An Overview of the Canadian Agriculture and Agri-Food System 2015
This 2015 report provides an economic overview of the Canadian agriculture and agri-food system using the most recent available data. It is meant to be a multi-purpose reference document that presents:
- the agriculture and agri-food system in the context of the Canadian economy and international markets; and
- a snapshot of the composition and performance of the agriculture and agri-food system as it evolves in response to challenges, opportunities and market developments.
The report begins with a special section on Food Loss and Waste (FLW) at all stages of the agri-food system. It looks at the agriculture and agri-food system’s relevance to the Canadian economy, as measured by its share of the Canadian gross domestic product (GDP) and number of jobs in Canada.
The report then reviews the sector’s performance internationally, in terms of its share of agriculture and agri-food exports and imports to total world exports and imports. It also reviews the degree and extent of innovation in the agriculture and agri-food sector, which is key to the ability of the sector to address challenges and take advantage of opportunities in the changing domestic and global market.
Next, the report presents a snapshot of each segment of the agriculture and agri-food system: primary agriculture, food processing, consumer and food distribution. The report ends with an overview of government support to agriculture.
The report describes the Canadian agriculture and agri-food system as a modern, complex, integrated, and competitive supply chain of importance to the Canadian economy. It is a dynamic and resilient system that adapts constantly to changing consumer demands, technological advances and globalization.
Special section – food loss and waste in the agri-food system
- About one-third of the global food supply is lost or wasted every year. Food is lost or wasted at all stages of the agri-food system and for many reasons ranging from pest and climate issues at the farm level, to infrastructure challenges in the distribution stage to consumer decisions at the household level.
- Analysis of food loss and waste in Canada, the United States (U.S.), and other developed countries shows that most of the food loss and waste occurs in households and in the food retail and service sectors.
- In Canada, 6 billion kilograms of food was lost or wasted at the household and retail levels, representing 29.4% of the food supply in 2010, with household food loss and waste accounting for 20.3% of this total and retail accounting for the other 9.1%.
Importance of the system to the Canadian economy
- The Canadian agriculture and agri-food system (AAFS) is a complex and integrated supply chain that includes input and service suppliers, primary producers, food and beverage processors, food retailers and wholesalers, and foodservice providers. The activities along this supply chain generate significant economic benefits at both the national and provincial levels.
- In 2013, the AAFS generated $106.9 billion, accounting for 6.7% of Canada’s GDP. Of this, the food retail and wholesale industry accounted for the largest share (1.8%), followed by the food, beverage and tobacco processing industry (1.7%). The AAFS’s GDP has increased annually since 2007, the exception being during the economic recession of 2009.
- Employment in most industries in the AAFS continued on an upward trend. In 2013, the AAFS provided one in eight jobs in Canada, employing over 2.2 million people. The foodservice industry was the largest employer in the AAFS, accounting for 5.3% of all Canadian jobs.
- The performance of the sub-sectors within the agriculture and agri-food system depends on their ability to compete in both domestic and international markets over the long-term.
- Canada was the world’s fifth-largest exporter of agriculture and agri-food products after the European Union (E.U.), the U.S., Brazil, and China in 2013. Canadian export sales grew by 5.5% in 2013 to $46.0 billion, maintaining its 3.5% share of the total value of world agriculture and agri-food exports.
- It is estimated that approximately half of the value of primary agriculture production in Canada is exported, as either primary commodities or processed food and beverage products.
- The U.S. remains Canada’s most important agriculture and agri-food export destination accounting for 50.8% of total Canadian exports. China accounted for 11.2% of Canadian agriculture and agri-food exports and Japan, E.U., and Mexico accounted for 17.0% combined.
- Exports to the U.S. increased by 10.8% in 2013 to $23.4 billion, while exports to non-U.S. markets grew by 6.0% to $22.7 billion. Exports to China, which grew by 84.0% in 2012, continued to climb, by 3.5% in 2013.
- With import sales of $34.3 billion in 2013 – an increase of 6.0% over the previous year – Canada remained the world’s sixth-largest importer, accounting for 2.9% of the total value of world agriculture and agri-food imports. The U.S. accounted for 61.4% of the value of all Canadian agriculture and agri-food imports.
