According to a recent report prepared by accounting firm Meyers Norris Penny, Canadian farmers could lose $48 billion over the next eight years if the federal government moves ahead with plans to reduce greenhouse gas emissions from on-farm fertilizer use by 30 percent.
In its report entitled Implications of a Total Emissions Reduction Target on Fertilizer, MNP said achieving a 30 percent reduction in ag emissions through a gradual reduction in actual fertilizer use would result in annual farm income losses ranging from $1.8 billion in 2023 up to $10.4 billion in 2030.
The federal government has established a voluntary target of reducing agricultural emissions related to fertilizer use by 30 percent by 2030.
Ottawa has not indicated how it intends to reach the target but some industry observers fear that the voluntary target could become a mandatory mandate achieved through regulated restrictions on fertilizer use.
Canadian farmers could lose $48 billion over eight years as a result of lower projected crop yields if Canada endorses a so-called European GHG emissions reduction model, which is based on restricting or reducing fertilizer use, the MNP report stated.
The report, prepared for Fertilizer Canada, uses historical yield data from three major crop types — wheat, corn and canola — between 2001 and 2020 to calculate projected 2030 yields, assuming that no fertilizer restrictions were implemented.
Those projected yield values were compared to projected 2030 yields under a 30 percent emissions reduction scenario, in which Canadian farmers were forced to reduce actual fertilizer between 2023 and 2030, consistent with the model proposed in the European Union’s Green Deal.
According to the MNP report, reducing Canadian fertilizer use to achieve a 30 percent reduction in ag related GHGs from fertilizer use would result in 2030 yield gaps or differential yield losses of 23.6 bushels per acre per year for canola, 67.9 bu. per acre per year for corn and 36.1 bu. per acre per year for spring wheat.
“If Canada adopted the EU model, the potential economic impact would be devastating for Canadian farmers,” Fertilizer Canada said in a Sept. 27 news release.
Fertilizer Canada, an industry association that represents the interests of fertilizer manufacturers, wholesalers and retailers, argued that any plan to reduce greenhouse gas emissions from agricultural fertilizers should not be based on absolute reductions in fertilizer use but on sustainable agricultural intensification — an approach that measures GHG emissions on a per bushel basis but allows for continued economic growth within the Canadian agriculture sector and does not restrict Canada’s contribution to the global food supply.
“When the federal government announced a 30 percent emission reduction target for on-farm fertilizer use, it did so without consulting the provinces, the agricultural sector or any key stakeholders on the feasibility of such a target,” said Karen Proud, president and chief executive officer of Fertilizer Canada.
“This study shows that we need to work together to find practical and pragmatic solutions for emissions reductions without causing economic devastation to our agricultural sector.”
In a Sept. 28 interview with the Western Producer, Proud said Canada should achieve its emissions target not by capping or restricting fertilizer use, but by encouraging Canadian farmers to use fertilizers more precisely and efficiently, as outlined in the fertilizer industry’s 4R Nutrient Stewardship program.
Fertilizer Canada commissioned the MNP report in hopes of determining the economic impacts of a 30 percent reduction in fertilizer-related GHG emissions.
“I think it’s important to make clear that (Ottawa) has not said definitively that it is taking the European approach. But, the targets that the federal government has put out would require an absolute reduction in fertilizer use. There’s no other way, at this stage, to achieve it.”
Despite announcing its GHG reduction target, Ottawa has not offered any estimates on how the Canadian ag sector would be affected, added Proud, who called the report’s findings concerning, but not surprising given that fertilizer is a key input in modern agricultural systems.
“When you look at a figure with a cumulative impact of $48 billion, that’s a huge number and it’s very concerning, especially when the report only looked at three crops — canola, corn and spring wheat,” she said.
If expanded to other major crops types such as barley, oats and pulse crops, for example, the cumulative impact over eight years would be substantially higher, she added.
In an email, the Western Canadian Wheat Growers Association said its members were “shocked by the depth of the impact” that Ottawa’s proposed 30 percent emissions reduction plan would have on growers and the Canadian ag sector.
WCWG said income losses caused by lower projected yields in corn, canola and wheat would cost farmers $2.95 billion a year in Alberta, $4.61 billion a year in Saskatchewan and $1.58 billion a year in Manitoba by the year 2030.
Accumulated income losses incurred by individual farmers would be enormous and would have serious implications for the health of the domestic farming sector and on Canada’s food security, WCWG added.
“This analysis shows the proposed Canadian changes have the possibility of devastating our agriculture value chain,” said WCWG president Gunter Jochum.
“Farmers don’t need the government to tell them how to properly use fertilizer. We engage crop consultants, soil tests and use the latest technology available to us. Our government should be strongly supporting the agronomic techniques that we have put into practice.”
Fertilizer Canada is calling on Ottawa to recognize 4R Nutrient Stewardship as a key concept in achieving on-farm emissions reductions from fertilizer.
“Now is the time for the government to collaborate with industry and farmers on an approach that showcases Canada as a world leader in reducing on-farm emissions,” the organization said.