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Preamble:
WHEREAS the agriculture sector in Alberta is vital to the provincial and federal economy, contributing to food security, rural development, and employment opportunities; and
WHEREAS the Inflation Reduction Act in the United States has introduced significant tax incentives and support programs for American agricultural producers, creating a competitive advantage over their Canadian counterparts; and
WHEREAS the disparity in tax incentives puts Canadian producers at a significant disadvantage, impacting their competitiveness, profitability, and ability to invest in innovation and sustainable practices; and
WHEREAS a joint effort between the governments of Alberta and Canada is necessary to address this disparity and ensure a level playing field for Canadian producers;
Operative Clause:
THEREFORE, BE IT RESOLVED that the Rural Municipalities of Alberta (RMA) advocate to the Government of Alberta (GOA) to initiate meaningful dialogue with the Government of Canada (GOC) to explore opportunities for collaboration and partnerships in addressing the challenges posed by the Inflation Reduction Act (IRA) and the competitive advantage it provides to the American agricultural sector; and
FURTHER BE IT RESOLVED that the RMA advocate for the GOA and the GOC to form a joint task force, including members from the RMA, industry, and agricultural groups, to evaluate the IRA’s impact on Canadian producers and recommend policy adjustments to enhance the competitiveness, sustainability, and resilience of Alberta’s agricultural sector.
Member Background:
The United States government passed the Inflation Reduction Act (IRA) on August 16, 2022. The agricultural sector in Alberta, and across the country, has been concerned with the competitive advantage that the IRA provides to American agricultural producers and the agricultural sector relative to its Canadian counterparts. The legislation has provided numerous supports to, and unduly advances the interests of American industry sectors, including the agriculture sector. Through tax incentives and other programs and initiatives, Canadian agricultural producers and the burgeoning agricultural sector is put in a disadvantaged position which threatens the ability of the province and the country to grow and diversify the agricultural sector.
The IRA is poised to provide US$300-billion worth of tax credits, grants, and loans to fund various programs and initiatives, many targeted to include the agricultural sector. Without counteracting the IRA, the Canadian agriculture sector is at risk. Supports and programs included in the IRA that create a competitive advantage for the U.S. agriculture sector over Canadian interests include:
As of Dec. 31, 2024, the Act switches the existing blender’s credit for biodiesel and renewable diesel into a producer’s credit. Canadian producers, who had access to the blender’s credit when selling biofuels into the U.S. market, will no longer be eligible for the new producer’s credit, as it will only apply to U.S. based production. Further, U.S. producers will be able to collect the credit on fuels destined for export – this is not the case under the existing blender’s credit program. That means heavily subsidized U.S. biodiesel and renewable diesel will likely flow across the border into Canada impacting the Canadian producers and resulting in corporate and personal tax losses for provincial and federal governments. The impact will be significant – not only will Canadians lose access to the American market because they will not be able to compete, but Canadian producers are also to be disadvantaged, since subsidized American product will entering the Canadian marketplace, undercutting Canadian producers.
RMA Background:
RMA has no active resolutions directly related to this issue.
Alberta Jobs, Economy and Trade
Alberta’s government recognizes the significant financial commitment the US is making to its agricultural sector through IRA. Notably, IRA adds more than $18 billion in funding to existing farm bill conservation programs, aiding landowners in implementing conservation practices on agricultural land. Additionally, IRA’s introduction of a Clean Fuel Production Credit, which offers a significant tax incentive to American producers of clean transportation fuels, could draw biofuel investment away from Alberta and Canada.
We are taking action to amplify Alberta’s first-class reputation for high-quality agricultural products and increase capacity to help meet global demand. For example, the Agri-Processing Investment Tax Credit provides a 12 per cent non-refundable tax credit for corporations investing $10 million or more to build or expand agri-processing facilities in Alberta, such as facilities that produce crops-derived biofuels. Our agricultural producers and agribusinesses can also leverage Agriculture Financial Services, which provides loans, crop insurance and farm disaster assistance.
Alberta also has conservation programs similar to those in the US, under the Sustainable Canadian Agricultural Partnership. This federal-provincial partnership has launched a five-year (2023-2028), $3.5 billion investment in programs and services for the agriculture and agri-food industry in Alberta. Alongside support for conservation, this partnership helps producers to reduce the energy use of their operations, processors to expand and farmers to adopt water management practices for continued growth, among other things.
We continue to keep sight on how support to the agricultural sector in the US impacts Alberta businesses. The scale of the subsidies available through IRA means that Alberta and Canada must continue to carefully consider the competitive risks created by the legislation. To that end, we continue to encourage the Government of Canada to come to the table and work with Alberta to develop a comprehensive competitive response that enables us to successfully compete for private sector investment.
Development:
There have been significant political and legal developments since the passing of Resolution 16-23F as it relates to the Inflation Reduction Act (IRA) in the US.
In April 2024, the One Big Beautiful Bill Act (BBB) was introduced which would repeal or dismantle – among many other social safety net acts – the majority of the IRA.
Specifically, the BBB targets clean energy tax credits and other tax breaks related to industrial and agricultural developments. These developments tended to have higher outputs of CO2e gases (including carbon dioxide, methane, nitrous oxide, and hydrogen fluorocarbons, among others). The applicable tax breaks resulted in financial boosts to the US agricultural economy, which ultimately provided the sector competitive advantages – to the detriment of the Canadian agricultural sector.
The passing of the BBB – as currently written – would likely remove many of the advantages provided in application by the IRA to the US agricultural sector, potentially moving the Canadian agricultural sector into a position of greater strength.
The BBB has hit several significant roadblocks to becoming law. The US Senate adjudication of the BBB discovered that planned repeals of sections of the IRA could not be passed on a simple majority vote as they violated certain budget reconciliation principles – basically, the difference between the passed federal budget and the changes proposed would be great enough to substantially alter the budget entirely meaning that the budget was invalidated. Without significant changes, the BBB would require a super majority (60%) of the vote to pass in the US Senate.
Significant changes to the language of the impugned provisions allowed the BBB to be passed on a simple majority vote; the BBB was approved on a narrow majority by the Senate on June 3, 2025. The BBB now goes to the President to be signed into law, the agricultural tax provisions intact.
No further responses have been received from the federal or provincial government at this time. RMA assigns this resolution a status of Intent Not Met. RMA remains committed to Alberta’s agricultural sector and will continue to advocate for better policy development between all levels of government to create beneficial circumstances irrespective of the existence or repeal of the IRA.
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