Ag productivity and exports: what you need to know

The world changed in 2016, in ways that call into question the future of globalization and world trade.

The surprising results from the Brexit vote and the U.S. election, and the appearance of widespread uncertainty about European political futures, led to brief periods of unprecedented turmoil in markets.

Despite that turmoil, FCC Ag Economics’ Canadian Agriculture’s Productivity and Trade Report argues that Canadian agriculture can remain optimistic. According to the Bank of Canada, global growth is expected to hit 2.8% in 2016 and rise to 3.2% in 2017, spurring additional demand from both traditional and emerging markets. Canada, as one of the world’s largest exporters, can capitalize on that growth.

The only question is how.

Canada must grow with the world

To meet growing demand, Canada (and competitors) must produce enough to feed the world. That’s not a problem as we head into 2017 with high global stocks of many ag commodities and booming production. But production alone won’t do the trick. New competitors, regional and bilateral trade agreements, and various markets’ shifting import priorities, will challenge our status as a world leader in ag exports.

Canada’s ag producers can work for immediate and long-term viability. Being efficient means producers will survive through periods of low commodity prices and uncertain markets, but finding productivity gains will ultimately allow Canada to keep its production and exporting edge.

Canada needs to increase productivity

No producing country can increase agriculture output by using additional land. Canada was just one of many that lost agricultural land as a proportion of total land area between 1961 and 2013. Further losses may arise with claims to preserve the world’s natural resources in the face of environmental pressures.

Instead, the technological advances and innovation that gave rise to successful Canadian exports (think of canola) will help Canada meet the world’s growing demand for food. Technology and innovation require investment that can be at odds sometimes with efficiency, but Canada’s productivity gains achieved over the last 50 years across all sectors have led to the diversity of Canadian agriculture. That diversity underpins Canada’s overall sector health.

Read FCC Ag Economics: Canadian Agriculture’s Productivity and Trade to learn more.