AGRI Committee Report

Supplementary Opinion of the Conservative Party of Canada

Food Price Inflation

Introduction

The Conservative Party of Canada (CPC) greatly appreciates the work of the Committee, its Chair and Members, the Clerk and her staff, including the dedicated analysts, as well as the translation and technical teams. We would also like to thank the many witnesses who participated and submitted briefs as part of the Committee’s study on Food Price Inflation.

We agree with the majority of the Committee’s report and its recommendations. However, certain aspects of the Report should be emphasized, and more information must be made available to Canadians in terms of the Liberal government’s policies and their contribution to food inflation in Canada.

At the time of this study, food inflation under the Liberal government is at a record 40-year high and up over 10% year-over-year.[1] Consumers can expect food prices to continue to rise. Canada’s Food Price Report 2023 predicts a 5% to 7% food price increase in 2023, with the most substantial increases in vegetables, dairy, and meat. The report forecasts that an average family of four will spend up to $16,288 per year on food, an increase of up to $1,065 from what was observed in 2022. The report also forecasts food costs could increase by as much as 34 per cent by 2025 further making groceries unaffordable for Canadian families who are already struggling.[2]

Inflationary Deficits

Justin Trudeau’s inflationary spending has caused the cost of food and groceries to skyrocket. For example, one in five Canadians are skipping meals and people are going to food banks in record numbers. Justin Trudeau’s “grocery rebate” will give $234 for a single adult to cover the rising cost of food his inflationary deficits helped cause. As noted above, Canada’s Food Price Report 2023 predicts a family of four will spend up to $1,065 more on food this year, $598 more than the $467 rebate they will receive.

Mr. Michael McCain CEO of Maple Leaf Foods Inc. highlighted the linkages between government deficits and inflation by recommending the current government focus on fiscal discipline to restrain overall inflation.[3]

Justin Trudeau has added more debt than all other Prime Ministers combined and has no plan to balance the budget. His out-of-control spending and inflationary deficits are driving up the cost of goods we buy, including essentials like food and fuel, and the interest we pay.

Canada’s federal debt for the 2023-24 fiscal year is projected to reach $1.22 trillion. That is nearly $81,000 per household in Canada.

There is no path to balance in Canada’s budget projections. The deficit for 2022-2023 is up to $43 billion. In 2023-2024 the deficit is projected to be $40.1 billion.

For years, Conservatives have warned Justin Trudeau about the consequences of his actions, and how much it hurts Canadians from coast-to-coast.

The Cost of Liberal Carbon Taxes and Inflationary Policies

Throughout the study it became clear Liberal Members of the committee purposely avoided discussion or inclusion of politically inconvenient facts and recommendations related to the economic impact of the carbon tax and its affect on food production, transportation and prices at the grocery store.

The Canadian Federation of Independent Business estimated on average, farmers paid almost $14,000 in federal carbon tax the first year it was imposed.[4]

For the average farm in Saskatchewan the carbon tax cost between $14,000 and $25,000. Mr. Ian Boxall, President of the Agricultural Producers Association of Saskatchewan, explained concisely the impact the carbon tax has had to the bottom line of farmers, the affect it has on food production and the livelihood of farmers.[5]

The Parliamentary Budget Officer (PBO) indicated increasing the carbon tax to $170 per tonne on natural gas and propane will cumulatively cost farmers more than $1.1 billion by 2030.[6]

Canada's Food Price Report 2023 states a farm could pay $150,000 in carbon tax per year when the carbon tax is tripled. Dr. Sylvain Charlebois emphasized the importance for the government to understand how the carbon tax is impacting food affordability and to recognize its impact on each node within the food supply chain.[7]

When asked about how a $150,000 carbon tax bill would affect the sustainability of Canadian agriculture, Mr. Boxall said:

It will have a huge impact—$150,000 on a 5,000-acre farm. It's unfathomable that we will get there on a carbon tax alone. It makes my skin crawl to think that's where we'll be, and then to be turned around and not recognized for the work that is done, ensuring that we have proper grasslands and that we have proper management of our farm soil. Farmers are the biggest stewards of the land in this country, and we care more about the environment than we ever get credit for. It really is going to be detrimental to Saskatchewan farmers.[8]

To make matters worse, beginning on July 1, 2023, the Clean Fuel Regulations (CFR) will require reductions in the carbon intensity of gasoline and diesel used in Canada. This second carbon tax being imposed on families, businesses and, more critically, food producers will be added to their existing tax burden. Like the first carbon tax, will be subject to the goods and services tax (GST) but does not include any rebates.

According to the Parliamentary Budget Officer this second carbon tax will cost the average Canadian household an extra $573 per year without any rebate, with families in some provinces facing costs as high as $1157. The second carbon tax will increase the cost of gas and diesel by up to 17 cents per litre and 16 cents per litre respectively and will decrease real GDP in Canada by up to $9 billion in 2030.

