From farm to fork, our food is responsible for about 25 per cent of the world’s greenhouse-gas emissions. 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.
A mandatory carbon tax of $10 per tonne is set to start in 2018 in Canada, and provinces are expected to produce a carbon-price plan. Some have claimed energy costs would rise because of a carbon tax, but little attention has been given to what would happen to food costs.
Canadian grocers will likely continue their quest for affordable foods. The concern is that a carbon tax would make Canadian goods more expensive. This would encourage grocers to import more foods, regardless of the state of our loonie, a trend we have seen over the past few years.
While food prices will likely continue to increase, the carbon tax will hardly be to blame since importers have choices to buy products from areas unencumbered by carbon-pricing measures. More imported foods will likely find their way here.
Contrary to what some doomsayers are claiming, taxing carbon won’t make Canadians more food-insecure; the issue is more about food sovereignty.
The timing is not great. Prime Minister Justin Trudeau’s announcement about a carbon tax occurred weeks before the U.S. election. Now that we know who the next tenant of the White House is, such a move for Canadian agriculture and food is worrisome. With Donald Trump at the helm, we are likely to see the U.S. remain idle on climate-change policies. This would make our agrifood systems less competitive.
Coupled with a possible reduction in U.S.-based corporate tax rates, a new carbon tax on our agrifood companies could isolate Canada as the only green-focused economy in North America.
To make matters worse, our food economy remains vulnerable to currency fluctuations. When our loonie tanks, food prices go up. However, we have seen new greenhouse projects emerge recently, particularly in Ontario, potentially making the Canadian market less susceptible to price fluctuations. A price on carbon might thwart these initiatives.
Protecting the environment 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 global reality.
Due to the aggressive campaign on carbon here, firms could relocate, to the detriment of our economy. We have seen more than 150 food-processing firms close or relocate since 2008 in Canada, costing almost 30,000 jobs.
A carbon tax will clearly discriminate against certain agricultural sectors. According to a recent EU study, a carbon tax would increase prices from 15 to 40 per cent for beef, lamb and dairy products. Thus, consumption of some products could conceivably fall by as much as 15 per cent.
Unlike the cap-and-trade solution, a carbon tax provides certainty on how carbon is priced, but the amount of emissions reductions is always difficult to predict. Mixed results from B.C.’s carbon tax since its inception in 2008 is one example. And who knows what could happen to funds directed to what some consider as the Ottawa budgetary black hole. However, it is the most effective instrument the federal government can use to entice provinces to act.
Agriculture-dependent provinces could opt for a cap-and-trade scheme, which 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.
Sylvain Charlebois is dean of the faculty of management and professor in food distribution and policy at Dalhousie University in Halifax.
