More so than any other country, say agricultural economist Larry Martin and researcher Kate Stiefelmeyer, Canada is equipped – by history, by geography, by aptitude and by infrastructure – “to feed the world.” Agriculture was our founding industry. We have vast tracts of arable land. We have abundant fresh water. We have know-how. We have everything we need to be a global food superpower.
Alas, say Mr. Martin and Ms. Stiefelmeyer, Canadian agriculture is in serious decline. Farm productivity has fallen. The industry’s share of world food markets has dropped. The country’s influence on global trade policy has shrunk. All in all, government farm policy has turned Canadian agriculture into a “backwater” enterprise that drags down the larger Canadian economy. They put the cost of farm subsidies at $3.5-billion a year – much of it paid to part-time farmers who contribute little to the national economy.
So Mr. Martin and Ms. Stiefelmeyer assert in a compelling paper (Canadian Agriculture and Food: A Growing Hunger for Change) that calls on Canadian governments to look to the future, not to the past, in farm policy. Writing from a global perspective, the authors argue that Canada must heed its “moral and economic imperative to do better.” Indeed, they suggest, the world’s ability to feed itself in coming decades depends to a significant degree on an agriculturally ambitious Canada.
First, the world has witnessed, in the past two decades, “the largest migration of people out of poverty in human history.” Second, the world will add another billion people in the next two decades. Third, all of these people – mostly in Africa and Asia – will be richer and better fed than ever. The global demand for food, the authors say, will grow geometrically for the next 40 years.
Mr. Martin and Ms. Stiefelmeyer say Canada is “uniquely positioned” to meet this soaring demand for food. Canada has the third-highest endowment of arable land, per capita, in the world. Australia is first, but with poorer-quality soil; Kazakhstan is second, but without infrastructure. (Canada has 1.2 hectares, per capita, of arable land; the United States, our biggest competitor, has only 0.53 hectares.) Further, Canada has 9 per cent of the world’s fresh water – little of it used for productive purposes.
Countries that will need to import food, the authors say, are – among many others – China (with only 0.11 hectares of arable land per capita); India (with only 0.12 hectares); and South Korea (with only 0.03 hectares). Globally, arable land is in decline – falling from 1.3 hectares per capita in 1965 to 0.7 hectares in 2005. And Canada possesses the highest-quality arable land. (Canada uses only one-fifteenth as much pesticide, per square kilometre of crops, as Japan and South Korea.)
By any standard, in other words, Canada is uniquely, extraordinarily, blessed.
The expansive agricultural resource notwithstanding, Canadian farm productivity has fallen (in relative terms, at least) at a rapid rate. The U.S. recorded annual productivity gains averaging 1.7 per cent from 1997 through 2005; Canada, in comparison, recorded annual gains of only 0.7 per cent. Mr. Martin and Ms. Stiefelmeyer calculate that Canada needs productivity gains equal to American gains “to successfully feed a more affluent (global) population by 2050.”
The primary problem, the authors say, is Canada’s backward-fixated regulatory system. Canadian farmers can get more productive only though more capital investment. In the past decade, however, capital depreciation has exceeded capital investment – “which is tantamount to disinvestment.”
“Canada’s regulatory system is slow, cumbersome and inefficient,” the authors say. “It is an oppressive blanket on innovation. It requires immediate and substantial reform.”
Mr. Martin and Ms. Stiefelmeyer report that Canadian governments, federal and provincial, spend 70 per cent of their farm budgets on “income support” – direct subsidies to farmers. Add the indirect costs of supply management to this equation and the percentage reaches 90 per cent. On average, governments provide farmers with 25 per cent of their gross incomes “year in, year out.” Australia and New Zealand provide farmers with only 10 per cent – and they are doing well in export sales.
Mr. Martin and Ms. Stiefelmeyer’s report is an excellent – even inspiring – piece of work. Anyone who thinks that the Canadian Wheat Board will be the country’s final farm reform should grab a copy of the report off the website of the Macdonald-Laurier Institute, the Ottawa-based think tank that published it.