Here’s how agricultural productivity benefits all Canadians

Agricultural productivity growth in Canada is stagnating  

After peaking in the 1990s and early 2000s at around 2% per year, productivity growth in Canadian agriculture has stagnated. This slowdown threatens our ability to meet future demand for food and Canada’s competitiveness in the global food system.  

Productivity is a key indicator of how efficiently inputs – like labour, equipment, land and feed – are converted into outputs. Sustained productivity growth is essential for achieving long term sustainability, profitability and resilience in the agricultural sector.  

We all benefit from a healthy agriculture and food system 

FCC Thought Leadership estimates that restoring annual agricultural productivity growth to the historic level of two percent, which was achieved in the 1990’s and early 2000’s, could boost farm incomes by up to $30 billion over the next decade. However, the benefits extend far beyond the farm gate. Agriculture is a cornerstone of Canada’s economy, with the agriculture and agri-food sector accounting for 1 in 9 jobs and roughly 7 percent of national GDP in 2024. Revitalizing productivity growth in agriculture could generate significant spillover effects – enhancing Canada’s overall economic health, food security, and national wellbeing.  

Beyond the farm: economic benefits of boosting agricultural productivity growth 

Figure 1: Estimated aggregate economic impacts of returning to 2 percent annual agricultural productivity growth – 2023 to 2032

Sources: Statistic Canada, USDA, FCC calculations

FCC’s Thought Leadership team used Statistics Canada’s input-output multipliers to estimate the spill-over effects of increased productivity growth in agriculture, to understand the opportunities for the overall economy. We estimate that the GDP impact of this agricultural productivity growth would closely mirror farm income growth nearly dollar-for-dollar.  

This boost in agricultural productivity growth would also support the creation of an estimated 22,920 new jobs, and generate $12 billion in labour income. These employment benefits will spill over from primary agriculture into adjacent industries, and represent expanded opportunities throughout the entire value chain, from equipment manufacturing and input supply to transportation and value-added processing. 

Revitalizing productivity growth in agriculture also promises a cascade of additional economic and social advantages for all Canadians. It promotes food security and healthy rural communities. It also enhances the resilience of our food system in the face of growing global challenges associated with volatile growing conditions and shifting terms of trade.  

Seizing the opportunity 

Multiple factors contribute to the current slowdown in Canada’s agriculture productivity growth, including underinvestment and slow uptake of new technologies. Addressing these challenges represents a generational economic opportunity, both on and off the farm. A recent report by FCC Thought Leadership explores the role of innovation in enhancing productivity growth in Canadian agriculture and provides some key recommendations for how to catalyze investment and innovation into the future. There is no one-size-fits-all solution. A portfolio of solutions is needed to reignite productivity growth, including: 

• Increase investment in R&D and commercialization, both at home and abroad 

• Foster innovation across the sector, by supporting strategic partnerships and building capacity 

• Harvest low-hanging fruit by encouraging adoption of existing under-utilized technologies on farms 

Driving investment and innovation in Canadian agriculture will equip our food system to meet future needs and drive economic growth. It will ensure the long-term sustainability and profitability of the agricultural sector, and foster a thriving, resilient, and innovative food system that benefits all Canadians.

Article by: Bethany Lipka, Business Intelligence Analyst and Isaac Kwarteng, Senior Economist