On one level, the Canadian agriculture and food sector is booming with high commodity prices, expanding exports and investment.
It is the positive message the federal government and industry are promoting in the wake of the 2012 “system overview” report published by Agriculture Canada.
The report described an industry that accounts for 8.1 percent of the Canadian economy and two million jobs and is the world’s fifth largest exporter of agriculture and food products.
Canada is also the world’s six largest importer of food products.
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“There’s never been a better time to highlight agriculture’s significant contribution to our economy,” Ontario Federation of Agriculture president Mark Wales said.
“Our industry has seen nothing but expansion, increased efficiencies and productivity and modernization.”
When the report was released, agriculture minister Gerry Ritz joined the chorus while noting that while the industry is evolving, government support for the sector must change as well.
“It wasn’t that long ago that producers and processors were reeling from BSE, H1N1, reduced market access and weather-related disasters,” he said in a statement.
“As farm businesses evolve to meet changing demand or issues, so too must government adapt its approach to support industry’s need for increased innovation, market access and reduction of red tape.”
The March 29 federal budget signalled some of those changes with cuts in several traditional departmental areas, increased emphasis on international trade and a call for the private sector to increase investment in research.
However, beneath the bright global picture, there also is evidence of industry challenges.
The farm sector still depends on significant government financial support.
During the 2010-11 fiscal year, federal and provincial government spending on agriculture increased to $7.9 billion, 33 percent of the value of the sector’s output. The largest portion of the spending, 41 percent, was for program payments to farmers.
Research and inspection spending was significantly lower.
University of Western Ontario business professor David Sparling, chair of agri-food innovation and regulation at the Richard Ivey School of Business and a former chicken producer, argues the system’s emphasis on program payments helps keep the sector less competitive than it could be because it allows smaller farmers to stay in the business without providing an incentive to grow or exit.
“In tough budgetary times, you can sometimes use that to make change and if you look at how much everything else about our industry has changed, why wouldn’t we be looking at how we use the limited resources we have?” he said.
“I don’t think putting them all into BRM (business risk management) is remotely in the long-term best interest of the industry.”
The Agriculture Canada report notes that average off-farm income has almost doubled since 1995 to $41,000 in 2009. Off-farm income continues to exceed net farm operating income on most farms.
The federal report also concludes that while agriculture and food are the third-largest contributor to the national economy, the sector’s financial impact during the past 15 years has grown at an annual average rate of just 2.4 percent, significantly less than the overall economy.
The value of output from primary agriculture has been growing at just 1.5 percent annually.
The report also notes that the largest block of workers in the agricultural sector are 55 years and older, which is older than the general workforce.
It means that the sector will have a massive demand for new workers in coming years.