- Public investments in research and development (R&D) in the agriculture and agri-food sector represent a critical source of innovation and productivity growth. These expenditures, of which the majority are incurred by the federal government, are estimated to rise by 5.3% to $643 million in 2013-2014.
- Canada’s public research and development spending in the agriculture and agri-food sector, as a share of gross farm receipts has decreased over the past five years. However it continues to surpass that of the U.S. and Australia.
- Real private sector spending on primary agriculture amounted to $74.2 million in 2013, a decrease from a peak of $102 million in 2008.
- Real private sector R&D expenditures in the food processing sector were estimated to have reached $130.3 million in 2013, representing a gradual decline from its peak of $179.4 million in 2008.
- In general, the proportion of food processing establishments that report product or process innovation is less than the average for manufacturing establishments as a whole. They also generally invested less in the development of new products and processes.
- New and improved goods and processing methods continue to be the most common innovation introduced by food manufacturers in 2009 and 2012.
Components of the agriculture and agri-food system
In response to challenges, opportunities, and changing market conditions, the agriculture and agri-food system continues to transform and restructure itself.
- A record harvest and strong prices in the first half of 2013, contributed to the growth in farm receipts. Cattle receipts have increased for four consecutive years due to strong cattle prices. Strong hog prices contributed to a 5.8% increase in hog receipts in 2013.
- Overall, market receipts increased in value by 155.4% between 2003 and 2013. Market receipts from grains and oilseeds more than tripled during that time period. This accounted for the largest share (40.0%) of the total value of all farm market receipts in 2013. Share of farm receipts from red meats, which was 29.0% in 2003, decreased to 21.0% in 2013.
- Farm level performance, as measured by net cash income and net value added continued to remain strong overall. Net cash income among Canadian farms in 2013 was $12.9 billion – 27.9% above the 2008-2012 average. The net value added in agriculture was $16.2 billion in 2012 – 30.0% higher than the 2007-2011 average.
- Agriculture producers continue to see rising operating costs, with costs increasing by over 40% over the 2003-2013 period. The categories of operating expenses that mostly contributed to the increase in overall expenses over this period were commercial seed (107%), fertilizer and lime (90%), machinery fuel (80%), and custom work (74%).
- In regards to agriculture and the environment, agriculture is responsible for about 8.4% of Canada’s greenhouse gas (GHG) emissions. Over the past 20 years, changes in Canada’s agricultural GHG emissions profile show a relatively stable trend when considering all sources of emissions. Emissions intensity, measured by the amount of GHGs emitted per unit of GDP, however is expected to decrease by 30.6% by 2020.
Food and Beverage Processing
- The food and beverage processing industry is the largest of all manufacturing industries in Canada, accounting for the largest share (16.0%) of the total manufacturing sector’s GDP in 2013. It also accounted for the largest share (16.7%) of jobs in the manufacturing sector.
- The food and beverage processing industry produces goods using both primary and processed products as inputs, about 38% of primary agricultural products produced in Canada is used as raw material inputs by the food processing industry.
- The food and beverage processing industry continues to grow, and the value of its shipments more than doubled between 1992 and 2013 to $98.8 billion. More than half of the total value of food processing shipments is accounted for by the meat, dairy, grains and oil seed industries.
- Canadians spent $189.1 billion on food, beverages and tobacco products in 2013. This represented the second-largest household expenditure category, after shelter.
- Real spending on food and non-alcoholic beverages increased by 2.1% in 2013 partly due to a slight increase in retail food price inflation in Canada.
- The share of household expenditures on food has decreased since 1997 in Canada. In 2012 food accounted for 10.3% and 12.8% of all household expenditures in Canada and the U.S. respectively.
Government Expenditures in Support of the Sector
- Expressed in dollar terms, government expenditures (federal and provincial) in support of the AAFS were estimated to be $6.2 billion in 2013-2014. As a share of the agriculture GDP, government expenditures were estimated to be 31.2% in 2013-2014. It was 34.6% in fiscal year 2012-2013.
- Research and inspection expenditures and program payments make up the largest portion of government expenditures in support of the agriculture and agri-food sector. Program payments have continued to decrease since the 2003-2004 fiscal year, while research and inspection expenditures have increased.
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