Seeding Economic Prosperity: Agriculture and the Canadian Economy
December 11, 2019
Natural resources are the foundation of Canada’s economy. From the energy sources we harness to the agricultural products we grow and harvest, Canada is a global leader in natural resource development.
In 2016, the latest full year available, Canada’s agriculture and agri-food industries contributed over $110 billion to the economy, employed over 2.3 million Canadians, and accounted for 6.7 per cent of GDP, a number that is increasing. The agriculture and agri-food sector outpaced Canada’s own GDP growth between 2012 to 2016 at 11 per cent to 7.8 per cent respectively.
The impact of agriculture to Canada cannot be overstated. At home, in Calgary, agricultural firms have either moved into the city or consolidated their operations, most notably with Bayer Crop Sciences consolidating their headquarters in 2018, which has further contributed to local job growth in the sector.
The Canadian agricultural industry has evolved over time due to challenges and shifts in market demand, however, the contribution to Canada’s economy has remained steady and growth appears to be on the horizon.
Gains from trade
Canada’s agriculture and agri-food sector exported $56 billion in goods in 2016, and projected to reach $75 billion by 2025. This growth can be partially attributed to recent trade agreements, most notably the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) between Canada and ten other countries in the Asia-Pacific region, representing 495 million consumers and 13.5 per cent of global GDP.
CPTPP provides Canadian agriculture and agri-food goods better market access to all countries in the framework and gives Canada an advantage over the United States, a key competitor who is not part of the agreement. This creates new opportunities for Canadian exporters to sell their products and ensures Canada is positioned as a supplier of choice.
Since the approval of the agreement, 94 per cent of agriculture and agri-food exports to the region have been made duty free, and sales of goods have averaged $7.8 billion a year since 2015. Thanks to the CPTPP, agri-food sales are expected to increase by $1.84 billion in addition to saving exporters $428 million on tariffs every year.
Beyond CPTPP, the Canadian-European Union Comprehensive Economic and Trade Agreement (CETA) provides additional market access for Canadian agricultural exporters. The Canadian-Agri-Food Trade Alliance estimates this access could increase exports by $1.5 billion year-over-year. While the benefits to exports are apparent, the indirect economic benefits to Canadians could be even greater. As agriculture and agri-food producers become more profitable, it allows for industry expansion, leading to more jobs and potential growth, resulting in increased economic well-being across Canada.
Gains from technology
In addition to the gains from trade, technological developments also contribute to the projected growth of the agricultural and agri-foods sectors. The ability to automate tasks and remotely monitor assets enable farms to grow while becoming more sustainable, both in energy consumption and human resources.
Technological advancements have the potential to inject an additional $11 billion into the Canadian economy by 2030, pushing agricultural contributions to Canada’s GDP to $51 billion and surpassing both the aeronautics and automotive industries. But to effectively capitalize on the available gains from technological advancements, the industry will have to adapt to a more data-driven operation as opposed to manual labour.
Canada as the supplier of choice for agriculture and agri-food
Canada is the largest exporter of oats and canola oil, home to almost one million dairy cows, and has a growing cannabis industry. We are also a world leader in pulse crop production and sales, exporting to over 150 countries, and the third-largest pork exporter, exporting to over 90 countries.
Globally, Canada is the fifth largest agricultural exporter and this sector’s growth is primed to continue. There is no question about it, agriculture and agri-food products are essential to Canada and will continue to serve as a backbone in the economy of the future.
Today, we can have energy development AND solve climate change. We can feed the world AND have sustainable agricultural practices. We can be in business AND be socially accountable to the communities in which we operate.
Canada’s Agriculture Summit
On January 16, 2020, the Calgary Chamber will be hosting Canada’s Agriculture Summit, featuring panelists and keynote speakers from leading businesses and organizations in the sector.
The purpose of the Canadian Agriculture Summit is to showcase the significance of agriculture and agri-foods to the Canadian economy. It will be an opportunity for discovery and discussion around the innovative technologies that are shaking up the industry, the scale and competitiveness that make Canadian agriculture and agri-food world-class, and how we can continue to protect and grow our presence on the global stage.
The event is open to the public, and registration is now open.
Agriculture and Agri-Food Canada, An Overview of the Canadian Agriculture and Agri-Food System 2017. https://www5.agr.gc.ca/eng/about-us/publications/economic-publications/an-overview-of-the-canadian-agriculture-and-agri-food-system-2017/?id=1510326669269
Agriculture and Agri-Food Canada, 2018 Medium Term Outlook for Canadian Agriculture. http://agr.gc.ca/eng/about-us/publications/economic-publications/2018-medium-term-outlook-for-canadian-agriculture/?id=1536863615431
Canadian Agri-Food Trade Alliance, Comprehensive and Progressive Agreement for Trans-Pacific Partnership, http://cafta.org/trade-agreements/cptpp/
Canadian Agri-Food Trade Alliance, Canada-EU Comprehensive Economic and Trade Agreement. http://cafta.org/trade-agreements/canada-and-the-european-union/
RBC Thought Leadership, Farmer 4.0: How the Coming Skills Revolution can Transform Agriculture. http://www.rbc.com/economics/economic-reports/pdf/other-reports/Farmer4_aug2019.pdf