A look at recent Canadian bills and their effect on the ag industry.
By Andrew Joseph, Editor
Regarding Canadian politics, do you understand how things get done? How do laws become laws? How are amendments approached before they are agreed upon or put to the wayside?
Back in the early 1970s, School House Rock had numerous animated teaching moments on television during the breaks in Saturday morning cartoons.
You could sing along with Lolly, Lolly, Lolly Get Your Adverbs Here; or loll about with the Conjunction Junction – What’s Your Function?
But along with learning about grammar, they would also perform something about how the government was run—when you could learn all about the USA’s Bill—just a lonely old bill, sitting here on Capitol Hill.
Aside from a Hinterland moment where Canadians learned about bears and salmon with real-life film footage, we needed more instruction about such needful things as grammar or politics.
As a democratic society, Canada has laws—laws that have been put in place thanks to the work of elected officials. While we can’t be sure that every politician understands how rules are formed, we can at the very least provide you with a backgrounder and discuss some of the Bills in play right now that affect the Canadian agricultural scene.
The term “Bill” is critical. Whenever a province or territory of Canada wants to alter or add a new law, it is introduced as a bill. Federally and via Parliament, bills may originate in the Senate or the House of Commons.
When a Bill is introduced, it is assigned a number based on its chronological order of introduction in its chamber of origin.
Any bill introduced via the Senate has an “S” placed before the assigned number, while any originating in the House of Commons gets a “C” preceding the number. And, for whatever reason, more often than not, Bills originate in the House of Commons.
Unfortunately, regarding clarity, Parliament likes to reuse the numbering of the proposed laws, meaning there can be multiple Acts with the same numbering. For example, there’s 1974’s Bill-22: Quebec’s Official Language Act; Bill C-22: The Canada Disability Benefit Act; and Bill 22 of the BC Mental Health Act. You’ll notice that two are provincial, and only the Bill with the “C” designation is federal.
However, as noted, the numbers are repeated, too. For example, an earlier version of Bill C-22 amended the Criminal Code and the CDSA (Controlled Drugs and Substances Act) to remove some mandatory minimum sentences for offences involving drugs and substances—i.e., to remove all mandatory minimum sentences of imprisonment from the CDSA. This bill ended in 2021 and did not become law.
The point of mentioning all this is to show you that “politicking” and creating laws should be less confusing than they already are.
Can’t we create a new numbering system that doesn’t repeat? Or, if you must repeat, ensure it has a fully designated year—such as C-2023-22, which reads as the 22nd Bill by the House of Commons in the year 2023. But what does this writer know? He has a degree in political science.
Another one of the more recent bills to pass was C-203, an Act respecting soil conservation and soil health. Bill C-12 is an Act respecting transparency and accountability in Canada’s efforts to achieve net-zero greenhouse gas emissions by 2050. This passed into law on June 29, 2021.
A Glimpse at Bill-97
The Ontario Provincial Bill-97 was also in play until May 31, 2023—it was known as the Helping Homeowners, Protecting Tenants Act.
Introduced in April 2022, it was meant to help the province support the construction of 1.5 million homes over the next 10 years.
However, one part of the housing bill relates to farmland, which would allow farmers to build up to three new residences on their existing property.
In a conversation with Diego Flammini of Farms.com, Crispin Colvin, the Vice President of the Ontario Federation of Agriculture (OFA), said that the legislation as proposed is too broad and lacks clarity.
“There’s no definition of what a farm is,” offered an exasperated Colvin. “Is it five acres? Or 10 acres? One hundred acres? There hasn’t been any definition of how large a home can be. Is it restricted to 2,000 square feet, or can you build a 20,000-square-foot mansion? We need more details.”
Colvin said that farmers with more significant operations could split farmland into multiple parcels to build more homes, removing more farmland.
The main issue against Bill 97 was that the severing of farm property into lots would fragment the farmland and make it more difficult for farmers to do their jobs.
It was also feared that the passing of the Bill would limit the growth of farms, drive the price of farmland up, lead to conflict between farmers and neighbours over noise and smells, and permanently take valuable land out of food production.
And we certainly don’t wish to see more good farmland disappear to make a dollar—honest or not.
For context, the 2021 Census of Agriculture calculated that the province of Ontario is losing 319 acres of farmland per day. The 2016 Census of Agriculture pegged the farmland loss at 175 acres per day.
So, over the past five years, farmland loss in Ontario has nearly doubled. And while Canadian farmers have done a great job of increasing yield thanks to progressive precision ag technologies and sciences, the federal government has asked or told the provinces that they need to reduce GHG (greenhouse gas) emissions by 30 percent by 2030—oh, and note that with food insecurity a huge global concern, Canada should grow more food to feed the hungry.
