Alberta’s greenhouse industry says a new federal tax program could make expansion easier, but it might not help to lower food prices.
Ottawa announced Monday it will allow producers who buy or build new facilities to more quickly write off the cost of capital expansions on their taxes — a change from the current rules that limit write-offs to 10 per cent each year.
That could improve cash flow projections, perhaps tipping the scale in a project’s business case.
But tomato, cucumber and pepper producers stress that operating costs have a bigger impact on food prices than capital costs.
They say that growing a business during uncertain times in the food industry is a difficult decision to make.
“There’s a continued appetite for growth and expansion in the industry,” Michiel Verheul, the head of the Alberta Greenhouse Growers Association (AGGA), told Radio-Canada. His group represents about 200 growers in the province.
Federal tax support “really helps incent these investment decisions and increase the amount of locally produced produce in our grocery stores,” he said.
“But it may not lower prices,” he later added. “That’s hard to predict.”
The tax changes announced this week are among a number of measures outlined by Prime Minister Mark Carney to address food inflation.
Albert Kramer, who operates large greenhouses near Medicine Hat, Alta., said uncertainty in other areas — like potential changes to the Temporary Foreign Worker Program and energy costs — makes it difficult at this point to greenlight multimillion-dollar business expansions.
“It’s nice that [Ottawa] is focused on costs, but I’m not sure it’s going to do anything, myself,” said Kramer, adding that growers are seeing stressed market conditions and strained consumers.
He said year-round production in Alberta’s cold climate is inherently expensive, and can only be carried out by large operations that have high overhead and operating costs.
“As an industry, we get it — we feel the pressure to lower costs — but I don’t think we can,” he told CBC News.
Modern greenhouses, like the Kramer family’s three-million-square-foot facility in southeast Alberta, can cost tens of millions of dollars to build.
Greenhouses benefitted substantially when the consumer carbon levy was eliminated on the natural gas they use for heating, but many still use large amounts of electricity.
Increasingly, growers are installing their own on-site gas generators to produce power, heat and carbon dioxide that is fed back into their facilities to promote plant growth.
A cluster of large greenhouses around Medicine Hat has supplied tomatoes, cucumbers and peppers for decades.
They are a key pillar in municipal economic development strategy to attract investment in agri-food production and value-added processing.
Large growers across Alberta currently operate about 230 hectares of covered, heated greenhouse growing space — equal to the size of 383 football fields — and employ about 5,000 people, according to the AGGA.
It’s the fourth-most space among the provinces, behind Ontario, British Columbia and Quebec.
But Alberta, and Canada as a whole, are still net importers of fruit and vegetables.
Alberta’s Agriculture and Irrigation Ministry told CBC News it considers greenhouse production a priority and is still evaluating the federal tax measure.
“Reducing our reliance on imports and expanding local food production is essential for both affordability and food security,” said ministry spokesperson Garrett Koehler.
The province’s Growing Greenhouses Program provides a matching grant of up to $2 million to cover some costs of expansion, or to improve yields or energy efficiency.
The Canadian Federation of Agriculture welcomed the federal program, saying that it signals government support of agriculture and food security “makes sense.”
