In writing a bit about food production for BizVoice, it seems there is one daunting, unavoidable fact: With China and other Asian countries expanding their palettes to include dairy products, the pressure will be on Western food producers to raise the output in the coming years. While my talks with Hoosier producers indicated their eagerness to step up, Dan Gardner, a columnist for the Ottawa Citizen, argues Canada will have a much tougher time doing so:
With rare exceptions, discussions of food policy in Canada are limited to the joys of eating organic and how hard-pressed farmers need more help from the government.
What you never hear is this: As a result of rising population and wealth, global demand for food is soaring and the world faces a food crisis unlike anything seen since the 1970s if food production does not grow rapidly. Canada is among the very few nations with the capacity to dramatically boost production. But we’re not. In fact, Canadian agriculture is stagnant. And politicians will not even discuss how we can change that.
“There is a disconnect,” says Larry Martin, an agricultural economist at the George Morris Centre, an independent think tank devoted to agricultural policy.
“Canada has the third-largest endowment of arable land per capita in the world, after Australia and Kazakhstan,” notes Martin. “We have, depending on the set of numbers you look at, nine per cent of the renewable fresh water supply in the world.” Put those two facts together, add one of the greatest commodity booms in history, and money should be pouring into Canadian food production.
But Martin found something startling when he compared the ratio of investment in agriculture with the depreciation of existing assets. Over the last decade, as China boomed and food prices soared, there was no rush to invest. “The ratio in Canada in eight of the last 10 years is less than one. So there’s less new investment coming into the food industry than there is depreciation.”
In the United States, by comparison, the worst year in the last 10 saw 40 per cent more investment than depreciation.
“It’s just astonishing when you see these numbers. We think of ourselves as a great wheat exporter but our share of the wheat market is declining. During the ’90s and early 2000s, we had between 20 and 25 per cent market share and it’s gone down steadily to 15 in the last few years.”
The causes of the stagnation are many, Martin says. A big one is a regulatory system that stifles innovation. Martin recalls testifying at a parliamentary committee alongside a wheat breeder from the University of Saskatchewan. “He went through a whole list of wheat varieties that he came up with that are much higher yielding than the wheat varieties in Canada. He couldn’t get them registered in Canada but they got registered in Montana and we now have to compete with them.”
Then there’s “supply management,” the 1970s-era policy which effectively turned dairy and poultry production into an industry-controlled cartel protected by import tariffs. It’s good for existing dairy and poultry producers because it keeps prices high and stable. And it has made the lucky people with production quotas a lot of money: the quota for a single dairy cow can go for $30,000 and estimates of the total value of production quotas range between $30 billion and $50 billion.