Thank you, Mr. Chair, and thank you to the members of the committee for inviting us.

My name is Kyle Larkin. I am the executive director of Grain Growers of Canada. We are the national voice for 65,000 cereal, oilseed and pulse producers across the country. As a farmer-driven association for the grain industry, GGC advocates for federal policy that supports the competitiveness and profitability of grain growers across Canada.

Canada's grain sector is fundamentally tied to international trade. In 2023, production by Canadian grain farmers resulted in 55 million tonnes of grain and grain products exported to over 150 countries globally, generating $40 billion in revenue. This trade fuels our economy and is the livelihood of thousands of farm families across the country.

By adhering to and supporting the WTO's rules-based trade framework, we have established long-standing relationships with countries around the world that depend on Canadian grain to meet their food demand needs. These partnerships are essential not only for our agricultural sector, but also for global food security, which highlights the importance of maintaining open and fair trade channels.

As it relates to carbon border adjustment mechanisms, we urge the government to exercise extreme caution for two reasons. First, we are concerned about the mechanism's impact on Canada's international trade. Second, we are troubled about the impacts it will have on input prices for thousands of farmers across Canada.

From an international trade perspective, implementing a carbon border adjustment may be perceived as protectionist by our trading partners, potentially leading to retaliatory measures that could disrupt established trade relationships.

Our partners at the Canadian Agri-Food Trade Alliance, CAFTA, articulated before this committee two weeks ago that, “It is essential that sustainability measures do not become barriers to fairer and freer international...trade or do not serve as cover for protectionist trade policies.”

We are in complete agreement with this statement.

Furthermore, the landscape of international trade is already fraught with differing standards related to carbon accounting, which not only complicates compliance for exporters, but also could further strain relations between trading partners. These discrepancies could impose an administrative burden on businesses and other countries.

Any carbon border adjustment mechanism under consideration should be developed multilaterally, ensuring that it aligns with WTO obligations and adheres to rules-based trade principles. Seeing that the United States is our largest trading partner for grain and grain products, it must also align with American policy.

We are also concerned about how a carbon border adjustment mechanism could impact input prices, such as fertilizer and equipment for farmers. When we consider fertilizer, Canada heavily relies on imported fertilizer from other countries. In 2022, we imported over $3 billion worth of fertilizers, which are essential for growing the crops Canadians and the world rely on.

With a CBAM in place, prices for essential inputs to grow crops could skyrocket, further straining Canadian grain farmers, who are already facing rising input costs, declining revenues and increasing taxes.

Over the past five years, Statistics Canada has reported a staggering increase in the farm input price index. Total farm costs have surged by more than 40 points, from 116 in 2019 to 157 by the end of 2023. Canadian grain farmers simply cannot bear more financial pressure from increased input costs driven by additional costs at the border.

In conclusion, we urge the government to exercise caution and carefully evaluate the potential unintended consequences of implementing a carbon border adjustment mechanism. Any Canadian CBAM should prioritize our global competitiveness and be crafted to align with the standards recognized by our major trading partners.

Thank you. I'd be happy to take questions.