An Overview of the Canadian Agriculture and Agri-Food System 2011
This 2011 report provides an economic overview of the Canadian agriculture and agri-food system.
It is meant to be a multi-purpose reference document to provide:
- an introduction to the agriculture and agri-food system;
- a snapshot of structural changes that are occurring throughout the system in response to various factors; and
- background data and information to inform public discussions on challenges and opportunities facing the Canadian agriculture and agri-food system.
Charts and tables with brief accompanying texts are used to summarize information and to provide base performance indicators.
The 2011 report begins with a special feature that provides a description of young farmers in Canada including their numbers by farm size, province and farm type and how they are performing relative to other farming age groups. Young Farmer Enterprises (YFEs), at 8% of farms performed better than other farms. This is important, given that Canada's future capacity to produce food for the world, as well as contribute to a vibrant agriculture and agri-food system, will depend on the number and skill set of these young farmers today.
The publication continues by reviewing each segment of the system, starting downstream with consumers to food distribution, and heading upstream to food and beverage processing, primary agriculture and input suppliers. It also contains a section that considers the natural resources available in Canada and the environmental impacts of agriculture. The report concludes with a review of government expenditures in support of agriculture, including international comparisons of government measures of support.
It 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, responding to the challenges and opportunities it faces by restructuring and adapting to changing consumer demands, advancing technology, North American integration and globalization.
Young Farmer Enterprises (YFEs)
- The Special Feature section this year focusses on Young Farmer Enterprises. Close to 8% of farms are YFEs and they performed better than other farms in Canada. More of them are in the medium to very large farm categories. They are well distributed across farm types, with slightly more operating hog, poultry and egg, and dairy farms, partly dispensing the myth that barriers to entry in the poultry and egg and dairy industries prevent young farmers from entering.
- In terms of financial performance, most YFEs, by farm type and size, earned higher gross revenues from their farm assets and had relatively higher profit margins than did other farms. They also reported higher farm employment income than other farms but ultimately earned lower total family income, due to the smaller amounts of investment and pension income compared to other farms.
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, making a significant contribution to Gross Domestic Product (GDP) and employment. In 2009, it directly provided one in eight jobs, employing two million people and accounted for 8.2% of total GDP.
- 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. Any changes in commodity markets can have impacts on the performance of the primary agriculture industry and the whole supply chain.
- The performance of the agriculture and agri-food system has been heavily influenced by developments over the past two years, which saw crude oil and commodity prices rise sharply to record levels in 2008, followed by price declines in 2009 in the wake of the serious global financial crisis and the subsequent recession, and record crops.
- This increased volatility in commodity markets and exchange rates has added an element of heightened uncertainty associated with marketing agriculture and agri-food products in Canada and around the world.
- This is particularly the case since the agriculture and agri-food sector has become increasingly internationally focussed over the past 15 years. Canada's share of world agriculture and agri-food trade has increased in response to trade liberalization and global economic growth. The composition of trade has also changed with increasing exports of higher value-added processed goods that meet changing global demands.
- At the same time, the emergence of major competitors in growth economies such as China and Brazil has added to the challenges and opportunities of competing in global markets.
- Export opportunities are critical for the growth of most Canadian agriculture and agri-food industries. In 2009, Canada was the fourth-largest exporter and sixth-largest importer of agriculture and agri-food products in the world, with exports and imports valued at $35.2 billion and $27.9 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 for relevant markets. Long-run sales growth in domestic and international markets shows that Canada has remained relatively competitive in markets for agriculture and agri-food products in 2009.
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.
- Canadians enjoy some of the lowest food costs in the world, with food from stores accounting for almost 10% of personal household expenditures in recent years.
- The food and beverage processing industry transforms primary production, and was the most important manufacturing industry in Canada in 2009. It is important for the agriculture industry, since 42% of agricultural production is used as raw material inputs by the food processing industry.
- Food and beverage processing experienced growth in 2009 leading to higher GDP, but higher and volatile exchange rates are forcing the sector to adjust their business strategies.
- In response to challenges and changing market conditions, the primary agriculture industry has gone through considerable transformation and continues to restructure towards fewer, larger farms. There are also an increasing number of farms diversifying production, producing niche products such as organics, adopting environmentally-friendly production methods and producing non-traditional products such as biogas and bioproducts.
- Canadian farms differ by size, scale, farm type and typology, while farm operators differ in their management skills and business strategies. Differences in performance between farms can be explained by this diversity. Some farm families rely more on off-farm income to help them manage uncertainty due to production and marketing risk, and others diversify production.
- Real gross output in Canadian agriculture grew more than in the United States over the period 1961 to 2005.
- Input suppliers and service providers also perform important functions in the agriculture and agri-food system. In 2009, producers spent over $35.3 billion in operating expenses, with commercial feed constituting the largest component. Recent decreases in the costs of fuel, fertilizer and pesticides eliminated some of the cost pressures on farmers in 2009.
Government Expenditures in Support of the Sector
- Total government (federal and provincial) support to the agriculture and agri-food sector increased slightly from 2008-2009 to reach an estimated $8.4 billion in 2009-2010, or 34% of total sector GDP.
- Program payments continue to account for the largest portion of both federal and provincial government expenditures in support of the sector in 2009-2010, followed by spending on research and inspection.
- 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 Newfoundland and Labrador, Quebec, Nova Scotia and Manitoba received the most support.
- Government spending in support of public R&D in agriculture and agri-food is important for the innovation and competitiveness of the sector and has been increasing over the past few years.
- 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 20% in 2009, compared to 10% for the U.S. and 24% for the EU. In 2009, the PSE declined for the main OECD countries mainly because of higher gross farm receipts and reduced market price support due to higher world commodity prices.
Publication: 11279E - ISSN: 1708-4164 - ISBN: 978-1-100-17171-5 -
Catalogue: A38-1/1-2010E-PDF - Project: 10-040-r
To request a copy of the complete publication, please contact:
Departmental Publications Service
Publications dating back to 2003 are also available.