Storm clouds build over a canola field near Cremona, Alta.Jeff McIntosh/The Canadian Press
Craig Alexander is a contributing columnist for The Globe and Mail. He has served as chief economist at Deloitte Canada, the Conference Board of Canada and Toronto-Dominion Bank.
Canada needs to think more strategically about its agricultural sector, by considering the forces that will shape its future and acting pro-actively to maximize the industry to benefit the country.
Two of these powerful forces are climate change and the fragmentation, as well as the politicalization, of international trade. How Canadian agriculture is positioned and leveraged will determine the extent to which the sector contributes to Canadian and global prosperity.
The world will likely experience higher average temperatures, changes to precipitation patterns and more frequent severe weather conditions, such as floods, droughts and wildfires. The result will be disruptions to food supply around the world. As we experienced during the pandemic, supply disruptions lead to insufficient access to food and dramatically higher food prices, which combined are referred to as creating food insecurity.
Canadian agriculture will need to be more climate-resilient to reduce the risk of shocks to supply. The southern Prairies and Interior B.C. are particularly vulnerable to future droughts or reduced soil moisture, considerations that are important for crop selection to maximize agricultural production. Similarly, many actions can be taken to reduce the likelihood or impact of wildfire on farms, such as creating fire break areas, reducing combustible materials around farm operations buildings and implementing sprinkler systems.
Canada also needs to boost agriculture productivity. From 1991 to 2010, Canadian agriculture posted 2 per cent average total factor productivity growth per annum. Since then, annual productivity growth slowed to around 1.4 per cent between 2011 and 2020 and it is projected to drop to 1.0 per cent by 2030. Reversing this trend will require greater use of digital technologies, mechanization and automation, as well as changing management and farming practices.
Addressing the potential for negative climate risks and boosting productivity can position the industry to benefit from the longer growing seasons and increase in arable land that climate change will bring. A research article contributed by the Food for Thought program at the University of Guelph estimates that land suitable for crop production across Canada could increase by 4.2 million square kilometres because of rising temperatures.
This is important because the world will need more food supply from Canada. Many countries are much more vulnerable to climate-created food shocks. The increase in food insecurity abroad is likely to create significant economic and social risks that could lead to political and social unrest.
The risk of greater food insecurity is taking place at the same time as the fragmentation and politicalization of international trade. Governments no longer believe in the benefits of promoting greater free trade. Global trade as a share of world economic activity has been falling since the financial crisis of 2008 to 2009.
Governments are increasingly thinking about shifting supply chains to be closer to home. Trade tensions between countries or blocks of countries have also increased, such as the friction between the West and China. Protectionism is an increasing threat, as will be seen in the upcoming review of the United States-Mexico-Canada free-trade agreement. And the traditional forums for addressing trade disputes, such as the World Trade Organization, are becoming less effective. These trends are dangerous to Canada because our country relies heavily on foreign trade to generate domestic prosperity.
Canada’s agricultural sector can help address future international-trade risks. We can generate considerable goodwill by expanding while also highlighting the sector’s contribution to reducing food insecurity in other countries. We can speak to the importance of Canadian food during bilateral talks to improve relations or avoid protectionism risks.
Canada is also viewed as a trusted nation compared with the other country that will experience a large increase in arable land because of climate change – Russia. Canada should avoid embracing protectionism and it should remain true to its commitments under the WTO. Leveraging the agricultural sector is about using influence rather than force.
The private sector and the federal and provincial governments must work together to address climate-change risks and to seize opportunities in agriculture. Farmers need to make investments and change traditional business models to boost climate resilience and productivity. Canadian governments must invest in infrastructure, such as expansion of rail and port capacity, and create a regulatory environment that encourages agricultural expansion.
There are also food-security benefits to encouraging Canadians to buy local foods. Canada’s agricultural sector has always been critical to the domestic economy, but its importance could expand as climate change unfolds – if we manage the risks and opportunities effectively.