An Overview of the Canadian Agriculture and Agri-Food System 2013
This 2013 report provides an economic overview of the Canadian agriculture and agri-food system with the latest comprehensive annual data from 2011. It is meant to be a multi-purpose reference document to provide:
- a snapshot of the structure and performance of the system including the changes that are occurring in response to challenges, opportunities and market developments; and
- background data and information to inform public discussions on these challenges and opportunities.
The report describes the Canadian agriculture and agri-food system as a modern, highly complex, integrated, internationally competitive and growing part of the Canadian economy. It is a resilient system, continuously attempting to respond to the challenges and opportunities it faces by restructuring and adapting to changing consumer demands, advancing technology and globalization.
Charts and tables with brief accompanying text are used to summarize information and to provide base indicators of structure and performance.
The 2013 report begins with a Special Feature section that provides data and information from Statistics Canada's 2011 Census of Agriculture, describing the primary agriculture industry in Canada.
A second Special Feature section provides data and information about the global context for agriculture in 2011.
The report then provides a general picture of the economic contribution of the system to the Canadian economy, as measured by its share of Gross Domestic Product (GDP) and employment. This is followed by a snapshot of each segment of the system, starting downstream from consumers and food retail/wholesaling, and heading upstream to food and beverage processing, primary agriculture and farm input and service suppliers. The report concludes with a review of government expenditures in support of agriculture and agri-food, including international comparisons of government measures of support.
Importance of the System to the Canadian Economy
- The agriculture and agri-food system encompasses several industries including the farm input and service supplier industries, primary agriculture, food and beverage processing, food distribution, retail, wholesale and foodservice industries.
- It continues to play an important role in federal and provincial economies, where it makes a significant contribution to Gross Domestic Product (GDP) and employment, directly providing one in eight jobs, employing 2.1 million people and accounting for 8.0% of total GDP.
- In 2011, GDP in the agriculture and agri-food system regained its value achieved prior to the economic recession of 2009.
- While primary agriculture accounts for a small share of the total economy (1.7% of GDP), it is at the heart of the agriculture and agri-food system and has grown on average by 1.4% per year since 1997.
- The agriculture and agri-food sector continues to be internationally focused, with the value of Canada's agriculture and agri-food trade now growing, after slowing during the recession.
- The composition of trade has also changed since the late 1990s with increasing exports of higher value-added processed goods that meet changing global demands. However, recent export growth has been led by increased exports of primary agriculture products.
- At the same time, the emergence of major growth economies such as China and Brazil, have added to the challenges and opportunities of exporting to these export destinations while competing in global markets.
- Export opportunities are critical for the growth of the Canadian agriculture and agri-food sector. The report shows Canada as the sixth-largest exporter and sixth-largest importer of agriculture and agri-food products in the world [if the EU is treated as a bloc], with exports and imports valued at $40.3 billion and $31.0 billion, respectively.
- The competitiveness of the agriculture and agri-food sector depends on its ability to remain profitable and viable over the long term in relation to its competitors in relevant markets. Long-run sales growth in domestic and international markets shows that Canada remained relatively competitive in markets for agriculture and agri-food products in 2011.
Components of the Agriculture and Agri-Food System
- Changing consumer and societal demands are influencing changes throughout the whole agriculture and agri-food system. Consumers are demanding more variety, more convenience, more environmentally-friendly and healthier food choices, as well as food that addresses their values, e.g. organic and halal products, accompanied by proper assurances of quality and safety.
- In 2011, Canadian consumers spent $181 billion on food, beverages and tobacco from stores and restaurants. Food, beverages and tobacco account for 18.4% of total personal spending. Relative to other countries, Canadians enjoy some of the lowest food costs in the world, with spending on food and non-alcoholic beverages from stores accounting for just under 10% of personal household expenditures.
- Retail food prices rose by more than the overall rate of inflation, increasing by 3.7% compared to the 2.9% rate for the overall economy.
Food and Beverage Processing
- The food and beverage processing industry transforms primary production, and as such, is important for the agriculture industry, since 34% of agricultural production was used as raw material inputs directly by the food processing industry.
- Food and beverage processing, which is one of the top manufacturing industries in Canada, experienced growth in employment and shipments in 2011. However, a higher Canada-U.S. exchange rate and rising input costs led to competitive challenges for the sector, which will need to be addressed by increasing investments and innovation.
- According to the latest Census of Agriculture, family farms continue to evolve and restructure in response to changing market conditions so the number of farms continues to decline, but also continues to get larger. There were a reported 205,730 farms in Canada, down 10% from 2006, with the average farm size growing to 779 acres.
- The mix of crops and livestock production is evolving, reflecting changes in the types of products consumers are demanding and changing market prices and conditions. Non-durum wheat is no longer king – it has been overtaken by canola; and soybean area also increased between 2006 and 2011. Livestock numbers are down significantly from previous censuses.
- Farm performance, as measured by farm income and net worth, continued to remain strong overall. Net cash income, after adjusting for inflation, was up 17% over that of 2010, as farm cash receipts grew more than net operating expenses. Market receipts were boosted by higher grain and oilseed prices and red meat prices. Expenses were up in 2011 due to higher fuel, feed, fertilizer and seed prices.
- Farm net worth continues to grow in the face of higher asset values, particularly land values, and record low interest rates which helped keep farm debt servicing costs down. Farm debt to asset ratios continued to fall to historically low levels.
- Young farmer enterprises (YFEs) which are managed solely by young operators between the ages of 18 and 39 years, while small in number, are important for the future of the sector. YFEs accounted for 7.5% of Canadian farms in 2010, but earned more from both farm and non-farm sources compared to older farm enterprises.
Government Expenditures in Support of the Sector
- Total government (federal and provincial) support to the agriculture and agri-food sector is estimated to have increased slightly to $7.5 billion in 2011-12 from 2010-11; this represented 26.7% of agriculture GDP.
- Program payments continue to account for the largest portion of both federal and provincial government expenditures in support of the sector in 2011-12 at 36%, followed by spending on research and inspection at 30%.
- Government support to the sector varies across provinces. On the basis of government support as a percentage of agriculture and agri-food GDP, farmers in Manitoba, Quebec, Nova Scotia, Prince Edward Island and Newfoundland and Labrador received the most support. Federal support accounted for a larger share in B.C., Saskatchewan, Manitoba and New Brunswick.
- Government spending in support of public R&D in agriculture and agri-food is important for the future productivity growth and competitiveness of the sector. This spending has been increasing over the past four years, and is expected to reach $561 million in the 2011-12 fiscal year.
- Agricultural policies in Canada and other countries have evolved over time. Some countries have made major reforms to their agricultural policies, leading to reductions in levels of support and modifications to the types of support provided.
- Canada's Producer Support Estimate (PSE) for all commodities was estimated at 14% of gross farm receipts in 2011, compared to 8% for the U.S. and 18% for the EU. In 2011, the PSE declined for the main OECD countries mainly because of higher gross farm receipts and reduced market price support due to higher world dairy prices.
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