In addition to the overall loss of farmland, building homes on existing farmland could hinder farming activity—if it needed to be spelled out.
But, on May 31, after much gusting of wind power from opposing sides of Bill-97, the Ontario government relented in what critics called a “clueless” plan on a key rural issue.
The National Farmers Union and other allies released a joint statement stating, “Ontario’s productive farmland is a scarce resource... These policy changes put the sustainability of that land and the food system it provides at great risk.”
Peggy Brekveld, a northern Ontario dairy farmer and President of the OFA, offered that housing growth should be done in areas near those already settled where it is near necessary infrastructure such as water and sewage, not on existing farmland. “Housing needs can be met in serviced areas using much less land.”
In other words, other solutions abound. It also means that if you encounter a bill you think is unfair, protest against it.
Although the ramifications of Ontario Bill-97 would affect federal goals enormously, it is still “only” a provincial bill affecting one province.
Federally, there are five bills currently up for discussion involving the Canadian ag industry in some way, shape, or form: Bill C-21, Bill C-208, Bill C-234, Bill C-280, and Bill C-282.
One of the more unlikely bills related to agriculture is Bill C-21, a proposed legislation that proponents wanted to create a national freeze on importing, buying, selling, or otherwise transferring handguns.
It was meant to be a Liberal-party-introduced measure that would provide firearm control legislation by expanding the law’s description of “assault-style” firearms and adding several hundred more guns to the list of illegal firearms.
It was meant to ban assault weapons—mainly because there had been a recent spate of weapons-related crimes and deaths in the Canadian news.
When amendments were presented, there was an impression that many rifles used by hunters and farmers were to be banned as well—i.e., the ag connection.
Federal opposition from the Bloc Québécois, NDP, Conservative MPs, and firearms-rights groups forced their withdrawal.
Superstar NHL goalie Carey Price of the Montreal Canadiens came under fire for his objections to the amendments in December 2022, though it was more for the timing of his comments (the 33rd anniversary of the École Polytechnique shooting, one of Canada’s worst mass shootings) than opposition against banning firearms for farmers or hunters—such as the Indigenous community that Price is from.
Although the intent of Bill C-21 was not to infringe upon the rights of hunters or farmers, better wording of the proposed act must be found if it is to become law.
Firearms are federally regulated in Canada via the 1977 Criminal Law Amendment Act. With amendments, the law prohibits automatic weapons, sawed-off shotguns, and rifles, and it is illegal for anyone in the country to possess them—except for the police and the military.
In the Canadian federal Budget 2023, the government said it was investing $29 million over five years to create an IM/IT solution for the Firearms Buyback Program to provide financial compensation to firearms owners and businesses as it seeks to remove assault-style weapons from within Canadian communities.
Recently passed in June 2021, Bill C-208 was an amendment to the Income Tax Act that was already in place.
The amendment sought to provide tax relief to those who wish to transfer (sell) shares of their farm, fishing business, or small business to their adult children or grandchildren.
First, the amendments are now part of federal law. It allows for the intergenerational transfer of shares to be treated the same as the sale of those shares to an arm’s-length (unrelated) corporation.
Before this, when a business owner sold or transferred shares of their incorporated business to their adult child or grandchild, they would be taxed at the dividend rate, up to 48.27 percent.
Ouch. Thanks, Grandpa.
However, if the business were sold to a non-family member, the seller would be taxed at the lower capital gains rate—up to 27.0 percent—and be able to use the capital gains exemption to reduce or eliminate their total income tax payable.
In other words, selling your farm to interests outside your family was more beneficial.
Since most of our CAAR readers are from a rural farming community, we don’t need to explain how frustrating it was to inherit a farm business and have to pay through the nose for that right.
However, Bill C-208 was created solely to remove the tax-avoidance loophole that families were using to take advantage of lower tax rates without changing business ownership.
As such, business owners could convert what would otherwise be a dividend into a capital gain.
And without the actual transfer of business occurring, Canada was worried that its tax system would be negatively compromised.
And, because there is tremendous concern about this loophole being used unscrupulously by some—regardless of it benefiting a family—Canada is looking to amend things again.
As of March 2023 and the Budget 2023, the loopholes left by Bill C-208 were closed. These are the only proposed amendments mentioned within Budget 2023, so the loopholes aren’t closed.
