Summer Update 2024
No Agricultural Exemption for the Competition Act Changes
Several industries have named Canada’s Competition Act the ‘greenwashing amendments’. It was amended on June 20, 2024.
The Act changes now prohibit the following representations to the public promoting the supply of a product or the use of that product or business interest.
- An environmental or climate benefit of a product, or
- An environmental or climate benefit of the business or business activity.
The changes did not exempt the ag sector. That means a business in our sector making an environmental or climate benefit claim is compelled to:
- Test the claim before making it.
- Remove as much as possible testing subjectivity, and
- The testing reflects real-world use.
The onus is on the ag business.
Why is this important?
It now places a duty on a business making a climate claim and any direct or in-direct mitigation being used. Certainly, in our recent ag press, claims have been forwarded about that glass of milk, T-bone steak, or having an environmental farm plan.
A recent paper by Ken Giller and this graphic, looks at various words, all designed to present a positive light on the ag industry and its products to a full spectrum of stakeholders and customers:
This paper, combined with the changes to the Act, raises a few questions. Does “The practice or business use” label:
- Actually, restore soil health on a parcel, let alone the sector?
- Actually, change the annual soil sequestration rate of a parcel or the sector’s whole sink?
- Actually, reverse bio-diversity loss, i.e. bring back protected or endangered birds and animals on that private parcel?
- Are there enough private parcels in Canada to make the changes claimed using sequestered carbon?
- Can the ag sector continue to use two greenhouse gas (GHG) life cycle assessments on fictional herds several years apart to make an environmental claim by the sellers of a drinkable product?
- Can the ag sector continue to claim a 15 percent reduction in GHG emissions to produce 1 kg of a product we eat when it is based on domestic and imported slaughter animals, and use a model for the whole sector?
Farm Management and the Climate Risk
Every farm should have a climate transition plan. This plan (along with the marketing and production plans) might examine your GHG emissions, soil sink, and risk plan for a changing climate.
The Carbon Plan
GHG emission data now has value. An example today is ADM’s purchase of scope three farm data. This sale can impact your farm sale revenue.
It also impacts your purchase of energy consumables. Growers can achieve a one tonne of reduction per acre by lowering the consumption of fuels and energy.
The Risk Plan
There are three types of risks emerging as more data is published:
1. Physical Risks
The farm faces mitigation challenges from changing growing seasons (longer/shorter), more days at or over 30C during flowering, water availability, and damaging weather events.
2. Regulatory Risks
Like the changes to the Competition Act, regulatory and policy changes can impact market access. The new European Union’s carbon border adjustment will slowly spread to other market blocks.
3. Technology Risks
There are possible events to contend with. One is a change in technology needed to stay current. The second is data and consumer preference.
Why have the Plan?
Farm GHG Plan
Primer Questions
- Do you have a GHG budget?
Do you have an estimate of the cost of achieving each tonne reduction? - What needs to change when a supply chain wants more data or transparency?
Do you have to add to the discount rate when you evaluate new purchases? - Where is your farm business exposed?
Things like access to capital, production and lost or damaged assets.
Farm Climate Plan
Primer Questions
- Is your current supply chain asking for or buying scope 3 data?
- Have new competitive advantages emerged?
- Did the lobby efforts of the group you belong to chang or have new targets for their efforts?
We have a New and Improved Calculator
With the publishing of the 2024 Greenhouse Gas National Inventory Report, the Ministry published coefficients for beef, dairy, swine, and poultry production and the various types of animals in each enterprise.
Agriculture and Agri-food Canada also published their coefficients from their support and climate mitigation programs.
Our calculator is now more enterprise-specific and allows for in-enterprise changes in management.
Re-enforced Market Signals
This past month, the USDA (the voluntary market regulator in the U.S.) published market intentions for carbon product quality and use.
The Secretaries who signed off on the publication said the following:
- Any activity that represents a GHG reduction will base its quality claim on additional, unique, real, quantifiable, verified by a third party, robust and permanent baselines.
- The generation of a credit should avoid environmental or community harm.
- Buyers should prioritize purchases inside their supply chain first.
- Buyers should publish their purchases annually.
- When buyers make public claims, they will reflect real change.
- Buyers and sellers should contribute to the needed design of market structures.
- Policymakers must facilitate and build the market structures required to scale and lower transactional costs.
Why is this important?
In light of the USDA program funding allowing ADM (US) to get into the purchase of scope three farm data and sell it to downstream customers, it lays out US regulator intentions. Since many Canadian supply chains are US-connected, buyers’ market interactions will shift.
Why Spend a Dollar?
A former mentor of BCC, Roy Ferguson, had a set of ratios and indexes to assist a farm manager in making better decisions.He often challenged participants of his seminars on this question.
Why spend that dollar?
