When thinking of agriculture, Canadians might envision an industry characterized by large-scale grain production or ranches with a thousand head of cattle.
Certainly the statistics – or even a simple drive through the Prairies – would seem to support this view.
In 2015, Canada exported nearly $1.6 billion worth of beef products and $5.0 billion worth of canola alone.* Yet, the agriculture industry in Canada is undergoing a transformation as new technologies and new markets become available. This diversification could pay dividends for western Canada.
First, emerging commodities are opening up new opportunities in existing markets. Though the United States has always been a major importer of Canadian beef, exports of Canadian bison doubled between 2013 and 2015, from approximately 14,000 animals to 28,000. The volume of bison exports is expected to only grow in 2016 as the U.S. named the bison its national mammal this year, generating interest among Americans in not only its conservation but also its cultivation.
Meanwhile, the recognition among Canadian farmers of strong demand in drought-stricken India has led to a boom in lentil production. In 2005, Canadian lentil production accounted for just 577,000 tonnes but soared to 2.1 million tonnes in 2014, despite negligible growth in domestic demand.
Securing access to emerging markets has also changed features of Canada’s agriculture industry in recent years. For example, the Canada-Peru Free Trade Agreement that entered into force in 2009 has contributed in part to the boom in lentil production. In the years prior to the agreement, the value of Canadian lentil exports to Peru averaged $15 million annually. By 2015, they reached $36.*
Success in Peru and other Latin American markets emboldened Canadian farmers to pursue greater volumes of production and entry into South Asia, where free trade agreements (FTAs) have yet to take shape. A growing alpaca herd in British Columbia and Alberta has been another outcome of the Canada-Peru FTA, which could also present opportunities in the future.
Peru exports approximately $150 million worth of alpaca fleece annually, much of which is destined for the U.S., and alpaca meat is regarded in Peru as a flavourful, trendy source of protein. It is too soon to tell whether this catches on in the U.S. and elsewhere, as well as whether Canadian farmers are able to capitalize on this.
The Canada-Korea Free Trade Agreement that entered into force in 2015 has not seen quite as significant dividends for Canadian business as originally expected. Yet this and recent market outreach to China could see a substantial increase in demand for Canadian pork. China consumes 53 million tonnes of pork annually, accounting for approximately half of the world’s pork consumption, while South Korea accounts (pdf) for a robust 1.1 million tonnes.
Strengthening Canada’s position in these markets will likely mean not only an expansion in the size of the Canadian hog herd but also changes in the kind of cuts that the country’s meat processing facilities pursue, especially in Western Canada.
Finally, emerging technologies are playing a significant role in changing the way Canadian farms operate. Drones are reportedly improving the efficiency of some Canadian farms by offering a bird’s eye view of operations. Furthermore, the federal government and its provincial counterparts have been devoting significant funding in recent months toward crop research, in particular through the five-year (2013-2018) policy framework known as Growing Forward 2, which pools together roughly $3.0 billion from federal, provincial, and territorial governments.
Reflective of this trend, Agriculture and Agri-Food Canada dedicated $35.3 million in funding to expand its research facility in Swift Current, Sask., this month, intended to enhance wheat breeding programs. Industry has also followed suit, such as Cargill’s recent $3.5 million expansion to its canola research facility near Aberdeen, Sask. Such innovation could position Canada well for new markets, especially as demand grows internationally for nutraceuticals, food products with additional health or medical benefits, or so-called “super foods.”
Evidently, Canadian agriculture is diversifying, not only in terms of what farmers grow but how they grow it and to whom they sell it. A trade mission by Saskatchewan’s Premier Brad Wall on Sept. 17-28, to China (including Beijing, Qingdao, and Shanghai) and South Korea (Seoul) could be another step toward securing new markets, further contributing toward the transformation of this sector.
Western Canadian alpaca exports may never rival the volume of the region’s beef shipments, but the diversification of such commodities lends a valuable versatility to an economy that is heavily reliant upon the export of raw goods. As ministers and deputy ministers responsible for provincial agriculture portfolios deliberate the successor to Growing Forward 2, investments and policies conducive to this innovation and diversification ought to be top of mind.
– Paul Pryce is a frequent writer on public policy and economic trends in Western Canada.
* Trade figures obtained from the Canadian International Merchandise Trade (CIMT) database maintained by Statistics Canada