The proposed amendments to the amendments included within the 2023 federal budget are new conditions that would have to be met for the business transfer to qualify as a genuine intergenerational transfer.
In this instance, these conditions could be met using either “immediate” or “gradual” intergenerational transfer options.
And, because these things take time, the proposed measures would only apply to those transfers used on or after January 1, 2024.
If laws about inheritance aren’t enough to make one roll over in their grave, then certainly an act to amend the Greenhouse Gas Pollution Pricing Act might be. Welcome to Bill C-234.
Bill C-234 is considered a piece of legislation that, when passed, will provide Canadian farmers with carbon tax relief.
It’s a kindness, as the Canadian government has already told the ag industry it must reduce its GHG emissions without offering alternate methods.
Since farmers currently lack options to replace their demand for fossil-fueled grain dryers and barn space heating, the tax rebate program was developed to support the Canadian farmer while maintaining the incentive for them to reduce emissions.
However, exempting the high-emission activities of fossil-fueled grain drying and barn space heating from carbon pricing for farmers is feared to encourage other sectors to demand similar tax treatments.
For example, within the oil and gas sector, it has lobbied for and received favourable treatment whereby it pays a lower carbon price than others. But that’s for other economic sectors to write about.
Bill C-234, as it is written, will exempt on-farm fuels such as propane and natural gas used in grain drying and barn heating from the federal carbon tax—a significant financial step as Canadian farmers, in total, pay millions of dollars in carbon taxes.
For example, Keystone Agricultural Producers estimated that farmers in Manitoba shelled out some $1.7 million in carbon taxes in 2019.
According to BDO Consulting Services—the fifth largest accounting firm in the world—and via its Canadian branch, the carbon tax credit rate was $1.47 in 2021 and $1.73 in 2022 per $1,000 in eligible farming expenses for the fuel charge year—but any farm business claiming it would have a total farming expense of at least $25,000 to be eligible.
The first reading was performed in the Canadian Senate on March 30, 2023, with a second reading on May 9. It completed its third reading on March 29, as this article was being written. The bill seeks to amend the Greenhouse Gas Pollution Pricing Act by expanding the definition of “eligible farming machinery” and extending the exemption for qualifying farming fuel to marketable natural gas and propane.
Imagine a scenario where half the people get paid on even days and the remaining half get paid on odd days. It sounds simple enough. There are 366 days in a leap year when this is proposed, meaning 183 days each of odd and even days.
But then it’s realized that there are 179 even days (January 2, 4, 6, etc.) in a year meaning they gat paid four less times over a year.
So, it gets amended, with those earning fewer even payments earning more per payment over the year so that everyone makes the same amount of money, regardless of whether they get paid on an odd or even day.
And everyone is happy for a week until someone realizes that leap years come once every four years; therefore, there are only 365 days a year three out of four years, which means that there is one fewer odd day, which means that now those who get paid on an odd-numbered day need to have their salary prorated to make up for that lost day.
And now everyone is happy. Except now some of the Even people want more money because they are doing a better job than some of the Odd people. And this is when it is decided to pay everyone weekly or biweekly and to pay them an hourly wage or an annual salary. And so, everyone is paid, fairly or not. But the act has been amended until it needs to be amended again.
Akin to our odd/even payday scenario, finding the best wording is at the forefront of the current amendment.
As noted, a troubling key factor is the definition of “eligible farming machinery” in Section 3 of the Act.
The third reading sought to replace it with:
- (c) an industrial machine or a stationary or portable engine, including a grain dryer; or
- (c) an industrial machine or a stationary or portable engine; or
Or, by striking out “or” at the end of paragraph (e) and by adding the following after that paragraph:
- (f) property that is used for the purpose of providing heating or cooling to a building or similar structure; or
The definition qualifying farming fuel in Section 3 of the Act is replaced by the following:
- Qualifying farming fuel is gasoline, light fuel oil, marketable natural gas, propane, or a prescribed type of fuel. (combustible agricole admissible)
The definition qualifying farming fuel in section 3 of the Act is replaced by the following:
- Qualifying farming fuel is a type of fuel that is gasoline, light fuel oil, or a prescribed type of fuel. (combustible agricole admissible)
As such, the argument will be about wording, which is at least a lot better than the argument that, per Ontario’s C-97, one is making the life of a farmer more difficult by turning farmland into residential property.
Now all of this may seem like wordy semantics, but imagine if the Act were to remain as it stands. In that case, pundits fear it would weaken the carbon price by expanding the definition of eligible farming machinery and extending the exemption from carbon pricing for qualifying farming fuel to include marketable natural gas and propane.
