Aquaculture
Canada’s agriculture and agri-food supply chain will have to operate outside its comfort zone if it is serious about competing on a global level, says a prominent economist.
“You want to set an ambition that is not crazy, but it should be really stretched. It should be make you uncomfortable,” said Dominic Barton, chair of the Canadian Minister of Finance’s Advisory Council on Economic Growth, which has been asked to unleash inclusive growth across all trade sectors over the next 10 to 15 years.
“We don’t do that. We just kind of do our thing and if it (trade) grows, that’s good, but that’s not how you break through,” he said during a Feb. 16 presentation to industry and education leaders in Saskatoon, which was sponsored by Ag-West Bio and Farm Credit Canada.
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As a senior partner with McKinsey and Company, Barton is widely recognized for his leadership in the development of a series of documents making recommendations on economic growth opportunities for Canada, commonly referred to as the Barton Reports.
“He’s one of the few economic thinkers who sees where ag food can go and how significant it is and what the opportunities are,” said Wilf Keller, chief executive officer of Ag-West Bio.
“He’s clearly outlined the challenges of what Canada can do with our immense base of land and know-how.”
Barton said agriculture and food is a vital sector and growth driver for Canada’s economy with sky-high opportunities globally over the next 10 to 15 years.
“This is the future,” he said.
“You’re in the place that’s in the biggest tailwind that’s out there in the world.”
Helping fuel this is the increased potential for Canadian product that will see 2.4 billion new middle class consumers globally by 2030. Long-term demand for food is strong.
As incomes grow, caloric intake, especially from milk and meat, will rise and agri-food will be a huge opportunity.
However, Barton challenges those with the desire to participate at a world level to question whether they are ambitious enough to ask the hard questions and do the work that is necessary.
“Do I think about my end consumers? Where are they going to be? Do I know them?” he said.
“Because the more you know about that, the more you may be able to innovate. If we get better, we can capture more of the value here than there because a lot of people capture the value from our produce elsewhere.…
“What I mean by that is because we don’t process it, we don’t think about the branding of it.”
This under-developed value chain means only half of agricultural output is processed.
Canada also lags other members of the Organisation for Economic Co-operation and Development in investment in machinery and equipment.
Other member countries are also outgrowing Canada on exports of direct-from-farm agricultural products as well as exports of processed food products.
Like every other sector, the agricultural industry is being transformed and going through big changes fuelled by innovation and high-efficiency.
“We’re concerned about the automation that’s going on. The need to rescale is going to be very important to be able to ensure that people have good jobs as we go ahead,” he said.
“Our estimate is about two million Canadian jobs will be displaced by technology in the next 10 to 15 years. I think that’s a low estimate. That’s a force. If we do not do something proactive on that, that’s not going to be good on medium household incomes.”
Barton said agriculture must embrace all technological disruptions because there’s no stopping it.
“I would be having my radar up full bore and knowing what could be changing here,” he said.
“I would want to really make sure I understand that. And then, how’s my operation going to have to change because of that?”
He sees no reason why Canada cannot be one of the top three players in the world to not only produce but to add value.
Canada has been traditionally good at producing commodities, but continues to lag on the process side.
“And that’s the one we’re actually the furthest. We’re relatively better on the commodities. We’re not so good on the value added,” he said.
“We’re inching, but just given how fast the world is moving, we just have to go faster. We’re behind. We’re always behind it.”
What worked in the past is no longer a model or formula for success if the goal is to be a serious world contender.
“It’s partly because we could do well with that because of what’s needed, but there’s so many people doing even better now,” he said.
Added Keller: “Somehow we need to do better to translate that into economic action in the form of a couple of different things: particularly the growth of new companies in an environment that’s conducive to growth; supporting entrepreneurship and training so that we really have a vibrant ecosystem, particularly on the Prairies. After all, we have 85 percent of Canada’s arable land right here.”
Barton used the Netherlands as a case study, which is now one of the world’s top agri-food exporters.
Despite having only three percent of Canada’s arable land, the Netherlands produces the equivalent of 60 percent of Canada’s annual agricultural gross domestic product.
The small country’s agricultural success is driven by four key factors:
- world-class efficiency in production
- export-oriented culture
- top educational and research institutions
- government support
However, the number one lesson Canada can learn from the country’s success is that the Netherlands had to think outside the box because it is constrained.
“They punch way above their weight. I mean,they’re just a tiny physical mass that is a top three ag player. Its disconnect between their size of endowment and what they do is something to see,” he said.
“Who would imagine that country would be a major producer of tomatoes. They’re literally growing them vertically. It’s obvious after the fact, but then when you think about the people building buildings of tomatoes — you kind of go, ‘I understand.’ ”
Canada’s vast richness in natural resources, agricultural lands and water remains one of its great endowments, but it has also been a limiting factor economically.
“Sometimes when you have so much you don’t have to innovate as much (because) you can do quite well, but this is a sector that’s changing very quickly,” he said.
Israel’s aquaculture industry is another example where the lack of resources such as water has created innovation.
“They can produce fish with much less water and feed than what we normally do,” he said.
“They have to because they don’t have water and they don’t have the protein for the fish, but they’ve had to figure it out because of those constraints.”
Square watermelons are also being grown for efficient packaging compared to their round cousins.
“They said, ‘let’s design it so that you can actually pack them in a box,’ which is very consumer oriented,” he said.
“Sometimes it’s an advantage to not have anything because you’re forced to think out of the box, and that’s what they’ve done.”
However, Canada is a world leader in innovative ideas.
“We just don’t follow through,” he said.
“I think we can do both. Let’s be very ambitious about what we want to do. This should be the centre of the world in food and anything related to innovation. I don’t understand why it should be elsewhere.
“We’ve got the endowments, but let’s act as though it’s scarce or let’s act as though we have to do something extraordinary with it and then look out because then there’ll be a lot.”
- Triple global market share from 0.2% to 0.6%, increasing exports by $2.6 billion
- Produce 6 billion more marketable litres of milk per year
- Boost oilseed sales by 20% (or $2 billion), and increase global market share of pulses from 30% to 50%
- Increase exports of equipment and digital/scientific services from $2 billion to $5 billion over 10 years
