Budget 2024

Tax and spend fiscal plan will inhibit growth

As published in The Globe and Mail

The question of how to revive growth is at the top of the list for government and business leaders everywhere. Even more important is how to combat climate change while doing so.

Perhaps no other group of people can make more progress on both of these challenges than farmers.

From my earliest days as RBC’s CEO, I’ve been focused on the challenge and opportunity of our country’s climate transition and the fundamental reshaping of our economy that will be required to make it happen. During this time, I’ve seen that for many of the business leaders and policy makers driving the net-zero transition, Canada’s agricultural sector is too often overlooked.

And yet, few sectors have done more for growth, productivity and exports lately. Over the past 25 years, farmers have been embracing climate-smart agricultural practices, and today the sector’s productivity numbers are leading the country and outperforming other advanced economies, including the United States, France and Germany.

Canada can be the sustainable breadbasket for an increasingly hungry world.

In the past few years, I’ve met with farmers in almost every province across the country, including this week in Saskatoon. The more time I spend learning from them, the more I believe Canada can add to the $75-billion worth of food that farmers already produce and export globally each year – and better capture emissions while doing so.

Last week’s federal budget laid out some significant and much-needed climate investments across critical minerals, electricity and clean-tech manufacturing.

But to truly turbocharge Canada’s ability to be a global net-zero innovator, our country needs to complement these investments with climate-smart agriculture commitments. This is one critical way we can compete with the incentive-heavy U.S. Inflation Reduction Act, which continues to attract investments and talent to green-energy projects south of the border.

The good news is that most farmers across Canada have already begun making their soil as productive as it can be by embracing sustainable practices such as cover cropping, low or no tillage, and nutrient management.

To keep that going and growing, we must collectively find ways to reward farmers for what they preserve, not just what they produce.

Take soil sequestration as an example. Soil, like trees, absorbs carbon, which makes it so important for farmers to find ways to better manage and observe those carbon-capturing abilities.

Our research estimates that a carbon soil market could be worth as much as $4-billion, but right now, Canada lacks a consistent and credible system to measure, report and verify carbon soil pools. Without this, farmers get little to no economic credit for the sustainable farming practices that many of them are so good at.

To help, we’ve formed the Canadian Alliance for Net-Zero Agriculture, a collaborative effort with Maple Leaf Foods, Loblaw, Nutrien and dozens of farmers, food producers and partners across the country.

The group’s goal will be to advance climate-smart agriculture that grows more food while reducing emissions and to encourage the industry to put more emphasis on helping consumers understand and, hopefully, demand sustainably grown food.

For RBC’s part, we’re kicking things off by working with partners on a market-driven system around crop production that could help build a groundbreaking Canadian carbon credit market that compensates farmers for what they preserve. We’re also partnering on a pilot that helps livestock producers capture methane and further reduce agricultural emissions.

Looking ahead, we hope the industry can work together with the government and other partners to scale these projects across the country, continuing to cultivate a farmer-led sustainable agriculture movement.

All of this work is among the first being explored through the RBC Climate Action Institute. Launched this week, the institute will seek to bring industry experts and partners together to share insights and inspire action for Canada’s net-zero journey across key sectors such as buildings and real estate, energy and agriculture.

Our bank believes this model can help inspire industries across Canada to shift from strategy to action.

At this critical moment on climate change and the reimagining of our economy, every sector in Canada needs to work with long-term thinking, co-ordination and focus. Businesses and governments cannot act independently and expect to make progress.

It’s time to work closer together – with more ambition than ever before.