His answer was always grouped into two reasons:
- That dollars spent will directly improve sales
- To slow the growth of new debt
This question came to light when Agriculture and Agri-food Canada announced their last jurist for their Agricultural Methane Reduction Challenge program. BCC hoped the Auditor General would be kinder to the Ministry on this program than their last report.
Here is a quick summary:
At last count, several want to sell the farm a product or service, and the others will sell the farm an asset. Depending on what the farm buys, purchasing a product would increase the cost of goods sold and add to direct and capital expenses.
Will the purchasing farm generate new sales?
For beef production, not directly and not today.
The Alberta GHG market has a feed additive protocol and would need amending to accommodate the newly licensed additive. The Federal government needs to be faster on realizing a feed additive protocol for all backstop provinces. There is a U.S.-based protocol, but it has yet to be licensed in Canada.
For dairy, maybe.
Feed and feed additives, as well as the purchase of animals and semen straws, are eligible costs used by the Dairy Commission to set the milk price. Raise production costs, which can change the milk price. If the new milk price does not cover the new fees, the purchase would not lower the rate of acquiring new operating debt.
BCC does spend time with business acceleration entities. One thing is clear from all the businesses that go through that process.
Your product has to solve the buyer’s problem first.
Additional Industry News
The Price of Voluntary Credits
Ecosystem Marketplace published its 2024 GHG price outlook. Voluntary credits dropped from $7.37 USD/tonne to $6.53. Ag sector credits took a significant hit, falling from $11.02 USD/tonne to $6.51 over the same period. Issues impacted price. Ag sector credit volumes rose by 0.9 million tonnes to 4.7 million tonnes, but retirements dropped. Terra’s re-statement of projects lowered prices. Lastly, there are still seven different standards to make an ag credit.
Alberta Regulated Offsets
Anew and Trible have registered new NERP projects on Alberta’s offset registry.
Right to Repair Consultation
From an Email Notice:
In Budget 2024, the Government of Canada committed to launch consultations on right-to-repair for farm equipment, home appliances, and consumer electronics, focusing on durability, repairability, and interoperability.
This consultation seeks to gather feedback from Canadians to help inform policy direction, including the policy levers to improve Canadians’ ability to repair a range of consumer products. Agriculture and Agri-Food Canada (AAFC) is collaborating with Innovation, Science and Economic Development Canada (ISED) and Environment and Climate Change Canada (ECCC) on this consultation.
The online feedback period will be open for 90 days. We welcome comments from interested parties until September 26, 2024. Please see following link for the live consultation: Right to Repair Consultation (canada.ca)
Following the online consultation, Agriculture and Agri-Food Canada will hold targeted roundtable discussions focused on interoperability, farm equipment, and the distinct considerations related to this product category’s repairability.
BCC has identified several issues to send back to the Ministries. Our rationale is that carbon certificates are based on data, and complete data ownership is key to a functional marketplace. Driving straighter, planning field movements, and preventing application overlap lead to emission reduction.
BCC is considering these issues.
- Bill C244 and C294 are still on the order paper.
- The primary purpose of the consultation is consumer goods.
- Interoperability
- BCC supports protecting the intellectual property embedded in software.
- BCC supports the output of any software system, which shall be open source. An example of this would be yield monitoring data. A company can have closed software to measure yield, but the report is open source and can be exported to any software.
- BCC supports the RTK correction signal as a public good and would not support a private correction signal unique to an in-house hardware reader.
- BCC would support changes to the import certificate of farm machinery with embedded software.
- The import certificate must be disclosed and made publicly available.
- What parts does a purchaser have the right to repair, and what parts must be done by an authorized repair dealer?
- The number and locations of dealers locations authorized to repair the equipment and the number of technicians authorized to repair the equipment.
- The parts of the machine that self-repair would damage:
- Pollution controls
- Safety of user
- Health of user
- The planned obsolescence time frame of moving parts on the machine.
- The extent of software locks that can be sent over the air to the machine from the manufacturer.
- BCC supports backstop legislation that would:
- Cover a province if the province does not have legislation.
- Statutory one-year warranty (lemon law approach) covers hardware and software.
- Mandatory ten-day access to parts.
- Auto-steer, sectional control, and other GPS-based units (hardware with software) are considered parts.
- Farm Repairs
- BCC supports the right to buy individual parts.
- The manufacturer must declare in their import certificate what parts are available singularly or must be purchased as a bundle. Recently, an example in the news was a $10 dollar oil seal, but the manufacturer did not sell the patented seal. The dealer must replace the whole unit. It is difficult to swallow if the seal is on a $50,000 tractor transmission.
Soil Sample Depth
A new paper suggests that soil models and ground truthing should examine the 0 to 90 cm zone instead of the shallow (0-15 cm) sample depth. The 90 cm depth gives a better overall review of changing organic material.
