Why agriculture, not AI, will secure Canada's place in the post-pandemic world order
JUNE 7,2021
Canada could yet breed a stable of unicorns that shows the wild success of Shopify Inc. isn’t a fluke, but a smart bettor wouldn’t put money on it. There’s too much risk, history argues against it and the landscape is already dominated by better players. It would be like a wager on the Toronto Maple Leafs getting past the first round of the Stanley Cup playoffs (smirk).
Canada could yet breed a stable of unicorns that shows the wild success of Shopify Inc. isn’t a fluke, but a smart bettor wouldn’t put money on it. There’s too much risk, history argues against it and the landscape is already dominated by better players. It would be like a wager on the Toronto Maple Leafs getting past the first round of the Stanley Cup playoffs (smirk).
© Provided by Financial Post Agriculture is perhaps the one industry in which Canada will have obvious comparative advantages in the future.
But if not in digital technology, where might Canada make a mark in a post-pandemic world full of angst over the climate and the ability of the United States and China to get along? Answer: Food. Artificial intelligence gets all the press, but agriculture holds more promise, since it is perhaps the one industry in which Canada will have obvious comparative advantages in the future.
For one thing, Canada’s growing season will get longer as climate change makes agriculture in some parts of the world impossible. Our reputation for being nice might finally become an advantage in global business, because who buys dinner from someone they distrust?
Becoming one of the world’s primary sources of food might even be enough to give us a say on how the world is run. China controls about nine per cent of the world’s arable land, but has to feed about 20 per cent of the population. It is going to need some help and it might have to take seriously those countries responsible for an outsized share of the world’s nutrition.
Food is the new oil, even if most of the world — including, remarkably, Canada — hasn’t realized it yet.
“Canada’s agri-food system has a significant comparative advantage, but it is not being leveraged to maximize outcomes,” a report last month by the Canadian Agri-Food Policy Institute (CAPI), an Ottawa-based research group, concluded . “Strategies need to be developed to leverage the assets the agri-food system has today and the advantages it will have in 20-30 years.”
Christopher Barrett, an agricultural economist at Cornell University in Ithaca, N.Y., offered a similar assessment of Canada on May 11 at a virtual conference hosted by CAPI. He was enthusiastic about the country’s potential as an agri-food power, but observed it comes up short, in part, because it has been content to grow raw ingredients and ship them elsewhere for processing, which is where most of the value is created. It’s like choosing to be poor.
“Without food security, you don’t have anything,” Ted Bilyea, a former Maple Leaf Foods Inc. executive and CAPI’s chief strategy officer, said in an interview. “The Canadian government needs to be more strategic. No one wants to look at agriculture like a system.”
Strategic thinking means breaking down silos. Multiple cabinet ministers should be involved, not just the agriculture minister. The various farm lobbies need to get over their jealousies and try harder to work together. The same applies to the processors, grocers and transportation companies. Universities and colleges must be present, because research and development is the engine of innovation.
The effort might be anchored on the goal of neutralizing carbon pollution. Agriculture is responsible for about 10 per cent of global emissions, but Canada’s farmers and processors are greener than many of their peers, since they account for about eight per cent of Canadian emissions, according to Bilyea. That suggests they could be part of the solution to climate change, giving the industry a comparative advantage as the world’s biggest economies strive to meet net-zero goals.
Of course, the various agriculture ministers, farmers and processors would be unable to take full advantage of that opportunity without help. Importantly, they need the support of a trade minister who backs open commerce, not tit-for-tat protectionism. If the connection to the environment isn’t obvious, consider what would happen if a trade war between China and the G7 powers led the former to purchase all its grain from Brazil, a country that has had little difficulty razing the Amazon rainforest to make room for more farmland. Global commodity markets stuffed with Canadian cereals are good for the environment.
Farmers would need to be at the cutting edge of innovation, so they would need easy access to the newest research and technology. That means governments should reinvest in extension services that were decimated by the deep budget cuts of the 1990s. The final piece would be figuring out why Canada has created so few globally significant food companies, because, ultimately, it is the processors that generate most of the value and wield much of the clout.
“Processing gives you leverage,” Bilyea said.
But if not in digital technology, where might Canada make a mark in a post-pandemic world full of angst over the climate and the ability of the United States and China to get along? Answer: Food. Artificial intelligence gets all the press, but agriculture holds more promise, since it is perhaps the one industry in which Canada will have obvious comparative advantages in the future.
