Policy Matters: Advancing Canada’s Agriculture and Agri-Food Sector

There has never been in a time in recent history when food insecurity and food inflation are of more importance to world governments. In the next 40 years, the world will need to produce the equivalent of all the food produced in the last 10,000 years.

Canada’s agriculture and agri-food sector has the potential to singlehandedly meet this demand — with the right investment. We are one of the few countries with an export-oriented industry, selling upwards of 70% of crops like soybeans, wheat, canola and pulses to other countries.

Any strategic vision Canada has for the agri-food sector must facilitate access to expanding global markets, positioning us as the solution to the urgent global demand for food, while also allowing us to achieve our ambitious objectives for increasing domestic and export sales by 2025.

In addition to contributing to our economic prosperity, Canada can use our agri-food sector to increase our global influence at a time when the world is undergoing major shifts in the post-WWII international order. Because, despite how drastically things have changed in the past few years, the world will always need food.

Challenges and Opportunities for Canada’s Agriculture and Agri-Food Sector

The agriculture and agri-food sector is an economic powerhouse, supplying approximately 2.3 million jobs and contributing $143.8 billion (7.4%) to Canada’s GDP, and its continued competitiveness and sustainability are vital to a prosperous future for generations to come.

There may be significant challenges to overcome before we can take full advantage of this pivotal economic opportunity, but with the right government investment and supports, we will be able to expand and amplify the sector both domestically and internationally.

Infrastructure

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The growth of the agriculture and agri-food sector relies on having reliable physical and digital infrastructure.

Physical Infrastructure

Expansion of Canada’s agriculture and agri-food industry is largely dependent on our ability to move goods efficiently and reliably to international markets. Unfortunately, as the events of 2023 demonstrated, our trade infrastructure is vulnerable to extreme weather events and labour disruptions.

The infrastructure challenge requires us to be especially forward-thinking and invest in worthy, strategic and long-term trade and transportation infrastructure. Increasing bridge capacity to reduce congestion in high-traffic areas will help relieve some of the pressure. As will government policies that mitigate the negative consequences of labour disruptions at ports.

According to recent data analysis by Scotiabank Economics, “Canada is losing more hours worked to striking workers than it lost at any point during pandemic restrictions.” Replacement workers allow organizations in sectors like trucking, rail, ports, telecom, and air to maintain a basic level of “lights on” continuity that preserves supply chains and critical services for Canadians, including fertilizer deliveries that sustain our food supply — and other nations’. The anti-replacement worker legislation that is being considered by government will provide an encouragement to strike rather than to bargain collectively. In fact, research from the C.D. Howe Institute found that anti-replacement worker legislation increases the frequency and length of strikes and even reduces hourly wages.

Digital Infrastructure

On the digital side, the agriculture and agri-food sector has invested in solutions to address consumer demand and make supply chains more efficient, which has the added benefit of reducing operating costs and improving the sustainability and environmental footprint of the sector. But challenges arise when it comes to unreliable transportation systems and lack of supply chain transparency, making end-to-end digitization of Canada’s national transportation network more important than ever. Government investments in digital infrastructure will permit real-time data sharing in all aspects of the supply chain and increase visibility to prevent reliability issues.

Policy Recommendations

• Commit to long-term investment through a Canada Trade Infrastructure Plan. Canada must build and maintain trade infrastructure that reliably and efficiently transports goods to and from market.
• Abandon anti-replacement worker legislation. Any actions that introduce more volatility and disruption to supply chain processes will only raise costs for Canadians and businesses, and further undermine our trading relationships.
• Address transportation bottlenecks and supply chain vulnerabilities by coordinating strategic and sustained investments in trade-enabling infrastructure, and in digital processes to optimize delivery, particularly for rural and remote communities.

Commercialization

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Canada is the fifth largest exporter of agriculture and agri-food products in the world. Too often, Canada ships its unmodified agricultural commodities abroad to be processed by another country and then sold back to Canada as a new product. By developing our domestic processing and manufacturing capacity, we can make these value-added products in Canada and sell them globally at a higher price than we can our raw commodities, leading to more jobs and economic activity.

