AGRI Committee Report

Supplementary Opinion of the Conservative Party of Canada

Efforts to Stabilize Food Prices

Introduction

The Conservative Party of Canada (CPC) greatly appreciates the work of the Committee and would like to thank the witnesses who participated and submitted briefs as part of the Committee’s study on Efforts to Stabilize Food Prices.

We agree with the majority of the Committee’s report and recommendations. However, certain aspects of the report should be emphasized, and Canadians need to be aware of decisions and policies by the Liberal government which contribute to higher grocery prices and jeopardize food security in Canada.

Food inflation reached 40-year record highs after nine years under Justin Trudeau’s NDP-Liberal government and continues to outpace general inflation. 1 in 5 Canadians are skipping meals,[1] food banks received a record two million visits in a single month last year,[2] with a million additional Canadians expected in 2024.[3] Grocery affordability has become a such a national crisis that some have resorted to dumpster diving[4] while others are relying on food that has passed its best-before-date or even expired food to kill their empty stomachs.[5]

Canada’s Food Price Report 2024 forecasted Canadian families will pay $702 more for groceries this year,[6] and the latest data shows 83% of Canadians are paying on average $80 more a month today for groceries than just six months ago.[7]

So, when the Industry Minister François-Philippe Champagne said he was going to stabilize food prices by Thanksgiving of 2023,[8] no one believed him, and no one was surprised when he failed to deliver.

Inflationary Deficits

Justin Trudeau’s inflationary spending has caused the cost of food and groceries to skyrocket. Nearly 23% of the Canadian population, or 8.7 million people, reported food insecurity in 2022,[9] an increase of almost 1.8 million from the previous year, and things have since gotten worse.

This year, the government plans to double down on the same out of control spending that has caused so much misery in households across the country. The Parliamentary Budget Officer has confirmed that Justin Trudeau will add $61 billion in inflationary spending.[10] This means Trudeau’s spending is now costing the average family $3,687 extra in new government debt and inflationary spending. And for the first time in a generation, Canada is now spending more on debt interest than on health transfers.

Justin Trudeau has added more to the national debt than all previous 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.

The Cost of Liberal Carbon Taxes on Farmers and Food

The government’s inflationary carbon tax impacts the cost of food since it is felt at every single point in the food supply chain. With the carbon tax increasing by 23% on April 1, 2024, the committee received numerous letters from agricultural stakeholders regarding their opposition to the carbon tax hike including from the Ontario Minister of Agriculture, Food and Rural Affairs, and the Saskatchewan Association of Rural Municipalities.

Additionally, we saw seven Provincial Premiers and 70% of Canadians opposed the government’s 23% carbon tax hike on April 1^st.[11] The Premiers of Alberta, Saskatchewan, Ontario, Nova Scotia and New Brunswick have issued public letters calling on the government to provide a carbon tax carve out for farmers and pass Bill C-234 in its original form.

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.[12]

The Canadian Federation of Agriculture surveyed the impact of the carbon tax on livestock, crop production and greenhouse farms across Canada and found that the carbon tax accounted for up to 40% of total energy bills in some sectors.[13]

We heard that the carbon tax currently costs greenhouse operators in Canada $22 million a year and they’ll will pay between $82 million and $100 million by 2030 when the carbon tax quadruples.[14] The share for operators in Ontario is over $18 million this year and over $40 million by 2030, which means over a 10-year period, Ontario greenhouse operators will have paid over $242 million in carbon taxes.[15]

We have also heard that no rebates have been provided to those who grow food, despite spending tens of thousands of dollars per month on the carbon tax. Likewise, on farm efforts to sequester carbon have gone unrecognized by the government. This, like many other policies from the NDP-Liberals, are punishing for farmers and counterintuitive to making real progress.

We know 44% of fresh fruit and vegetables growers are already selling at a loss and 77% can’t offset production cost increases.[16] Mushroom farms will pay $7.4 million in carbon taxes this year and by 2030 they’ll pay more than $16 million.

A sample of 50 farm operations across Canada paid a total of $329,644 in carbon taxes in one-month last year, with the increase this year it’ll cost those farms $431,544 and nearly triple over the next seven years to $893,944[17].

The beef sector has calculated that by 2030 the carbon tax will add over $84 per head for cow-calf producers and feedlot operations would see the carbon tax add over $88 per head.

To make matters worse, on July 1, 2023, the Clean Fuel Regulations (CFR) requires 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, this second one 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.[18] The second carbon tax will increase the cost of gas by up to 17 cents per litre and diesel by 16 cents per litre and will decrease real GDP in Canada by up to $9 billion in 2030.

With the Bank of Canada confirming that the carbon tax is responsible for 16% of inflation last October,[19] it's no wonder the Food Professor, Dr. Sylvain Charlebois recommended a pause on the carbon tax for the entire food industry.[20]

Recommendations

• 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.      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.

Liberal Policies Jeopardizing Food Security

In addition to the inflationary carbon taxes the Liberal government has proposed regressive policies that would increase the cost of food and jeopardize Canada’s food security at the worse possible time. The government’s font-of-pack labelling initiative is just one example of policies that will make food more expensive for Canadians.

“From front-of-pack labelling to supplemental food labelling, changes to nutrition facts tables, and now the requirements from ECCC with regard to recycling labelling, the industry is simply struggling to keep up with the volume and frequency of continued government requests. By way of illustration, the $8-billion estimated cost for adopting Health Canada's front-of-pack labelling changes not only impacts businesses' operational expenses but also will trickle down to the consumer in higher prices. - Mr. Michael Graydon (Chief Executive Officer, Food, Health & Consumer Products of Canada)”[21]

Another misguided Liberal policy is their plastics ban proposal on fresh fruit and vegetables.

An in-depth Deloitte report on the Liberal’s P2 plastic ban and its impact to the fresh fruit and vegetable sector has revealed that the policy could:[22]

• Increase the cost of fresh produce by 35%
• Reduce fresh produce availability to Canadians by over 50%
• Cost the industry $5.6 billion
• Increase fresh produce waste by more than 50%
• Increase greenhouse gases from the produce supply chain by more than 50% which could add 22 million MTC02 emissions
• Increase health care costs by over $1 billion per year because of lower fresh produce consumption.
• Disproportionate impact the cost of food for rural and remote regions of Canada
• Increase food safety incidents and food-borne illness

Recommendations

• 3.      That the Government of Canada immediately reverse its policy on front-of-package labelling.
• 4.      That the Government of Canada immediately reverse its policy on proposed PLU ban and Pollution Prevention Plan Notice for Primary Food Packaging.

Conclusion

It’s not a coincidence that 2023 was the most expensive crop farmers have ever put into the ground.[23] In 2022, Statistic Canada found that the average net farm operating income decreased by 2.9%,[24] while total farm operating expenses increased by 19.9%, the largest gain since 1979 (+21.1%), surpassing the 9.5% rise in 2021. This was led by increases to fertilizer expenses by 54.4%, feed expenses by 20.7% and fuel expense increases of 52.5%.[25] Statistics Canada is now forecasting that net cash income for farms is expected to fall by 14% this year, wiping out any gains seen in last year.[26]

The government’s ideological pursuit to penalize greenhouse gas (GHG) emitters through the imposition of carbon taxes without properly recognizing those who have been mitigating, removing, and sequestering 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 – not taxes.

Inflationary taxes and bad policies are increasing production costs for our businesses and farmers, which further contributes to the increase in prices. We cannot tax farmers, truckers, and grocers without having those costs pass on to the people at the end of the grocery aisle increasing the cost of food they bring home.