Productivity growth has stagnated in Canadian agriculture equipment manufacturing
This is the first of two posts looking at productivity in the Canadian agriculture equipment manufacturing sector.
Canadian farm equipment manufacturers are powering an $10B industry — but the shop-floor metric that matters most is slipping. Between 2015 and 2021, labour productivity rose just 11%, and the broader trend is downward. With tariffs, tight farm margins, and a heavy reliance on the U.S. market, standing still is quickly becoming a competitive risk.
Canadian farm equipment manufacturers are essential to supporting the food value chain and Canada’s competitiveness in global markets by producing machinery tailored to Canada's unique growing conditions. Despite global consolidation, Canadian manufacturers have stayed successful by being adaptable and focusing on niche, "shortline" products (ones that attach to tractors and other machinery). Recent innovations — such as autonomous platforms, precision seeding, and advanced seeders and sprayers — highlight the strong partnership between manufacturers and producers, where challenges on the farm and in the fields translate into solutions in the factory. In this post, we examine productivity growth in Canadian agricultural equipment manufacturing sector and assess the importance to Canada’s economy.
Output per worker is stuck in neutral
In recent years, labour productivity growth in Canadian farm equipment manufacturing has been largely stagnant. Between 2015 and 2021 (the most recent time period available for analysis), labour productivity in agricultural equipment manufacturing grew by only 11%, due to a slight bump in 2021 (see Figure 1). Importantly, the general labour productivity trend of the sector has been declining. Comparably, food manufacturing labour productivity grew by close to 30% over the same period.
Figure 1: Labour productivity in Canadian agricultural equipment manufacturing – 2015 to 2021
Sources: Statistics Canada and FCC Thought Leadership calculations
Addressing this trend is essential to maintaining equipment manufacturers long-term competitiveness domestically and in global export markets.
What are the challenges to labour productivity growth?
Today, this critical sector faces growing challenges influencing production costs as well as producer demand:
Rising input costs are placing pressure on margins, particularly following sharp increases in steel and aluminum tariffs in 2025.
Declining consumer confidence, due to softening farm income and general market uncertainty, resulting in delayed or forgone equipment purchases. For the past several years, declining crop prices and rising operating costs – combined with high equipment prices – have resulted in reduced farm equipment sales.
Market concentration adds an additional layer of risk – approximately 80% of Canada’s farm equipment exports were destined for the United States as of 2025 (see Figure 2), reflecting a deeply integrated North American supply chain. This leaves Canadian manufacturers highly exposed to changes in U.S. demand, trade policy, and economic conditions. Recent tariff disputes underscore the vulnerability that comes with heavy reliance on a single export market.
Labour availability is constantly challenging rural businesses seeking to fill highly skilled job vacancies.
Figure 2: Canadian farm equipment exports to the U.S. and other countries – 2015 to 2025
Source: Trade data online and FCC Thought Leadership calculations
As AI and automation drive increasingly advanced farm equipment, manufacturers must remain agile by investing in automated, software-enabled technologies. However, these investments often limit funds for improving overall production efficiency. The shift toward sophisticated technology is increasing demand for highly skilled labour, at a time when chronic labour shortages in Canadian manufacturing are ongoing. Meeting this growing demand is especially challenging for often small, rural farm equipment manufacturers that struggle with smaller labour pools. Product development now centers on computer programs and virtual modeling, resulting in less direct farmer involvement — a factor previously key to the Canadian shortline industry’s success. With over 80% of Canadian ag tech organizations based in urban areas, product development is evolving quickly but becoming more disconnected from the farm. There is also the challenge of compatibility when integrating shortline software with that of major equipment manufacturers.
Evolving legislation around the right to repair and copyright adds further complexity for manufacturers, and raises important questions about the future of Canadian innovation in the agricultural industry and its relevance to farmers. How can manufacturers design equipment that encourages safe, legally permissible customization by farmers without compromising intellectual property or warranties?
What’s at stake?
Sustainable productivity growth in Canadian farm equipment manufacturing is essential for the industry’s long-term profitability and for the broader Canadian economy. The sector has a significant economic presence. In 2025, it generated approximately $10.3 billion in sales, contributed $3.9 billion to GDP and exported roughly $2.7 billion in agricultural equipment to over 150 countries. When accounting for spillover effects into other industries across the Canadian economy, the GDP impact of the sector more than doubles, to $8.4 billion. The industry employs close to 25,000 Canadians, mainly in rural areas, with many manufacturers based in communities of fewer than 10,000 residents. The innovation and success of these manufacturers is therefore closely tied to rural prosperity.
Figure 3: Economic impact of Canadian farm equipment manufacturing sector in 2025
How can we move forward?
Despite present challenges, the outlook for Canada’s farm equipment industry remains bright. Canada’s farm equipment industry has a long tradition of problem‑solving, and the sector is built on innovative companies with a proven ability to adapt.
Recognizing today’s pressures is the first step toward addressing them. With the right mix of policy support, skills development, and investment, the industry can continue to drive productivity and rural prosperity. In part 2, we will explore practical strategies to strengthen productivity and innovation in Canadian agriculture equipment manufacturing, and examine what comes next for this critical part of Canada’s agriculture economy.
Article by: Bethany Lipka, Business Intelligence Analyst
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