Policy Recommendations

• Strengthen investment in agriculture. Partner with businesses on research, product development and the commercialization of the agri-food sector, while developing policy mechanisms and supports to incentivize private-sector research and development investment.
• Encourage value added agricultural processing. Increased capital investment in agricultural processing would help Canada meet global food demand, while promoting value-added economic activity in commodities bound for export.
• Identify agriculture and agri-food as a key economic growth sector and take a whole-of-government approach to implementing policies that promote long-term growth for the industry.

Innovation and Productivity

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Innovation — the significant improvement of a product, system, or process — and new technologies are needed to maintain or increase the productivity of Canada’s agriculture and agri-food sector. But as with many other industries across Canada, the sector is facing ongoing and chronic labour shortages. Businesses are being forced to rethink their operations and consider less labour-intensive ways of running their operations, like automation and robotics, but this high level of technology requires specialized skillsets to fix and operate as well as access to broadband internet, both of which can be a barrier, especially in remote rural regions.

Despite these challenges, the sector is already using innovative techniques and technology to improve productivity, disease resistance and harvests, including:

• Seed technology: Seed is the starting point for agriculture and Canada is known for its innovation in the sector, producing seed that results in higher yield potential, greater disease resistance and improved quality.
• Crop rotation: Crop rotation involves switching out what kind of crops are grown on a plot of land every few years. Having these diversified rotations can help with insect and disease management. Results from two long-term studies on corn in North America showed, “that increasingly diversified rotations improved corn yields across all growing conditions, including during growing seasons with extended droughts.”
• Precision agriculture: A management method that uses different technology, as well as data and analytics, to increase efficiency, production and sustainability.

Further development and application of these and other innovations will provide Canadian producers with a competitive edge.

Policy Recommendations

Policy changes that incentivize private-sector investment by targeting research and development as well as promote collaboration between the agri-food sector and public innovation programs  in Canada will transform our ability to create and retain innovations that can increase the agriculture sector’s competitiveness.

• Prioritize the allocation of spectrum through measures such as increasing the quantity of spectrum available and subsidizing rural deployment. For Canadian businesses to remain globally competitive, they need to be able to access wireless services, use the power of the Internet of Things (IoT) and artificial intelligence, and benefit from deployment of 5G networks.
• Develop mechanisms, policy, and support to incentivize private-sector research and development investment that will increase short-term resilience and long-term competitiveness.
• Incentivize investments in labour-saving technology to address the growing labour shortage in the agri-food sector.

Regulatory

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Although a 2018 Economic Strategy Table on Agri-food called for an agile regulatory regime that is robust, flexible and based in evidence to help clear up the red tape, the issue remains. A regulatory system that is informed by economic realities and driven by data and evidence that prioritize health, safety, and sustainability will greatly improve our ability to get crops where they need to go — domestically and internationally. Another meaningful step would be to ensure that regulators consider the impact on businesses, innovation and growth when developing new rules and systems.

Policy recommendations

• Add an economic and competitiveness mandate for regulators. An economic mandate for regulators would encourage manageable regulations that support economic growth and consider our competitiveness in the global marketplace.
• Ensure regulatory alignment. Government must look to ease the regulatory burden facing Canadian business, and work with industry and our international trading partners to ensure regulatory efficiency and alignment.
• Modernize Canada’s regulatory regime by committing to evidence-based, data-driven regulation and applying an economic lens to all regulatory mandates.

The Future of Agriculture and the Agri-Food Sector

This could be Canada’s moment to realize the full economic potential of our agriculture and agri-food sector and provide for future generations of Canadians as well as our international partners.

To get there, the sector needs help that can only come from the government collaborating with the private sector on solutions to meet the challenges facing the industry today. Solutions that take a holistic approach to policy implementation by including agriculture and agri-food businesses in economic and environmental consultations and programs.