For one thing, Canada’s growing season will get longer as climate change makes agriculture in some parts of the world impossible. Our reputation for being nice might finally become an advantage in global business, because who buys dinner from someone they distrust?
Becoming one of the world’s primary sources of food might even be enough to give us a say on how the world is run. China controls about nine per cent of the world’s arable land, but has to feed about 20 per cent of the population. It is going to need some help and it might have to take seriously those countries responsible for an outsized share of the world’s nutrition.
Food is the new oil, even if most of the world — including, remarkably, Canada — hasn’t realized it yet.
“Canada’s agri-food system has a significant comparative advantage, but it is not being leveraged to maximize outcomes,” a report last month by the Canadian Agri-Food Policy Institute (CAPI), an Ottawa-based research group, concluded . “Strategies need to be developed to leverage the assets the agri-food system has today and the advantages it will have in 20-30 years.”
Christopher Barrett, an agricultural economist at Cornell University in Ithaca, N.Y., offered a similar assessment of Canada on May 11 at a virtual conference hosted by CAPI. He was enthusiastic about the country’s potential as an agri-food power, but observed it comes up short, in part, because it has been content to grow raw ingredients and ship them elsewhere for processing, which is where most of the value is created. It’s like choosing to be poor.
“Without food security, you don’t have anything,” Ted Bilyea, a former Maple Leaf Foods Inc. executive and CAPI’s chief strategy officer, said in an interview. “The Canadian government needs to be more strategic. No one wants to look at agriculture like a system.”
Strategic thinking means breaking down silos. Multiple cabinet ministers should be involved, not just the agriculture minister. The various farm lobbies need to get over their jealousies and try harder to work together. The same applies to the processors, grocers and transportation companies. Universities and colleges must be present, because research and development is the engine of innovation.
The effort might be anchored on the goal of neutralizing carbon pollution. Agriculture is responsible for about 10 per cent of global emissions, but Canada’s farmers and processors are greener than many of their peers, since they account for about eight per cent of Canadian emissions, according to Bilyea. That suggests they could be part of the solution to climate change, giving the industry a comparative advantage as the world’s biggest economies strive to meet net-zero goals.
Of course, the various agriculture ministers, farmers and processors would be unable to take full advantage of that opportunity without help. Importantly, they need the support of a trade minister who backs open commerce, not tit-for-tat protectionism. If the connection to the environment isn’t obvious, consider what would happen if a trade war between China and the G7 powers led the former to purchase all its grain from Brazil, a country that has had little difficulty razing the Amazon rainforest to make room for more farmland. Global commodity markets stuffed with Canadian cereals are good for the environment.
Farmers would need to be at the cutting edge of innovation, so they would need easy access to the newest research and technology. That means governments should reinvest in extension services that were decimated by the deep budget cuts of the 1990s. The final piece would be figuring out why Canada has created so few globally significant food companies, because, ultimately, it is the processors that generate most of the value and wield much of the clout.
“Processing gives you leverage,” Bilyea said.
It all makes so much sense, and yet there is little evidence the agricultural establishment is even close to getting its act together. Consider the dairy industry. It suffered consecutive blows in recent years, as the federal government was forced to make space for more dairy imports to gain admittance to important trade agreements with the European Union and 10 Asian nations, and to keep former U.S. president Donald Trump from wrecking the North American Free Trade Agreement.
The beating appeared to persuade the public servants, lobbyists and politicians who set the parameters for Canada’s highly regulated dairy industry that the time had come to take a hard look at the system. Lawrence MacAulay, who was agriculture minister when the North American trade pact was signed, promised at the time to set up a “working group” that would “chart a path forward to help the dairy sector innovate and remain an important source of jobs and growth for future generations.” The group was put together, but, more than two years later, “no recommendations have been made,” an Agriculture Canada spokesperson said by email.
Participants blame circumstances. Pierre Lampron, president of the Dairy Farmers of Canada, said talks were first interrupted by the 2019 election, and then by the pandemic. He said the delays haven’t stopped his group from coming up with a “blueprint” of its own, and he hopes that work will accelerate the process once the group resumes meeting. “We have come to acknowledge that these processes sometimes require patience,” said Mathieu Frigon, president of the Dairy Processors Association of Canada.
Hopefully, patience doesn’t lead to more inertia. Canada’s agriculture industry has been handed a rare opportunity. We will all be better off if seizes it.
• Email: kcarmichael@postmedia.com | Twitter: CarmichaelKevin
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