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Federal Climate Policies Frustrate Alberta Farmers

As carbon taxes increase, growers brace for possible fertilizer reductions

Photo courtesy of the Alberta Wheat Commission. Photographer: Two Stone Creative Co.

Alberta farmers and agriculture stakeholders are burdened and frustrated over Federal Government climate change policies like escalating carbon taxes and a goal to dramatically reduce nitrogen fertilizer use by 2030, which could hit farmers’ bottom line and threaten Canada’s status as a food exporter.

The problems are exacerbated by war in Ukraine, which has significantly reduced global fertilizer supply due to sanctions against Russia and driven up the price of natural gas, a key ingredient in fertilizer production. Fertilizer prices have roughly doubled in the last year.

On April 1, the Federal Government, despite record high fuel prices, increased its carbon tax by 25 per cent, raising the cost of greenhouse gas (GHG) emissions related to fossil fuel consumption to $50 per tonne. For consumers, that translates into an additional 2.21 cents per litre for gasoline and 2.68 cents for diesel. For Alberta farmers, who don’t pay carbon tax on dyed farm fuel, it means paying even more for fuels like propane and natural gas that are used in large quantities for grain drying and heat. Farmers say most agriculture service industries are subject to carbon tax and pass on the added expense to farmers.

“We dry grain almost ever year in our climate,” says Brent Konstapel a director of Alberta Barley, who farms 500 kms north of Edmonton near Spirit River. “It saves the quality of our grain, keeping it stored for any amount of time. Having it in good condition for our export markets is huge.”

Konstapel has heard from some members of the Alberta farming community who say carbon tax costs are close to the cost of fuel. Carbon tax is also incorporated into goods used by farmers, like feed and chemicals, he explains. Konstapel, who says farmers are at the mercy of commodity markets, is concerned carbon tax may eventually be levied on dyed farm fuel. He’s also concerned about Ottawa’s aspiration to reduce nitrogen fertilizer use by 30 per cent by 2030.

Nitrogen fertilizer, according to the Government of Canada, releases nitrous oxide, a GHG more potent than carbon dioxide. In a 2021 report commissioned by Fertilizer Canada, a fertilizer industry advocacy and research group, Meyers Norris Penny (MNP) said Canada’s aspiration to massively reduce nitrogen fertilizer use, if realized, would be devastating and cost producers approximately $48 billion over the next seven years.

“We want to have a high yielding crop and get the best price for it,” says Konstapel. “Reducing fertilizer is going to reduce our yields. Fertilizer is the highest cost on the farm. We are not putting more in the ground than needed. We are not throwing it on the ground and wasting it.”

The Government of Canada says on its website that fertilizers play a major role in farmers’ success and have enabled record harvests over the last decade. Fertilizers drive increased yields, sales and exports, they explain.

“However, nitrous oxide emissions, particularly those associated with synthetic nitrogen fertilizer use have also grown significantly,” they add. “That is why the Government of Canada has set the national fertilizer emissions reduction target, which is part of the commitment to reduce total GHG emissions in Canada by 40-45 per cent by 2030.”

All is not lost, says one industry expert who notes that agriculture contributes 24 per cent of global GHG emissions.

According to Jeff Ivan, President & CEO of Soilgenic Technologies, a company developing enhanced efficiency fertilizer technologies that will reduce agricultural GHG emissions, there is hope for the future despite Ottawa’s goal to drastically reduce nitrogen fertilizer use. He said lowering fertilizer use by 30 per cent is not the answer and is “the easy way out.” The problem, he explains, is more complex in the context of feeding the world’s growing population. The solution is all about fertilizer use efficiency.

“Essentially what we’ve done is we’ve created environmentally friendly biodegradable molecules that are added to the fertilizer to stabilize the nitrogen,” he says. “So, our company has developed what we call next generation nitrification inhibitors that perform better, so they last longer and are less expensive while helping to reduce GHG emissions from nitrogen fertilizers. The suite of patents for upstream fertilizer manufacturing and retail fertilizer additions includes new innovations that will significantly improve nitrogen and phosphate fertilizer use efficiency, resulting in greater efficiency and significantly reducing loss to the environment, all while helping the farmer to grow more food for a growing world.”

Member of Parliament for Sturgeon River – Parkland Dane Lloyd, whose constituents grow everything from potatoes to canola, says no one likes additional taxes during times of inflation. Poultry farmers and others in his region are stuck with large barn and shop heating bills. Liberal policies, he explains, are compounding existing challenges with input costs.

“They’ve set a target for emissions and now they’re trying to figure out policies that are going to achieve it,” he says. “They are using economics but are very activist in trying to move forward on this agenda.”

When asked about the impact of climate change policy on farmers, David Yager, a Canadian energy analyst, says people who write climate policy in Canada are oblivious to economic principles. He says the real issue isn’t what climate activists are doing, but why they are doing it.

“Of all the things that the entire climate change file has completely ignored, or chosen to ignore, or doesn’t know enough to ignore, is the role of fossil fuels in the food chain,” he says. “Something like half the population of the world is fed by nitrogen-based fertilizer. I’ve watched the entire climate debate unfold with absolutely nobody talking about food or the impact of food or the cost of food. The whole climate debate has been that the cost of doing nothing is so huge that the short-term costs are irrelevant.”

The Prime Minister’s office, asserts Yager, has told the world Canada plans to exceed its 2030 GHG targets. He wonders how that’s going to happen, adding it’s been “open season” on the oil and gas sector. The Federal Government, he explains, has followed through when it comes to pushing back against the energy sector.

“The sleeping giant is food,” he says. “Now, one of the reasons they are doing this, and this is another twist, is the demographics of Canadian politics is just astounding. Sixty-five per cent of voters live in urban centres. Urban voters that support the NDP and Liberals have absolutely no idea where anything comes from. They don’t know where their food and gasoline come from. When it comes to Western Canada and farmers and oil producers, they go ‘What’s that noise? What’s your problem?”