A recent report from the Advisory Council on Economic Growth highlighted agriculture and food processing as keys to economic growth in Canada.
The advisory council called on Ottawa to create a growth strategy for what it calls “agfood,” which it defines as everything from “field to fork.” Its report says that could generate another US$30 billion in exports (equivalent to nearly two per cent of the GDP) over the next five to 10 years.
The importance of this report is that it has flagged agriculture and food processing as an economic generator of priority within the nation’s economy and there should be full engagement in the strategy right to the office of the prime minister. (The advisory council was created by Finance Minister Bill Morneau.)
This is the first time in my years in the industry that food processing and agriculture have been linked, identified as a key thread in the fabric of economic prosperity, and given so much attention by the federal government.
To the advisory council’s credit, it looked at the examples of countries such as Australia, New Zealand, and Holland that have been successful in growing their food exports. Its recommendation to create a hub connecting all the parts of the sector is interesting and speaks to the shortage of infrastructure within processing.
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However, the report did not address the capital infrastructure issues from a commodities perspective, which I feel is an outstanding issue — especially when it comes to ingredients.
If we are to compete and to grow our food industry, we need more than two lanes on the Trans-Canada Highway throughout the nation; greater access to air and sea transportation; and a national railroad policy that prioritizes ag commodity shipping. Growth in the food-processing industry will need to grow at port and plane to ensure controllable logistic costs. How Canadian ingredients get to Canadian manufacturers is still an outstanding problem that needs addressing.
The report also touches on farm subsidies and dairy quota. These have yet to be clarified so we can withhold from judgment. Its contention that government farm subsidies equate to “26 per cent of its economic output” and this funding “is not contingent on meeting productivity-related requirements, such as adopting new technologies” needs further discussion. (What does this mean? Is the council suggesting farm subsidies be axed or that they should be revised to boost productivity and encourage adoption of new technologies?)
The report also says provincial quotas are a handicap to growth within the dairy sector because they “curtail investments in productivity.” How does the dairy industry interpret this in the wake of Ottawa’s November announcement of $350 million to help it adjust to new competition stemming from the trade deal with Europe? Will dairy be on the table?
Our natural capital in Canada allows for some terrific growth, but we cannot grow at the cost of jeopardizing land and water. This then begs the question of where the lens will focus: Will it be on manufacturing or will that be combined with production? How do we protect natural capital while growing food exports by $30 billion?
While it is true that we have had a terrific base of entrepreneurs and companies in Canadian food processing, the big question always comes back to the weak link of commercialization. It is fair game to keep the pressure on in this area as small- and medium-size enterprises are often left to drift at this stage in development. The call for existing financial institutions to provide growth capital for expansion of small- and medium-size companies is one part of the solution. But the report goes further and recommends not only talent recruitment, but also training. (What is not addressed is wage parity within the sector and until we have a gender balance within it, some of the best talent may not be attracted to the Canadian food sector.)
The idea of building research capacity is welcome and needed, and we have much to repair in this area. But in key areas such as genomics and multidisciplinary research platforms, we have world-class researchers. When combined with the needs of the industry around one roundtable, we could see an unprecedented level of product development.
The key is investment from the federal government. That will provide momentum and that, in turn, will attract foreign investment, a critical ingredient to successful food processing. The Prairie provinces are especially in need of a robust and aggressive plan to transform commodities into food products.
If the federal government takes the report to heart (and provides funding), it will require the entire agriculture and food-processing sector to ensure that the end result is world class and rivals models such as Holland for innovation, co-operation, and creativity.
This is our chance and our future to have farming and food recognized as essential for the future prosperity of our nation.
The council’s report can be found at the Government of Canada website.