Carbon Pricing And Canada’s Beef SectorFebruary 6, 2018 7:24am
A study out of Western Universtiy in London shows that Canada’s carbon pricing will hurt the competiveness of Canada’s beef sector, specifically the cow-calf and feedlot sectors.
The report is called ‘Carbon Pricing and the Canadian Beef Sector’ and was written by Brandon Schaufele who is an Assistant Professor at the Graburn Economics and Ivey Business School.
The study suggests the unilateral implementation of carbon pricing results in increased costs for cow-calf and feedlot sectors and the costs will be borne by each sector with limited or no ability to pass on additional costs either up or down the supply chain.
Canada does not have a uniform carbon pricing policy, leaving each province and territory to implement its own system.
The Federal Government has committed to a “Federal Carbon Pricing Backstop,” a policy that sets the minimum stringency for the provincial programs.
Implemented on January 1, the policy mandates carbon prices starting at $10 per tonne carbon dioxide-equivalent, increasing by an additional $10 each year for five years.
Canada is proceeding with carbon pricing even as the other major cattle producing countries are not.
Cattle markets are globally integrated, so industry is concerned that even a small increase in costs, due to a carbon levy, may jeopardize the sector’s international competitiveness.
The study recommends limited input-specific exemptions, such as those on dyed fuels used for on-farm activities, or output price-contingent exemptions as practical safety valve mechanisms to offset potential leakage and competitiveness problems resulting from carbon pricing.