Carbon tax could compromise Canadian food sovereignty
Special to The Globe and Mail
Published Monday, Dec. 19, 2016 5:00AM EST
Last updated Sunday, Dec. 18, 2016 5:10PM EST
Sylvain Charlebois is dean of the faculty of management and professor in food distribution and policy at Dalhousie University.
From farm to fork, our food is responsible for around 25 per cent of the world’s greenhouse gas emissions. This is much higher than what most people would think. Whether we realize it or not, every decision a consumer makes when picking what to eat has an impact on our environment, and many want to do something about it. The federal government recently mandated a tax on carbon emissions. A mandatory tax of $10 a tonne is set to start in 2018 and provinces are expected to produce their own plans. While energy prices are expected to rise, the impact on food costs has garnered scant attention.
Grocers will likely continue to seek affordable foods for their customer. The concern, of course, is that Canadian goods with a carbon tax may become much less attractive from a price perspective. This would encourage grocers to import more foods, regardless of the dollar’s value, a trend we have seen over the past few years. While food prices will likely increase over the next few years, carbon taxes will hardly be to blame since importers have choices about where they buy their products. A tax on carbon won’t make more Canadians food insecure – the issue is more about food sovereignty for certain sectors.
Prime Minister Justin Trudeau’s announcement about a carbon tax occurred weeks before a new U.S. administration. With Donald Trump ascending to the White House, the timing of the carbon deal is worrisome for the Canadian agriculture and food sector. Under Mr. Trump, the United States is likely to remain idle on policies to mitigate climate change. This would make our agrifood systems much less competitive. Coupled with a possible reduction in U.S.-based corporate tax rates, Canada could be isolated as the only green-focused economy in North America. To make matters worse, our food economy remains vulnerable to currency fluctuations. When the loonie tanks, food prices go up. However, we have seen many new greenhouse projects emerge in recent years, particularly in Ontario, which could potentially make the Canadian market much less susceptible to abrupt retail price fluctuations. A price on carbon may stop these initiatives from coming to fruition. Working together to protect the environment only makes sense, but we need to move forward with great caution. To give market currency to carbon is a necessary step toward a more sustainable food system, but our policies must capture our global reality. Due to the aggressive campaign on carbon here, firms could relocate to lower-cost countries. Canada has seen more than 150 firms close or relocate since 2008 in Canada, affecting almost 30,000 jobs.
A carbon tax will clearly discriminate against certain agricultural sectors. As a recent EU study noted, prices under a carbon tax would increase between 15 per cent and 40 per cent at farm gate for the most greenhouse gas-intensive foods such as beef, lamb and dairy products. Thus, it would be easy to speculate that consumption could fall by as much as 15 per cent for some products. The result would affect major sectors in our agricultural economy. According to the same study though, health gains could be made since some of these products are deemed unhealthy if not consumed in moderation. A win-win perhaps, but consumers should be given the opportunity to adapt, as consumption habits are often difficult to break.
Unlike the cap-and-trade solution, for example, a carbon tax provides certainty on how carbon is priced, but the amount of emissions reductions is always difficult to predict. And who knows what could happen to tax revenues given funds allocated to Ottawa’s budgetary black hole. However, it is the most effective instrument the federal government can use to entice provinces to act.
Provinces where agriculture is a significant part of the economy could opt for a cap-and-trade scheme that would guarantee emission reduction and reward good stewardship. For example, with no-till farming, precision agriculture and better equipment, Saskatchewan annually sequesters about nine million tonnes of carbon. At $50 a tonne, which is the federal carbon price set for 2022, that sequestered carbon would have a value of more than $450-million. Beyond just taxing carbon, a hybrid approach could be substantially more powerful.
In the grand scheme of things, it boils down to one thing: Our current food consumption trends in Canada are, for the most part, environmentally unsustainable. The price we pay at the grocery store does not reflect the true cost of food production and distribution. We all know that. So doing nothing is no longer an option and most would recognize that the writing is on the wall. However, given that we live in a borderless world, Ottawa should also recognize that not everyone on earth wants to save the planet.