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Ag sector growth will take investments in skills, tech now: RBC

Already capital-intensive agriculture will require more capital soon

One of Canada’s big six banks bets the agriculture sector’s gross domestic product could rise by nearly 60 per cent over the next decade if it were to have enough people, capital and access to new technology where ag lives.

A report released by RBC on Tuesday titled “Farmer 4.0” estimates Canadian ag GDP could reach $51 billion by 2030, compared to $32 billion today “if the right investments in people and technology are made.”

“We believe Canada can once again be an agriculture superpower, and do it in a way that cuts greenhouse gas emissions, and supports thousands of communities that still help to define our country,” RBC senior vice-president John Stackhouse said in a release.

Before it can get there, the report noted, Canada is up against a “skills and labour crisis” in the ag sector, projecting a domestic shortage of 123,000 workers within a decade.

And by 2025, the report added, a quarter of Canada’s farmers will be 65 or older. Over the next decade 37 per cent of the ag workforce will be set to retire and Canadian youth “are not looking to replace them, with 600 fewer young people entering the sector every year.”

Canada’s share of global agriculture exports has also fallen, from 6.3 per cent in 2000 to 4.9 per cent in 2005 and 3.9 per cent today, “as developing countries like China, India, Indonesia and Brazil produce and sell more to the world,” the report said.

Also, it said, Canada imports more farm machinery than it makes, and its share of global ag investment — while still in the top five — is “only 3.4 per cent, behind that of India and Brazil.”

“We are growing our exports; we are growing our output. The problem is the rest of the world is doing it faster,” RBC’s senior manager of research, Andrew Schrumm, said on Thursday’s episode of Glacier FarmMedia’s Between The Rows podcast.

The future farmer, or Farmer 4.0, “will need to focus on strategy and systems, leaving past tasks to a new generation of smart machines,” the report said.

By the end of the 2020s, the report said, nearly two-thirds of job shortages in agriculture will require manually-intensive, lower-skilled tasks, for which the “immediate” solution will be to continue to lean on Canada’s Temporary Foreign Worker program, which could supply 27 per cent of Canada’s ag work force by 2030, up from 17 per cent today.

However, RBC said, “the eventual solution for many of these roles will be automation.”

Over 80 per cent of producers under the age of 40 report using technology, compared to 57 per cent for those over 60, the report added.

The report sees yet another agricultural revolution in progress, “where agricultural technology is shaping how and who works on the farm,” Schrumm said.

And Canadian farms, while already capital-intensive, will need yet more capital in coming years. The ag sector in Canada in 2016 held $510 billion in capital assets, over 80 per cent of which was in land and buildings.

For all that, the report said, farmers’ access to credit is “surprisingly low.” Canadian agriculture has a 1.9 per cent share of commercial lending nationwide, down from the global average of 2.9 per cent and well below countries such as New Zealand at 14.1 per cent.

And for all their “substantial capital wealth,” high operating and asset-servicing costs weigh on Canadian farms’ profitability, as expenses alone eat up about 83 cents of every dollar of sales, dragging on producers’ ability to invest in technologies or skills.

Overall, the report said, if Canada fails to “transform the way we produce food, and market it globally,” the ag sector will likely grow by only 1.8 per cent per year on its “current path of declining productivity,” bringing its output to around $40 billion in 2030 from $32 billion today.

“But if we accelerate the adoption of innovative technologies and embrace an ambitious skills agenda, our research indicates Canada’s agricultural productivity can get back in line with the recent 10-year average of three per cent. The payoff: another $11 billion of output, bringing agricultural GDP to $51 billion in 2030.”

The Farmer 4.0 report, Schrumm said, is part of a larger RBC study titled “Humans Wanted,” which explores how Canada’s workforce will need new skills “as technology permeates every task we take on.

“We think it’s a really interesting case study for the rest of the country to understand what’s happening in agriculture.”

Among its recommendations, the RBC report calls for:

  • the federal government to spearhead a new “national skills strategy” for the sector, together with employers, workers, educators and industry groups, to plan for its future labour needs;
  • a “bold” industry-led campaign to attract and retain more youth, women, Indigenous people and new Canadians in the sector;
  • agriculture to be incorporated as a “key sector” in Canada’s learning strategy, increasing its exposure among “non-agriculture” students;
  • major research and development initiatives, such as the Protein Supercluster, to be linked to education and skills development;
  • reduced barriers to high-skilled immigration to agriculture and a dedicated service channel under the Global Skills Strategy;
  • accelerated development of governance standards to increase access to data and insights on food production; and
  • high-speed Internet for Canada’s remaining unserved 1.5 million rural and remote households within 10 years.

Education and skills development are in demand, the report notes, as 47.2 per cent of agriculture workers under age 40 have received a post-secondary or CEGEP education. Those with “only secondary schooling or apprenticeships” are decreasing in number.

Enrolment in post-secondary agriculture programs has seen a 29 per cent increase over the past decade, the report added, compared to a 21 per cent growth rate across all programs.

Aspects of Canada’s approach to ag skills development are “already groundbreaking,” the report said, such as the knowledge and “practical experiential learning” to which 30,000 students in post-secondary ag programs are exposed today.

It noted six Canadian universities (UBC, Guelph, McGill, Alberta, Saskatchewan and Toronto) today are in the top 100 agriculture and forestry programs globally, according to QS World University Rankings. — Glacier FarmMedia Network

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