Analyst sees aura of stagnation around productivity

Agriculture has been the productivity star of the Canadian economy for the past 50 years, says John Stackhouse of the Royal Bank.

But he also says that predictable productivity improvement seen almost every year is flagging and he’s not sure why.

He told the Ontario Federation of Agriculture’s annual meeting that for agriculture to become one of the future pillars of the Canadian economy, as the Royal Bank has predicted, the agriculture sector must evolve, especially in the area of labour.

There’s no doubt that agriculture in Canada has been a leader in productivity improvement in the economy. Look at milk production, days to market for hogs, corn yields or greenhouse productivity improvements. It’s nothing short of amazing.

However, there’s an aura of stagnation around conventional production systems in North America, Europe and South America, some of it deserved, some of it not.

The numbers, however, don’t lie and Canadian agriculture’s predictable productivity increases have stalled.

There are several reasons for this. For a look ahead, take a peek at Europe, where pandering to consumer perception versus science has meant regressive productivity. According to an EU report published in 2016, the increase in productivity from farming declined from 2005 to 2015 by 20 percent compared to 1995 to 2005.

That’s obvious in places like Great Britain where they increasingly rely on imports from the rest of the world to feed their population as impediments are placed on agriculture productivity in both the animal and crop areas. The report said that many of the original EU member states, like Germany, have had productivity losses.

Some of those impediments will continue to arrive here. Regulations are a productivity killer, and agriculture in Europe and North America continues to be limited by increasing regulations.

Agriculture innovators are focusing on Africa and parts of Asia, as there is a great potential to increase productivity. My sense is that those areas will not have an unregulated route to agriculture productivity. They’ll have to deal with the global standards now being required of agriculture production.

But back to Canada and the sense that agriculture productivity is peaking. It’s not surprising.

We’re having significant labour challenges on farms and also in farm supply and food value chains. The cost of that lack of labour will be in the billions and much of that will be because of a lack of productivity. If a tractor has to sit unused, or a barn run at less-than capacity because of labour, that’s lost productivity.

I’d argue that we’re in a bit of a tech adoption lull at the moment, although there’s a lot going on. We haven’t had new biotech traits that have offered a monumental leap ahead of what we now have. Tractor technology, such as auto guidance is fairly mature. We’ve likely had the big gains we’ll get from GPS technology. Some of the gains in the immediate future will be incremental.

I will admit that dairy production improvement is on a tear, with farms showing incredible production improvements, and some farms reporting average yields in the high 40 litres per cow per day. Many are pushing closer to 40 litres.

However, new technology is required to provide the next leap. There are no clear front runners. The popular one is “data,” but data will also only provide incremental improvement in productivity, although there will be some big-pay-off “ah-ha” moments for some farmers. It’s not the data that will be the big payoff, but the technology developed to address some of the issues identified by the data.

Continued improvement in plant genetics will be part of the productivity growth of the future. Plain old awesome selection of improved genetics has provided much of the productivity growth for farms in the past decade. In the future, traits identified now, but not quite in full use, such as drought resistance and the ability of some crops to make their own nitrogen will be critical.

Then there’s the brain power and enthusiasm that I see among young farmers. They’re following in the hard work and creativity tradition of their forebears. And some of them are going to do great things to take agriculture to its next leap.

John Greig is editor of Farmtario.

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