Report calls for hefty ag investment

Canada could become an agriculture and food export powerhouse, much greater than it already is.

But it would be challenging and would likely force a confrontation with policies, structures and politics, say economists about an Advisory Council on Economic Growth report.

“We just need to get our act together…. We need a vision,” said Sylvain Charlebois, the dean of food science at Dalhousie University.

“Before somebody else dictates what we should be doing, we should perhaps have meaningful conversations with ourselves.”

Charlebois hopes the report called Unleashing the Growth Potential of Key Sectors, issued Feb. 6, can spark that reassessment of how Canada manages agriculture and food, especially since the country’s “agfood” sector is riven by policy contradictions.

“Anybody who looks at what we do in Canada can be confused,” said Charlebois.

Bertrand Montel of Ceressys also hopes the report provokes a policy reassessment, and a complete rethinking of how and why Canada designs agriculture and food policies.

Adopting a deliberately export-focused approach is necessary because “we have no other choice” in terms of achieving economic growth for a country with a small population.

But that would mean agriculture policy development would need farmers to take a step back and act more like partners to the rest of the food industry, rather than as the focus of agriculture policies.

“Farmers would have to accept that they are not the primary concern of the agfood sector,” said Montel.

“That is something that may not play well, especially in Quebec.”

The Advisory Council report highlights agriculture and food as an economic sector it believes Canada should focus on to achieve strong economic growth.

It sets aggressive targets for export increases, including a boost of Canada’s agriculture products exports from the current 5.7 percent of world trade to eight percent, and doubling food products exports from 2.8 percent of world trade to 5.6 percent.

The council recommends revamping regulations and policies to promote this growth, and notes that some other countries are already trying to do this.

University of Manitoba economist Derek Brewin said he likes the highlighting of agriculture and food and the desire to boost investment in the entire sector.

“Australia is way ahead of us on these investments,” said Brewin.

“I think there is a lot of evidence that underinvestment in productivity (in farming and food production) means any funds used to improve productivity has a great return.”

However, boosting investment in much of Canada’s farm and food industry will be difficult, Montel said, because of various problems.

Farms are small businesses compared to most industries, so many farms have trouble raising enough capital to invest as much as they need.

And most farms have huge amounts of capital tied up in land, something they might need to withdraw in order to invest in value-added production or specialization of some sort.

Yet provinces like Quebec and Saskatchewan restrict non-farm or non-provincial money when it comes to land ownership.

“We would have to remove some of the obstacles…. It would touch some sensitive political issues.”

Both Montel and Charlebois said protecting supply management, especially for dairy, can’t work with an aggressive export focus and is a major reason for the problems in Canada’s agriculture policy.

“We need to be consistent with what we want,” said Charlebois.

Brewin said government spending on agriculture research makes sense because it is often hard to entice private sector investors if they can’t see how to profit from their investments. However, he does not want governments to get too intrusive on how the private sector operates.

“We should be careful in trying to pick winners. Governments don’t have the best methods of tracking that,” said Brewin.

“I think it is a matter of making good regulatory rules for the private sector and letting them decide how to grow.”

Canada has the land, water, technological and skills necessary to turn its farms and food processors into much bigger players, Montel said, but that is going to take money, so governments need to ensure that policies allow farmers to feel confident to reinvest in their operations, and for outside investors to provide investment money.

“A lot of capital will be required,” said Montel.

“I see many obstacles to get there.”

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