Canadian farmers need to continue to focus on efficiencies and increased production of commodities in order to remain competitive within a rising tide of production around the world, according to J.P. Gervais, chief agricultural economist for Farm Credit Canada (FCC).
鈥淥ur long-held reputation as a safe and reliable producer of high-quality food opens the door to existing and new export markets, but competitive pressures are mounting,鈥� Gervais said, in releasing the latest outlooks for the agriculture and agri-food sector. 鈥淭he game is quickly changing and it鈥檚 becoming more and more evident that it鈥檚 mostly about volume and value added.鈥�
Recent years of record-high production have boosted global stocks of many agriculture commodities. But even as the planted acreage of major crops in the United States is expected to be lower than its high in 2012-14, when it averaged almost 257 million acres, improvements in yields allow for continued growth in overall production. That鈥檚 why it鈥檚 important for Canadian agriculture to invest in innovation that will enable continued growth in productivity.
Gervais said increasing productivity doesn鈥檛 necessarily mean Canadian farmers need to expand their operations.
鈥淐anadian producers need to find ways of reducing costs while increasing productivity from their existing operations, whether that means increasing the yield per acre or getting more butterfat from a litre of milk,鈥� he said. 鈥淚nvestments in innovation and technology will go a long way in ensuring Canadian agriculture remains productive, competitive and sustainable.鈥�
Gervais said changing food preferences are also driving investment decisions. For example, milk production in Canada is trending upward, requiring further investment in processing capacity. Canadian consumers also seek healthy and convenient food products, which is expected to trigger more investments in pre-packaged and easy-to-prepare foods.
The food manufacturing sector鈥檚 Gross Domestic Product (GDP) is 5.4 per cent higher than at the same time in 2016.
鈥淭he climate for investment in Canadian food processing is positive, given a Canadian dollar under US$0.80, continued low interest rates and growing demand in the U.S.,鈥� said Gervais, who projects exports of food manufactured products to the U.S. could increase again in 2018, despite the uncertainty surrounding current negotiations of the North American Free Trade Agreement (NAFTA).
He believes this type of investment in Canada鈥檚 agriculture and agri-food sector will help keep the industry competitive and, in many cases, a world leader in agriculture innovation and technology.
鈥淚ncreasing productivity and adding value to agricultural products is the avenue that will grow Canadian farm revenues,鈥� Gervais said.
Outlook reports are available on crops (eastern and western Canada), dairy, cattle and beef, hogs, farm inputs and food processing.
By sharing agriculture economic knowledge and forecasts, FCC provides solid insights and expertise to help those in the business of agriculture achieve their goals. For more information and insights, visit the FCC Ag Economics blog post at www.fcc.ca/AgEconomics.
FCC is Canada鈥檚 leading agriculture lender, with a healthy loan portfolio of more than $33 billion. Our employees are dedicated to the future of Canadian agriculture and its role in feeding an ever-growing world. We provide flexible, competitively priced financing, management software, information and knowledge specifically designed for the agriculture and agri-food industry. Our profits are reinvested back into agriculture and the communities where our customers and employees live and work. Visit fcc.ca or follow us on Facebook, LinkedIn, and on Twitter @FCCagriculture.
