The Calgary Stampede Auction and Agriculture
July 2, 2019
The Calgary Stampede has been a driver of the city’s economy for over 100 years. While it provides the city with economic benefits, it also serves as a pulse check on our economy.
In 1912, Stampede’s first rodeo show brought in $120,000 for the city, which equates to about $3 million today. Fast forward to 2019 and the Calgary Stampede’s estimated contribution to the local economy has now grown significantly to more than $400 million. Contributing to the city’s well being through events, hotel stays, shopping and many businesses that depend on it for their success.
The Calgary Stampede showcases a bedrock industry for Alberta: agriculture and agri-food. The industry contributes over $5 billion a year to the province’s economy and is expected to grow in the upcoming year. The Protein Industries Supercluster, based in the Prairies, has been working towards adding value to key Canadian crops and increase exports to high-growth foreign markets. The goal of the supercluster is to bring a cross section of industries together for collaboration and innovation while moving Canada towards becoming a world leader in plant-based proteins. The Stampede brings attention to this sector and offers an opportunity to bring different industries together in a venue where business relationships can develop or grow.
The annual Chuckwagon Canvas Auction also provides insight into the confidence level of businesses operating in our city. Each March potential sponsors compete for advertising space on chuckwagon canvases (or tarps) featured during the 10 days of the GMC Rangeland Derby. The amount spent on sponsorship dollars provides us with a snapshot of business confidence in Calgary.
Historically we have found that yearly changes in Canvas Auction results, GDP, employment and the price of oil generally experience similar patterns of growth or contraction.
This year, the total amount spent on sponsorships for the Derby was just shy of $3.29 Million, bringing in $47,000 or 1.5 per cent more in bids from last year’s total of $3.23 Million. The small jump is significantly less than last year’s growth of 34 per cent or a total of $817,000 from 2017 sponsorship spending. However, this growth came at a time when Calgary was recovering from a recession.
This year’s auction results paint a fairly accurate picture of our city’s economy: improving, but at a slow pace.
Calgary’s recovery from the 2015-2016 recession is evident but has recently slowed to a crawl. The Conference Board of Canada expects real GDP growth in Alberta to shrink to 1.3 per cent by the end of 2019, trailing behind every other province. The Board also expects business investment in the province to fall once again this year, marking the fifth consecutive year that investment has decreased. These sentiments are also shared by major financial institutions across Canada.
Alberta has already faced significant challenges in 2019 that include: a sluggish start for the national economy, a trade war between two of the largest economies in the world that has tempered investment attitudes, ongoing tensions around the ratification of Canada-United States-Mexico Agreement (CUSMA) and high levels of personal debt in the province. Additional uncertainty is stemming from ongoing disputes around the Trans Mountain Pipeline Expansion limiting market access for Canadian energy products, sweeping changes to the regulatory environment proposed in Bill C-69 and the looming threat of Bill C-48. The combination of all these factors have hurt investor confidence to start the year and caused a cooling effect on our economy.
Employment throughout the city have also been affected by the factors above. Average unemployment for the first three months of the year has improved from 9.5 per cent two years ago but has barely changed from 7.9 per cent last year, sitting at 7.5 per cent to start 2019. During the auction, Calgary’s unemployment rate was higher than any other major city in Canada and was nearly two per cent higher than the national rate. The Atlantic provinces were the only region that saw higher unemployment than our city.
Between 2018 and 2019, the average price of oil in the first quarter also fell. At the time of the auction, the average price of West Texas Intermediate was just under $55 US/barrel, 13 per cent lower than the 2018 average. Historically, high oil prices led to high business confidence in Calgary. This was most notable in 2012 when the Tarp Auction hit record sponsorships at over $4 million while the average price of oil was around $100 US/barrel. It’s unlikely that we’ll be seeing oil prices return to those levels anytime soon, but there is a silver lining. The auction reached three-quarters of record sponsorship dollars with the price of oil nearly cut in half, a correlation that suggests Calgary’s economy has been diversifying and that energy companies have found ways maintain sustainability at lower commodity prices.
The Calgary Stampede has a rich history and has steadily contributed to our local economy for over a century. The annual event gives us insights into the current economic climate of the city and sets the stage for future growth of our local businesses and businesses across Alberta. Although the Canvas Auction this year did not come close record numbers, it does show that our city is moving towards growth and business confidence is improving.