Canada’s agriculture and food sector is losing competitive ground in the world, the Senate agriculture committee has heard.
Market share is declining even as the world demand for food is rising.
Economists from the Guelph-based George Morris Centre argued May 8 that the evidence of decline is everywhere.
Investment in the industry lags other countries, export market share is falling, Canadian food and agriculture regulations are “slow and sloppy” and Canadian agriculture policy is too oriented to supporting small, inefficient or import sensitive sectors.
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“In our view, the most important thing to do in public policy is to change the emphasis for agri-food from what has been mostly a kind of protect-and-preserve approach over the last 50 years to one that has the mission to create a progressive business environment that fosters innovation,” GMC senior fellow Larry Martin told senators.
With colleague Kate Stiefelmeyer, he wrote a report published last year by the Ottawa-based Macdonald-Laurier Institute that was damning.
The world wants more food and prices are rising, they wrote in the report, entitled Sector in Decline or Industry of the Future? The Choice is Ours.
“Canada is well positioned with its resource base, infrastructure and knowledge to take advantage of this growth,” they wrote.
“Despite its advantages, Canada has lost market share in almost every major product category. It lags in productivity both in primary agriculture and the food industry.”
At the Senate committee, Martin argued that the regulatory and product approval system should be improved and made “tough but fast” as well as more compatible with regulatory systems in competitor countries.
He said a key ingredient of a more competitive food sector is more access to foreign markets through trade deals and more competition in the Canadian market from imports to keep Canadian producers and companies on their competitive toes.
Martin raised the issue of supply management protections as a problem for competitiveness because it limits trade deals, but no senator took him up on the point.
The GMC economists argued that Canadian policy should offer more incentives to food companies to invest, noting that investment is less than depreciation.
“We are basically disinvesting,” said Martin.
Canadian pork plants use far too much labour and far too few robots to compete with highly automated European plants.
He also argued that there should be a move away from government subsidies for farmers, particularly if they are weighted to helping small producers.
Martin called for “more reliance on private risk management tools and less reliance on government.”
He said the farm lobby has been responsible for promoting government protection.
“I do not know how to say this other than to say it,” he said. “What I have observed over the past 40 years is that farm organizations and many farmers spend a lot of effort to try to maximize the payout from government programs. If they were to spend the same effort on figuring out how to be innovative in their industries, they would probably be further ahead.”
However, Martin agreed with Conservative senator Mike Duffy that despite all the problems, agriculture and food sector players have an optimistic outlook.
“Absolutely it is a very bright future,” he said.
However, Stiefelmeyer said the successful farm sector of the future will not look like the current model.
“In the future for farming, I see that there will be two types of farms — the larger farm enterprises that use technology and that are supplying export markets and larger chains in Canada, and then we will get rid of the middle and we will have niche market farms,” she said. “I see the industry going that way with both larger farms and smaller niche market farms being successful.”
In their study for the Macdonald-Laurier Institute, the GMC economists concluded that a disproportionate amount of government support payments go to smaller farms that produce little net income from agriculture.
