LASER TALK: The Effect of Pricing Carbon on Farmers

UPDATED The Effect of Pricing Carbon on Farmers    

In addition to a climate crisis, we must also recognize that we have a farm crisis in Canada. Even during the relatively good times since 2007, the majority of farm family household income has had to come from off-farm work, taxpayer-funded support programs, and other non-farm sources according to data from the National Farmers Union.[1] The report says both the farm and the climate crises have the same causes and largely the same solutions: “reduce dependence on high-emission petro-industrial farm inputs and rely more on ecological cycles, energy from the sun and the knowledge and wisdom of farm families.” The report details many ways that farmers can reduce their greenhouse gas emissions and move toward agro-ecological approaches.

Agriculture in Canada is heavily dependent on fossil fuels for running machinery and producing fertilizers. It should be noted that farm diesel is exempt from carbon pricing in the Greenhouse Gas Pollution Pricing Act. [2]  Farmer currently pay the carbon tax on propane for drying grains though.

The impact associated with pricing carbon on farmers is not nearly as great – or as volatile – as other factors, especially if the fee starts low and increases predictably over time. For example, in Canada, the price of farm machinery fuel increased by 25% in 2011 from 2010. During that same time period, fertilizer prices rose by 29%.[3]  Commodity prices, which influence farmer income, are also extremely volatile.[4]

Of note, according to a report by the Pacific Institute for Climate Solutions, British Columbia’s carbon tax does not appear to have had a measurable impact on international agricultural trade[5]

As demand for clean energy rises with a price on carbon, there will also be an economic opportunity for many farmers and ranchers. Wind developers are leasing land from farmers to erect turbines. Solar farms can also replace cropland that is not productive for traditional farming.

We need to listen closely to farmers and determine how we can help them. They know we are in a climate crisis and they are on the frontlines in a precarious economic position. Farmers want help in building climate resilience. Farmers also want to lead. Farmers For Climate Solutions has specifically put forth recommendations on how to help farmers during COVID with a three “E” focus of economics, equity and emissions in mind [6].

Bottom line: The impact of carbon pricing is negligible compared to the increased volatility that comes with a changing climate. In fact, a gradually and predictably increasing carbon price helps farmers balance that volatility with steady cash flow from clean energy and also support agricultural practices that increase resilience, reduce climate risks and reduce greenhouse gas emissions.


[1] Tackling the Farm Crisis and the Climate Crisis: A Transformative Strategy for Canadian Farms and Food Systems – The National Farmers Union (2019) Accessed 04 Nov. 2020

[2] Greenhouse Gas Pollution Pricing Act –” Accessed 27 Jun. 2019.

[3] “Crops industry – Agriculture and Agri-Food Canada (AAFC).” Accessed 28 Jun. 2019.

[4] “An Overview of the Canadian Agriculture and Agri-Food System 2016 ….” 9 May. 2016, Accessed 28 Jun. 2019.

[5] “The Effect of British Columbia’s Carbon Tax on Agricultural Trade.” Accessed 28 Jun. 2019.

[6] “A better future starts on the farm: Recommendations for recovery from COVID-19 in Canadian agriculture” Farmers For Climate Solutions.


Go back to Laser Talks Page.