Mr. Franco Terrazzano, Federal Director at the Canadian Taxpayers Federation, made the following comment in summarizing the situation:

Look, everyone knows that farmers aren't just pools of cash who can continue to pay higher tax after higher tax after higher tax. Really, only two things can happen: either at least some of the costs make their way to the till and hurt families who are struggling to afford the jug of milk or the ground beef; or supply goes down. What happens when we reduce Canadian supply? Prices, of course, go up. Even if we leave the farmers aside for a quick second, we're also seeing the increased costs of delivering those goods to the store—the carbon tax going up, and a second carbon tax coming in. All of this is being layered on top of each other. It's hurting Canadian businesses, but it's also hurting Canadian families.[9]

Furthermore, in the middle of a government made inflationary crisis Liberals insist on moving ahead with policies like front-of-pack labelling, which is guaranteed to increase the cost of food. Ms. Denise Allen, President and CEO of Food Producers of Canada, offered the following comment on this matter:

Certainly. The estimation of $2 billion overall as an impact to the industry for front-of-pack labelling alone is accurate. In the current competitive environment, we are looking at every possible input to our businesses rising dramatically. From front-of-pack labelling, whose timing is very difficult, especially after COVID, the supply chain disruption, climate events, labour.... We're in a very serious labour shortage in our industry. Each day, we are approximately 30,000 people short as an industry, and that number is expected to double by 2025 to 65,000. We need immediate relief with respect to labour.

To get back to your question on whether or not our industry is being affected by other factors in the regulatory environment, I can say yes, absolutely. Taxes are crippling for small business owners, and now we're looking at increased costs through transportation, through carbon taxing and through other environmental measures that are making investment in Canada incredibly difficult to defend. Inevitably, the owners, investors and leaders who are making those decisions are looking to other jurisdictions in the world, and that is a direct threat to our domestic food supply and consumers.[10]

Food Waste

Nearly 60% of food produced in Canada, roughly 35.5 million tonnes, is left to waste each year. More than 32% or 11.2 million tonnes of that food is edible and could be redirected to support people in need across the country.

Canada is blessed with abundance and has real potential to be self-sufficient, while growing our capacity to feed not only our own people, but the world. At the same time, due to various factors, including harmful government policies, 4 million Canadians, including 1.4 million children, struggle to access healthy food and maintain household food security. Food loss and waste comes at an enormous economic cost to businesses and society. It also has significant environmental impact. Salvageable food waste represents almost 60% of the food industry’s environmental footprint. Much of this waste and its environmental footprint is entirely avoidable. Food that ends up in landfills creates methane gas which is 25 times more damaging to the environment than carbon dioxide, yet the government’s actions fail to account for, or address, a matter much more impactful than their unnecessarily punitive carbon taxes.

The total financial value of this potentially rescuable lost and wasted food is a staggering $49.46 billion. In the long-term, Canadians need government support through programs to restore their financial freedom, fight inflation, and support their economic growth.

Testimony at the committee from Daily Bread food bank and Second Harvest outlined the dire situation. According to Second Harvest's figures, food banks and other food-related programs across Canada served 5,141,481 people per month last year. The organization expects that number to climb to 8,208,679 in 2023, a roughly 60 per cent increase.

More food banks will not decrease food insecurity in Canada. More food banks are only treating the problem, not finding a solution. Solutions for the affordable housing crisis would go further than current government policy, so non-profit food programs are not needed in the first place. Without systemic change, food insecurity will only get worse in Canada. There are too many new non-profits filling legislative gaps to feed Canadians. Non-profits exist where policy does not.

Conservatives believe in finding solutions to Canada’s food waste crisis and support Canada’s agricultural industry while working towards achieving national food security.

Conclusion

The government’s pursuit to penalize greenhouse gas (GHG) emitters through the imposition of carbon taxes without properly recognizing those who have been mitigating and removing GHG’s for years or decades, are both short-sighted and inequitable.

These are not insignificant costs, and they will compromise the competitiveness of our farmers, ranchers and processors who have, for years, demonstrated an ability to deliver meaningful reductions in emissions through the adoption of new technologies, education and innovative management practices.

Inflationary taxes and policies are increasing production costs for our businesses and farmers, which further contributes to the increase in prices. Tripling the carbon tax on everything will inevitably be passed onto consumers. A second carbon tax only adds fuel to the inflationary fire. We cannot tax farmers, truckers, and grocers without having those costs pass on to the people at the end of the grocery aisle and in their homes.

Recommendations

1. 1.      That the Government of Canada remove the carbon tax that is applied to all food inputs and production including all farm fuels and other appropriate aspects of the food supply system.
2. 2.      That the Government of Canada complete a comprehensive study on the economic impact of the carbon tax and Clean Fuel Regulations and how increases to both affect the cost of food production, price of food and the entire food supply chain.
3. 3.      That the Government of Canada immediately reverse its policy on front-of-package labelling.