Canada’s status as an agricultural exporting powerhouse is diminishing despite growing global food demand, says an industry analyst.
“We’re not doing all that well,” said Marlene Boersch, managing partner of Mercantile Consulting Venture.
“We think we are great and wonderful and one of the best exporters in the world, but in spite of an increasing marketplace we are actually losing market share.”
Canada was responsible for five percent of world agricultural exports in 1980, but that has since fallen to 3.8 percent.
Read Also
Weigum’s work with Alect Seeds earns her Alberta’s Outstanding Young Farmer award
Three Hills farmer earns Alberta’s Outstanding Young Farmers award through marketing of Alect Seeds to bring the best varieties and crop types to their customers and improve the quality of the land they farm.
“We’re failing to garner the opportunity to grow with the market,” Boersch told delegates attending Agri- Trend’s Farm Forum in Saskatoon.
Canada accounts for 13 percent of world wheat trade and four percent of the trade in feed grain, down from 22 percent and 6.5 percent, respectively, in 1990.
She attributes the substantial loss in wheat market share in part to the single desk marketing system and in part to Canadian farmers growing high quality wheat when demand for medium quality wheat is what is really on the rise.
There have been success stories, particularly Canada’s share of canola and pulse markets, which has risen over the last decade.
But in general, farmers around the world are elbowing Canadian producers out of markets.
Boersch blames it on sagging productivity. Canadian crop yields often exceeded world averages in the 1980s and 1990s but have fallen below the global trend line in the last decade.
For instance, Canadian barley yields have been flat compared to rapidly increasing corn yields.
“It’s one of the issues that we really need to think about if we want to be very competitive at the world level,” she said.
Another factor that needs to be addressed is the ever-increasing cost of getting Canadian crops to market.
Total handling costs of moving grain to the West Coast increased 27 percent between January 2000 and January 2009.
“Think about that for a moment. That’s very, very significant,” said Boersch.
The increase happened despite massive elevator consolidation. She estimated that railways have to pick up grain from only 10 percent of the locations they serviced in the 1980s.
“So where the hell are those efficiencies?” said Boersch.
She wonders how the railways can justify increasing freight rates during an era of consolidation. The result is the cost of shipping grain to various export destinations from Canada is more than double what it is in other agricultural exporting regions.
“If you’re inefficient or costly in your handling costs, that first of all means a lower bottom line to you as a farmer, but it also means that we are less competitive in the world market,” said Boersch.
On the bright side, she feels more optimistic about market prospects than some of her colleagues.
Boersch said it’s a myth that the global economy is contracting. Gross domestic product is still increasing despite the economic problems in the European Union. Grain supplies continue to tighten as population and income levels grow.
“The opportunities certainly are there. They haven’t melted down with the problems in Europe,” she said.
