Canada’s failing food industry
Troy Media – by Larry Martin
More food will be consumed in the next 50 years than in the rest of the history of humanity.
On the one hand, the world’s population will soon reach seven billion people and will grow to nine billion or more within 30 years. But on the other, the incomes enjoyed by these new populations are growing more rapidly than ever.
As the demand for food climbs with population and income, Canada – uniquely positioned due to its vast tracts of arable land, abundant water, infrastructure, and long experience in the sector – faces a huge opportunity to feed the world. And yet Canadian agriculture and agri-food businesses are not only failing to maintain their share of world markets, but are falling behind.
The Canadian advantage
Canada has the third largest and most accessible endowment of arable land per capita in the world behind Australia and Kazakhstan. Most of Canada’s competitors have less than half the arable land per capita than we do.
Many of the world’s soils have been badly degraded, including much of Asia and Africa where growth in food demand is occurring. Canada has some of the most stable soils in the world, which constitutes another significant advantage for our country.
Much of the world faces some degree of fresh water scarcity. Not Canada. Our nation contains approximately 9 per cent of the world’s renewable freshwater supply and our use of renewable water resources is very low compared to our competitors’.
In addition to these magnificent natural advantages, Canada possesses three advantages created by the energy and intelligence of our people. The first is infrastructure. In a comparative sense, it is much easier for Canadians to deliver their products to markets than many of our potential competitors. Second, Canada maintains a world-beating scientific and research-based capacity to support the industry. Finally, Canadians enjoy a long history and experience with agriculture and food processing. We know what we’re doing.
Yet our share of world markets is falling, our agricultural productivity is rising more slowly than our competitors’, and our influence in world trade talks about agriculture is falling. As a result, our rural communities are forgoing greater prosperity, our food processors are losing out on export opportunities, and our economy is missing out on potential growth. But it is also far more: at a moment when it is not clear that the world can meet the growing demand for food, it is a potential humanitarian tragedy for the globe. Canada faces both an economic and a moral imperative to do better.
The solution is largely in the hands of Canadians and their governments. Canadian policies were developed in a world of surplus, but we’ve been increasingly in scarcity for over five years: it’s time for our food policy to catch up with reality. Here are just three areas where old policies hold us back:
1) Canada’s regulatory system is an oppressive weight on innovation in the food sector that not only discourages investment, but drives it out of the country while destroying opportunities for Canada to be an early adopter of game-changing new technologies.
2) Our preoccupation with subsidizing small farming operations distorts farmers’ decisions, reduces our competitive advantage and reduces the amount of capital available for investment. In total, according to the OECD, Canadian government financial support for agriculture remains between 20 and 25 per cent of gross farm income on average. These policies do the farm and food sector no favour. Our big competitors, countries such as Australia and New Zealand, have reduced their market support to below 10 per cent, or have begun to replace market support with policies aimed at improving productivity and the environment. They are the countries now winning markets that used to be Canada’s. They are the countries now at the cutting edge of agricultural and food processing technology, which is where Canada used to be.
Self-inflicted wounds
3) Canada suffers from serious tariff and non-tariff barriers in accessing markets that are big consumers of products that it can supply. In other words, there are markets where consumers want products made in Canada but which are partly or wholly closed to Canadian firms because of trade barriers. And yet Canada’s ability to influence global trade talks in favour of more open markets for food and other agricultural products has declined because of our obdurate insistence on our own protectionism in sectors like dairy and eggs.
These wounds are largely self-inflicted. Policymakers in particular must face up to the fact that this country’s laws and regulations are sadly out of date, reflecting a mistaken belief that agriculture and food processing are industries of the past, not the future. Canada’s potential as a world leader in farming, food and food processing can yet be unleashed. An increasingly hungry world deserves no less.
Larry Martin is the lead author of Hungry for Change, recently released by the Macdonald-Laurier Institute, www.macdonaldlaurier.ca. He is a Senior Research Fellow at the George Morris Centre in Guelph, Ontario and a Research Advisory Board Member for the Macdonald-Laurier Institute.
Category: Business
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