The search for ways to shore up Canada's struggling economy is an increasingly urgent exercise, as the oil sector continues to sputter, non-energy exports stall and the country's labour market shrinks.
Among the proposed drivers to spur economic growth is the agriculture and food-processing sector, an unlikely yet important powerhouse that employs one in eight Canadians. Canada is the fifth-largest agricultural exporter in the world, and the sector is undergoing a technological revolution, from the use of drones and satellites that monitor soil moisture and indicate optimum planting times to smart machinery and transportation networks to make and distribute food products.
Canada's Dominic Barton, chair of the Canadian Minister of Finance's Advisory Council on Economic Growth, thinks that this kind of innovation in agriculture and food – combined with new free-trade agreements with hungry markets such as China – will help Canada find its next niche in the global economy.
The council's first recommendations in October dealt with setting up an infrastructure bank, increasing immigration levels by 50 per cent, and spurring foreign direct investment in Canada.
Mr. Barton, who is global managing partner of McKinsey & Co. in London, says the council is now working on its second, and likely final, wave of recommendations, focused on innovation, skills and particular growth sectors for Canada. He expects they will be released by the end of the year.
What are the major concerns about Canada's growth and productivity that you're trying to address?
What we're most worried about is the long term. If you look out 10 to 20 years, because of demographics and the aging population, we're one of the fastest-aging OECD countries on the planet. We will see our GDP growth rate literally halved, just because we'll have fewer workers in the market. We've enjoyed about a 3.1-per-cent growth rate in the past 50 years; we think that will literally be cut in half. The good news is that we've got a lot of things that we can do to unlock more growth. But if we sit back and do nothing, it would be a pretty ugly picture.
What can we unlock?
There's a range of things we can do. One of the reasons we picked infrastructure is because it is one of the most powerful ways of improving GDP growth and inclusive growth rates. Innovation is another one, because with all of the changes going on in technology, in particular, but also in biotech, it's probably going to be the most rapid source of good service jobs. Canadian universities and researchers are world-class in invention, but we're not as good as we could be in scaling up those inventions into commercial companies. And then we have sectors where we have some inherent strengths and really good niches where we could get much more growth.
What are these sectors and niches?
We're picking one in particular, which is agriculture and food, because it can employ a lot of people, there's a lot of innovation technology around it and huge demand. Also Canada is well-positioned. In health care, we have one of the biggest, most comprehensive databases on health in the world, but we're not leveraging that to figure out what we could do to innovate health-care delivery. There's also natural resources and fintech. There's tourism, where there's 400 million Chinese tourist trips going on a year and we don't capture much of that share. And then there's free-trade agreements. We're very keen on free-trade agreements.
Why are agriculture and agrifood so important?
There's going to be a massive demand for food, for protein, over the next 10 to 20 years. It's also a big employment provider, and we could generate even more employment – and high-skilled employment – because of technology.
What are the big markets for agriculture and agrifood?
We're going to have about 2.4 billion new middle-class consumers in the world in the next 15 years, and they want to live and eat like we do. Of that 2.4 billion people, at least 1.8 billion will be in Asia. China, India and Indonesia, those are the big three. It's urbanization that's driving this, that's why you see a lot of these countries actually buying land in places like Ethiopia, because food security is critical.
How much do you see demand increasing? How can Canada capitalize?
Food demand is going to go up by at least 50 to 70 per cent in the next 30 years. The Canadian brand on food is good – we're well positioned. I'm very excited by that opportunity. Again it's protein, and it's primarily Asia, that's why we need more free-trade agreements there. Australia is doing very well on that front; they have a free-trade agreement with China. That's to our disadvantage. We need to get one.
You also mention that our farming can be more high-tech.
Canada has already done a lot of innovation in agriculture and food. It's a natural area for us. Most people think ag-food is a backward area, an industry that you want to move from. I actually don't think it's that way at all.
How can technological expertise improve agriculture production?
There's precision agriculture, where you use big data, where you know how much water and how much fertilizer per square metre you should put into the ground, to use resources more effectively and efficiently. And genomics researchers in Canada have done good work in developing a variety of soybeans, which normally need more temperate conditions, to grow on the Prairies. With pulse products there have been good innovations in Saskatchewan in particular. With the demand from Asia for protein, this particularly means soy and pulse products. I think we've got a really good base.
What are the challenges ahead for your growth plan?
We're not a big enough country to do everything, so the notion of niches is important. We've got to focus, and by focusing that means you're making choices. A lot of people have their own ideas of what is important; that's where the challenge comes in.
How do we meet that challenge and see results?
It will take a lot of political courage to drive it. It takes deliberate action, it won't just naturally happen. A combination of government and the private sector is needed to push it. It takes muscle, if you will. Otherwise we can't do it.