Closing tech gap could boost GDP by $11B: RBC

RED DEER — Canada could gain $11 billion in annual gross domestic product in 10 years by closing the agriculture labour gap and accelerating investment in technology.

This would boost agricultural GDP to $51 billion making it bigger than automobile assembly and aeronautics industries combined, said a senior vice-president with the Royal Bank of Canada.

“We think a lot of technology disruptions are coming to agriculture,” said John Stackhouse at the recent Alberta Beef Industry conference held in Red Deer.

“The impact of technology always takes longer to hit than people predict and then when it does, it hits with a force that no one thought imaginable,” he said.

In a Royal Bank report titled Farmer 4.0, the condition and future prosperity of Canadian agriculture was assessed.

Canadian farmers are adopting technology but there are challenges on the horizon with a lack of investment in research and development and a shifting demographic in the workforce.

Seven million millennials are moving into the workforce while the people of the baby boom generation are retiring. The new workers need more digital understanding and all will have to be fluent in how to generate, collect and make use of data.

Even with enhanced technology there will be more jobs than people with skill sets that can overlap into different professions.

“Of course specific jobs and lines of work are eliminated and that can be acutely challenging and painful for people who are in those jobs,” Stackhouse said.

Many of the new jobs require more critical thinking, creativity and collaboration.

Probably 90 percent of large Canadian farmers who have sales of more than $1 million per year have invested in advanced technology. They still need to figure out how to get a better return on investment and that requires more knowledge and skills.

“We are going to need a generation of farmers who are innovative and are willing to try new processes, new techniques and new markets year after year,” he said.

Food producers of the future could be divided into five groups:

  • Deciders are the owner operators who run farms across the country. Robots will not replace them.
  • Doers are farm labourers who risk losing jobs to automation in the coming decades. Now is the time for those people to develop new skills as some of the old repetitive manual jobs are automated.
  • Enablers could be the computer scientists who are needed to enable what is being done with technology.
  • Specialists are in high demand. These could be separate jobs or farmers who have added specializations.
  • Advisers are the consultants to help with strategies for investment, markets or innovation.

There are barriers.

Since 2011, Canada ranked as the world’s fifth largest exporter of agricultural products. However, Canada is falling behind and productivity has stalled. Free trade agreements should secure more access, but Canada needs to transform the way it produces food and markets it globally.

Labour is a constant challenge. Within five years, 25 percent of the farming population will be senior citizens and during the next decade 37 percent of the agriculture workforce will be set to retire.

In 2017, it was estimated there were 63,000 unfilled agriculture jobs and by 2029 that will nearly double to 123,000 vacancies. Agricultural schools are full and graduates get jobs but they are not going into primary production.

More immigration is needed and agriculture needs a say in how to acquire people with the right skills. Immigrants represent one in 14 of the agricultural population compared with one in five Canadians in the general population.

More women should be involved because they account for only 28 percent of farm operators.

Only 1.9 percent of farm operators are Indigenous, despite controlling nearly nine million acres of territorial land.

Canadian agriculture held $510 billion in capital assets with land and buildings comprising more than 80 percent of that value, however farmers’ access to credit is low. Canadian agriculture has a 1.9 percent share of national commercial lending but the global average is 2.9 percent.

Current expenses eat up 83 cents of every dollar in sales, hampering producers’ ability to invest in new technologies or skills. This circumstance is a barrier to new entrants and is the reason so many operations are family owned.

Investment in research and development is falling. In Israel for example, food security is a matter of national security. Israel spends 4.5 percent of its GDP on research and development with a large share directed to agriculture.

Stackhouse said Canada is not spending enough.

“We have to open our minds as Canadians to doubling and tripling what we are doing. Not just the government but private sector and operators have to ensure more resources are going into R and D to develop those transformative ideas that are happening in other countries,” he said.

Agriculture must be promoted as a career and farmers need continuing education to stay ahead.

“The best dollar any government can invest is in education and that includes agriculture where life-long learning is needed,” he said.

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