When Chris Israelson learned in March that a six-cents-a-litre discount on diesel used for farming operations was being axed, he believed the province's motivation for cutting the discount program was more about politics than saving money.
“People involved in agriculture are a minority,” said Israelson. “I do feel the government maybe took advantage of us a little bit as far as, ‘Let's go pick on a minority because they don't hold enough votes to really be important anymore anyhow.'”
Israelson's family farm is located just west of Didsbury and includes 1,214
hectares of annual crops, 200 hectares of perennial hay crops, 250 head of beef cattle and 750 head of feeder cattle.
To operate the farm, the family uses 150,000 litres of fuel a year.
Because of the discontinuation of the Farm Fuel Distribution Allowance portion of the Alberta Farm Fuel Benefit program on March 7 and the loss of the six-cents-a-litre discount on diesel, Israelson said his family has had to spend up to $10,000 more to operate the farm.
Since 98 per cent of all the fuel used on the farm is diesel, he said he has had to look for other ways to save money now that the discount program is gone.
“As fuel gets to be a bigger portion of our expense column, we've had to find other ways to source fuel,” Israelson said, adding the “most competitive way” to save cash is to no longer buy fuel exclusively from local sources.
“We're at the point now where we can save two cents by buying out-of-province fuel or buying bigger volumes from refinery-direct (sources.)”
Israelson's family is now buying fuel from suppliers in Saskatchewan and other areas of Alberta, with only “smaller volumes” purchased from local suppliers.
Two years ago, he said, 100 per cent of his diesel came from a supplier in Olds.
Since March, however, that number has dropped to 40 per cent.
“We're not really dedicated to any one supplier anymore like we used to be.”
Local farm fuel suppliers contacted by the Mountain View Gazette, however, said they have seen little or no change in the volume of fuel they sell to farmers or the number of farmers buying fuel since the discount program was discontinued.
“They don't have a choice,” or “They still need the fuel” were the common comments shared by suppliers when asked about any repercussions from the discount program discontinuation.
But Israelson said because agricultural producers have to compete for fuel, equipment and manpower with other industries, the loss of the diesel discount still hurts Alberta's farmers, especially since the cost of diesel continues to rise.
“It decreases our ability to compete with those other industries for those inputs.”
He added that although farmers may have the cash to cover the loss of the discount now since the agriculture industry is healthy, that could change.
“Being a cyclical industry, when the cash flow isn't as good as it currently is, it's going to get real tight and probably put some operators out of business,” Israelson said.
Established in the 1970s, the province's Farm Fuel Benefit Program also includes a nine-cents-a-litre tax exemption for dyed gasoline and diesel used for farming that is still in place.
The province cut the six-cents-a-litre diesel discount as part of its 2013 budget to deal with a multi-billion-dollar deficit, since eliminating the discount would save $30 million a year.
“Obviously it was a difficult decision but we had to make sure we were focusing our budget on achieving those long-term goals for agriculture in terms of the competitive and sustainable (aspects of the) sector,” said Stuart Elson, a spokesman for the provincial agriculture and rural development ministry.
He added the discontinuation of the discount portion of the benefit program “brought us closer in line with fuel benefits provided to producers in other provinces” and Alberta is still the only province offering the nine-cents-a-litre tax exemption on marked gas and diesel for farming.
“We still have one of the best farm fuel programs in Canada.”
For example, Elson said, Saskatchewan farmers still pay a portion of the tax on unmarked gasoline whereas in Alberta they don't.
Under the Government of Saskatchewan's farm fuel program, farmers can buy 80 per cent of the gasoline they use for farming without paying provincial tax.
