Will a labour shortage impact agricultural growth?

The following is courtesy of Ray Bollman, senior research advisor to the Canadian Agricultural Human Resource Council (CAHRC) and former chief of the Rural Research Group at Statistics Canada. Dr. Bollman reports on Canada’s projected labour market shortage.

My previous post documented an anticipated labour shortage facing Canada in the near future. In agriculture, an industry that has seen its GDP grow at an average annual rate of two per cent from 1997 to 2012, the spectre of such a shortage raises concerns about the sustainability of the industry’s economic growth.

It may appear to threaten it, but historically, total employment in agriculture has been steadily decreasing (from over 900,000 in the 1950s to 315,000 in 2013). The number of paid workers hasn’t changed much since the 1950s although the proportion they make up of total agriculture labour has grown since then. At the same time, output has been steadily increasing due to the heavy substitution of capital for labour in farm production.

The fact of the matter is that labour-saving technology has triggered consolidation in the farm sector and decreased employment, primarily among self-employed farmers. If the expected labour shortage impacts the number of potential paid employees available for work, there may indeed be impacts to agriculture GDP. Such a shortage could also slow the consolidation trend.

If however, the ‘shortage’ exists in the numbers of those replacing the retiring producers who are self-employed, the impacts to GDP are likely to be low. Future consolidation and labour-saving technology could account for any corresponding possible decline in labour.

It’s important that farm businesses consider labour as a strategic asset for their operations, and as such develop the proper strategy to assure sustainability of their operations. There are a number of ways producers can respond to the challenge of finding the right labour for operations across Canada. Find out more at the Canadian Agricultural Human Resource Council (CAHRC).

Ray D. Bollman, Canadian Agricultural Human Resource Council