Canadian carbon price worries farmers, fertilizer makers

Tue Oct 18, 2016 8:59pm EDT
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By Rod Nickel and Alastair Sharp

WINNIPEG/TORONTO (Reuters) - Canada's plan to price carbon emissions may weaken the farm sector in one of the biggest grain-shipping countries, raising farmers' costs and discouraging investment in fertilizer production, industry groups say.

Ottawa this month promised a price on carbon emissions by 2018, and will let provinces choose a tax or cap and trade system. Carbon pollution will cost C$10 a ton in 2018, rising gradually to C$50 in 2022.

At C$50, it would raise fertilizer prices C$2 per acre for farmers, and some experts peg the total farm cost at C$6 an acre, according to CIBC bank.

"Everyone is paying attention to this, especially in a downtime for the economy," said Robin Speer, executive director of Western Canadian Wheat Growers, which has gathered 2,500 petition signatures opposing the price.

Reduced soil tilling and more fuel-efficient machinery have made farming more environmentally friendly, and crops absorb carbon from the air and leave it underground, Speer said.

Agriculture accounted for 10 percent of Canada's 2014 total greenhouse gas emissions, according to Canada's environment department.

Nitrogen fertilizer producers, among major polluters in western provinces, are leery of a carbon price.

Higher costs will discourage expansion and shift production elsewhere, said Garth Whyte, chief executive of industry group Fertilizer Canada. Provinces should instead credit fertilizer makers for reductions in nitrous oxide, a production byproduct, he said.   Continued...