Betting The Farm on Innovation

Disruption has reached the family farm. Microsoft is experimenting with “precision agriculture” to help small farmers cost-effectively manage water and other inputs. Monsanto, meanwhile, wants to be the Amazon of farming with its digital-farming platform. The innovations are part of a global race to feed a world population that’s expected to reach almost 10 billion by 2050.

For Canada, the stakes are high. The agricultural and agri-food sector accounts for 6.7% of our GDP. And our agri-food and seafood exports topped C$60 billion last year. But other countries (Australia, the Netherlands), have deep ambitions to be global ag powerhouses, and are making significant investments in infrastructure and agri-food R&D to get there.

We went to two of Canada’s key agri-food hubs – Saskatchewan and southwestern Ontario – to explore ways in which Canada can respond to the challenges, and the opportunities, that lie ahead. Here are some takeaways:

Canada’s got a strong start in the agricultural innovation race. We developed canola back in the 1970s. We’ve got top research institutions – Guelph’s Food Institute, the University of Saskatchewan – focused on advanced farming techniques and food safety. And farmers are practicing their own innovation – experimenting with new crops, or using social media to share information. So we’re well positioned to lead the way. Take Saskatchewan, which has 44% of Canada’s cultivated farmland. Once dubbed the Breadbasket of the World, it’s now much more than that: a major global producer of grains, pulses and canola; and an agribusiness and fertilizer powerhouse. The province has invested heavily in ag research; it hosts a bioscience cluster, and has formed partnerships with countries like Israel to tackle food security challenges.

Australia – which has a A$50 billion national infrastructure program – is investing in an inland rail link to get its agricultural products to market faster. Canada’s rail duopoly, meanwhile, has occasionally hampered farmers. Back in 2014, for instance, farmers vying with oil producers couldn’t get enough space on trains to ship a bumper crop of oats, sending oat-futures soaring. Better transportation solutions would help. So would better connectivity. Inadequate broadband service to many farms inhibits big-data analysis and resource optimization. That’s a problem, since farmers increasingly rely on sophisticated analysis of input and production data to boost yields.

Think of the food scares that have grabbed headlines: the tainted-milk-powder scandal in China, or the E. coli outbreak at the Chipotle restaurant chain in the U.S. Scandals like those have led to the growth of the organic food sector, and harsh scrutiny of the GMO industry. Canada, though, has a reputation for food quality, safety and reliability. How can we leverage that? One option: creating a “Canadian food seal” that vouches for 5-to-10 top-of-mind attributes such as traceability, nutritional value and bio safety.

While Canada’s a major food producer, it imports more processed food than it exports. Blame Nafta, or the economics of food, which make it cheaper to export Canadian durum wheat to be turned into pasta elsewhere. How can Canada become a more critical part of the food value chain? More infrastructure would help, as would brand recognition. But the industry says it needs support in developing and testing products. Value-added isn’t just nice to have: turning wheat into cakes and live cattle into burgers generates wealth. In western Canada, it amounts to a missed opportunity – only 40% of its agricultural products are processed and sold there.

Or is it? Carbon pricing is coming to Canada. It will raise the already-significant costs of planting and harvesting, and could have big implications for food exporters. The higher cost of carbon may prod some farmers to grow less carbon-intensive crops, such as pulses. Saskatchewan’s already doing that. But the focus on carbon may also be a boon to farmers. They’ve got the space to erect solar- and wind-power facilities, meaning they could potentially benefit from cleantech initiatives.

And the next. Canada’s farmers are getting older – in 2011, more than half of Canadian farms had operators over the age of 55. Succession issues are a big deal. That means making it easier for younger farmers to get into the business. It’s not easy – land prices in some regions have soared. And given farming’s capital-intensive nature, financing is an obstacle. But fostering a more dynamic agricultural sector would likely keep more farms in the family.

Sources:

Agriculture and Agri-Food Canada – Canadian Agri-Food and Seafood Exports by Product (by Value)

Agriculture and Agri-Food Canada – An Overview of the Canadian Agriculture and Agri-Food System 2015

The Wall Street Journal – Oats Stuck in Canada Clog the Market

Alberta Farmer Express – It’s a shame that Canada imports more food products than it exports

Global News – Number of farmers is shrinking, while avg age is climbing

The Economist – TV dinners

Saskatchewan Research Council – Growing the Future for Biotech in Saskatchewan

Innovation Saskatchewan – Saskatchewan and Israel Come Together to Create Technology Solutions for Global Food Challenges

Business Insider Australia – The government has introduced a $50 billion infrastructure plan

Carolyn King researches and writes the Thought Leadership team’s daily news feed. Before joining RBC, she spent two decades as a business journalist in Toronto, most recently serving as The Wall Street Journal’s deputy bureau chief for Canada.

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