Sometimes, bills move through the system quickly. Bill C-280 passed through the House of Commons after its second reading in late May 2023, and its resulting passage is considered a big win for the produce industry.
Bill C-280, aka the Financial Protection for Fresh Fruit and Vegetable Farmers Act, helps to ensure future financial security in the fresh fruit and vegetable sector.
The Act will allow a trust to help secure payment should a buyer go bankrupt. This will provide stability and support for the industry while at the same time safeguarding Canadian food security.
Because of the perishable nature of fresh produce and standard industry payment terms, sellers cannot recover losses when faced with buyer bankruptcy.
A recent January 2023 bankruptcy involving the large-scale commercial greenhouse business Lakeside Produce Inc. of Leamington, Ontario, which employed hundreds of people, is a faithful reminder of the problems faced by those who owed money.
Documents made public through Ernst and Young, who served as the insolvency trustee, showed that Lakeside Produce owed $187,889,241.97 in liabilities to 300 different creditors but only had $3,580,233 in assets.
“The successful passage of Bill C-280 at Second Reading is an extraordinary milestone, and we wholeheartedly express our appreciation to MP Scot Davidson for his commitment in propelling this legislation forward,” explained Rebecca Lee, the Executive Director of the Fruit and Vegetable Growers of Canada (FVGC). “For over three decades, the fresh produce sector has tirelessly advocated implementing a financial protection mechanism. Today, we find ourselves closer than ever to realizing our long-standing goal. This achievement marks a significant leap towards ensuring the security and prosperity of our industry.”
Bill C-280 is a twin to one successfully used in the US. The US version provides a financially feasible solution that imposes no additional burden on the government, and the same is hoped for in the Canadian aspect.
Per the FVGC, the Canadian Produce Marketing Association (CPMA), the Fruit and Vegetable Dispute Resolution Corporation (DRC), and others, the trust will allow those who sell fresh produce to continue contributing to local economies across the country while providing Canadian consumers with safe and nutritious fruit and vegetable products.
“The significance of this legislation for the fresh produce industry cannot be overstated,” said Ron Lemaire, President of the CPMA. “As we proceed to the committee stage, we eagerly anticipate further deliberations on the topic of financial protection for fresh produce sellers. We are optimistic about a future where the fresh produce sector thrives through a robust financial protection mechanism, fortifying the sector and ensuring enhanced food security for all Canadians.”
And, because there’s always room for more, late June saw the passing of the third reading of Bill C-232.
The Bill has been designed to remove supply management from any future trade deals. It was introduced by the Bloc Party’s Luc Thériault in June 2022 and received 262 votes in favour of its passing on June 21, 2023, with 51 votes against it.
Diego Flammini, a writer with Farms.com, reported that Agriculture and Agri-Food Minister Marie-Claude Bibeau, Conservative Leader Pierre Poilievre, and NDP Agriculture Critic Alistair MacGregor all voted in favour of Bill C-282, which has pleased Canada’s supply-managed sectors.
“Enacting Bill C-282 into law will not only strengthen and protect Canada’s essential system of supply management; it will present the opportunity to champion growth within Canada’s agricultural sector and support thousands of jobs and economic activity across our country,” stated the Dairy Farmers of Canada, Egg Farmers of Canada, and other related organizations in a joint June 22, 2023, statement.
But, despite support in favour of the Bill, Flammini noted that some ag groups were opposed to the Bill and the corresponding result of the June 21 vote—proof positive that what’s good for the goose isn’t always good for the gander.
On June 20, the Canadian Agri-Food Trade Alliance (CAFTA), whose members include the Canadian Cattle Association, Cereals Canada, and the Canola Council of Canada, urged MPs to vote against Bill C-282, stating that supporting this bill could prove harmful to Canada if trading partners are turned away because access to Canada’s dairy market is a non-starter.
“Our message is clear: no single sector of Canada’s economy should have the legislative authority to hold Canadians hostage,” Dan Darling, the CAFTA President said in a June 20 statement.
“The passage of this bill provides no tangible benefits to Canadians while risking our economic growth, international reputation, and key trading relationships—both current and future,” Darling continued.
CAFTA also noted that the passage of Bill C-282 could be a factor in increased food price inflation.
One would think that with all the lawyers and intelligent people we have running things, they would be able to get a law or act correct the first time, thinking of all the possible scenarios ahead of time and having a solution for it before it becomes a law. But no.
The reality is that we aren’t that smart.
Ah, bills, amendments, and acts on a provincial and federal level prove that we’re trying. Very trying.
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