Harrison began by explaining that there are several misconceptions surrounding Canadian carbon tax. One of the issues that people often misunderstand is that the carbon tax is actually not a tax at all, rather a levy on fossil fuels used as a tool to encourage reduction in carbon emissions when burned.

Conceptually, it is adaptable to both changes in rate and length of the program by attaching a levy rate to the carbon emission of over 22 fuel types, measured in cents/litre or cents/cubic metre. In 2021, these rates were $0.0805 per litre for diesel, $0.464 per litre for propane, and $0.0587 per cubic metre for natural gas.

Carbon tax is similar to other excise and fuel taxes where the distributor accounts for the tax and passes the cost on in the price, such as the price people see at the gas pump, and not a tax charge like you see in a GST/HST or PST.

The federal carbon tax program was initiated on April 1, 2019, with registration designed for self-reporting additional carbon tax owing or refundable. The program accounts for the issuance of exemption certificates for large emitters, users, and distributors, where entities would purchase an exemption ahead of time and not pay additional carbon taxes. Current proposals suggest legislation changes to an additional carbon tax of $15/tonne/year beyond 2022 out to 2030 which would make the carbon tax rate $170/tonne in 2030.

With carbon tax exemptions, there will be inputs with an indirect price increase as a result of the tax. Specific industries affected include the fertilizer manufacturing industry, which will offer exemptions for natural gas use, but incur tax on other fuel and indirect costs affected by the carbon tax. The potash and phosphate mining industry will not be provided exemptions and will form fuel consumed in mining and transport into their cost basis. Large emitters will likely acquire their fuel exemption for the most part, but account for carbon tax through the OBPS system, allowing some amount of carbon tax to be reflected.

What about the impacts on the Farming Industry?

Whether it is the farm itself or supporting services in the agriculture sector, the industry is heavily impacted by carbon taxes. Energy costs fluctuate with weather conditions and will continue to rise regardless of carbon taxes, wet harvests require larger use of propane and natural gas which are not exempt for farmers, and higher production costs will not always translate to higher commodity prices due to the competitive market. Harrison says Canadian farmers will have to compete with others that do not have a carbon tax, raising the question of who will bear the costs that cannot be passed on in price.

Canada’s Clean Fuel Standards legislation target is to reduce carbon intensity by 13% by 2030, with a proposed start of December 2022. This legislation would require fossil fuel suppliers to supply cleaner fuels in addition to having a credit system for low-carbon, renewable gas/hydrogen, supplying biogas, and more.

Harrison says the future is still uncertain, but it is important to accept that the carbon tax is not going away and that it will lead to additional broader legislation, and will have an impact on the farming industry as well as the retail ag business.

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