If you just looked at the raw numbers, you’d think that agriculture is waning in importance in Canada. You might even think it’s an industry in decline.
Country Guide: Should we be concerned that agriculture seems to be slipping in its importance to the Canadian economy? At eight per cent of GDP, it’s not insignificant, but there are other countries out there — say Brazil for example — where agriculture retains a far-higher proportion.
Al Mussell: As much as we all have an investment in the agriculture industry, I think we actually should be pretty happy that agriculture and food are a relatively small percentage of the overall economy. It’s indicative of a sophisticated and well-developed economy, and we all benefit from that, both on and off the farm.
Read Also
Editor’s Note: No pressure
What is your playbook going into this year’s crop? Not an easy question to answer right now, given the global…
But you are right, it does set up a reality in which we have to live, and it can force us to consider some fairly sobering questions. For example, we have our own federal ministry — is that proper? Is that over-representation? Is that a good thing?
It also makes us ask a fundamental question. Are we as well co-ordinated and integrated with the rest of the economy as we should be?
We’ve tended to consider agriculture policy in isolation. It’s been more about seeking exemptions from things other sectors have to live with. While there might be some good from that, it can breed insularity and I think we can miss some of the innovations that occur in other sectors as a result.
CG: There’s a lot of optimism about farming, and about feeding a global population that is both hungrier and wealthier. Will this translate into more prominence for agriculture?
AM: To a degree, it all depends. For example, there’s the Trans-Pacific Partnership that could provide us with some excellent economic opportunities. Those Southeast Asian economies are huge.
But let’s be honest. While as a country, we have an overwhelming interest in greater trade liberalization, we also have sensitivities, especially around supply management, which are thus far keeping us out of those talks. It’s going to be a challenging thing to get the industry engaged in, although I think we need to because this is where the opportunities are.
CG: In terms of our relative importance to the economy, you say we’ve grown modestly through productivity gains, while the rest of the economy has grown at a greater pace. What does that tell us?
AM: One thing it tells us is that agriculture is actually a very stable sector.
What we also know however is that farmers have historically been some of the most enthusiastic adopters of substituting capital for labour. As a result, we’ve seen direct employment fall dramatically while our absolute, rather than proportional, contribution to GDP has remained very stable. So, if you just look at primary agriculture, you could actually come to the conclusion that agriculture is a drag on the economy and on rural economic development, because it does nothing but eliminate jobs.
Of course that’s not actually the case, because it ignores processing and other additional economic activity.
Processing tends to be set up close to the supply of raw materials, rather than close to the consumers. The meat-packing industry is a great example of this — take the Maple Leaf plant near you, out at Brandon. It’s there, producing jobs, because there’s a supply of hogs. There’s a supply of hogs because there’s a reliable supply of feed grains. None of those jobs would exist in the first place without primary agriculture.
CG: We’ve all seen those studies that talk about the multiplier effect from agriculture — things like every dollar produced in ag eventually means a further $7 in economic activity. Are you saying those economic impact studies are right?
AM: I’m not sure I’d go that far. I think there are some problems with those studies, mainly with some of their assumptions. For example, they assume that without an agriculture industry the folks working there couldn’t possibly find another job. We all know that’s not true.
Just ask a farmer in a rural community in Ontario where an auto plant was located, and I’m sure they’d tell you that they have to compete for their labour and I suspect any farmer near the oil patch would say the same thing.
I think it is fair, however, to say that there is clearly additional economic activity related to agriculture beyond primary production — but I think it’s also fair to say that we’re not necessarily doing everything we can to foster that activity.
CG: How so?
AM: Well, let’s take the example of that hog plant in Brandon. They need to know there’s a stable and secure supply of hogs for their operation. But in the agriculture sector there seems to be a real hesitation to share that sort of information with the processors. They don’t want Maple Leaf to necessarily know exactly how many hogs are out there. They’re afraid the processor will use that information against them.
We have a real fear of customers in Canadian agriculture and we tend to view them negatively — that’s very much a cultural thing.
CG: You have talked about innovations we may be missing out on. What are we talking about here?
AM: Well, let me just give you one example. We all know that the automotive industry uses robotics on the assembly lines, but they’re also using robotic forklifts to manage inventory. It’s absolutely incredible.
In agriculture, we don’t tend to interact much with other sectors, and that means we’re missing some opportunities to learn from them. Take inventory tracking and management, for example. Some of our growth opportunities are for products that require the ability to track where that product has been, what’s been done to it, and where it’s going. There’s technology out there that can do that, it’s broadly employed in other sectors, and we make almost no use of it — at least until very recently.
Can you imagine where we’d be if we’d adopted it at the same time as other sectors of our economy? CG
