Keeping Canadian agriculture competitive

I had the pleasure of presenting at last week’s GrowCanada conference. On the surface my assignment was simple: Discuss strategies to keep Canadian agriculture competitive. But the idea of Canadian competitiveness has many layers.

First of all, “competitiveness” is somewhat of a buzzword- it’s used in many different ways. I personally like to define it as “sustaining profits in a given market in relation to other sectors or countries.”

Is Canadian agriculture competitive?

Absolutely!

Here’s a look at the numbers.

Net cash income at the farm level reached a record-high $13.8 billion in 2014. 2015 is on pace to fall only slightly below that level. Most sectors are healthy. Crop receipts increased from $13.6 billion in 2006 to a projected $27 billion in 2015. Livestock receipts climbed from $18.4 billion to $25 billion over the same period.

Is it enough to look at just these numbers? Likely not. We should also look at the drivers of profitability to understand how to sustain this happy story of income.

Profit margins in most agricultural sectors are projected to be tighter in 2016 and beyond. The world supply of grains, oilseeds and meat is climbing, catching up with the growing demand. As a result, commodity prices have fallen. Yet, the profit margins of Canadian producers are still projected to be positive, thanks to a low Canadian dollar.

Don’t bank on a low currency to sustain profits

That doesn’t mean Canadian competitiveness is based on a weak loonie however.

The low dollar helps Canadian exports of agriculture commodities and agri-food products, no question. But our long-term success relies far more on other factors, and luckily, these are factors Canadian producers and manufacturers can control. I’m referring to, specifically, productivity and innovation – a major emphasis of this year’s GrowCanada event.

Innovation drives Canadian success

In the words of Jim Carroll, a leading futurist, successful innovation means “think big, start small and scale up fast.” Dr. Maurice Moloney, of the Global Institute for Food Security (GIFS), echoes this statement. He predicts the production needed to feed a world population of more than nine billion by 2050 will come from innovation and technological progress.

As our recent FCC report, A 2015 Look at Global Trade emphasises, Canada’s stellar trade performance is a function of past innovation and productivity gains. We must invest to protect this strength as we seek to feed a growing and wealthier world. This applies at both the industry and farm levels.

In an environment of tighter profit margins, maximizing productivity and efficiency will be key to delivering positive returns on the farm.

Check out these articles for ideas on how to increase productivity on your farm:

Brazil and Canada at the forefront of future growth in agriculture

Touch Sensitive Technology Next Big Thing in Ag Automation


J.P. Gervais, Chief Agriculture Economist