Huge Canada must boost food production

June 16, 2011

Source: Commodity Online

Canada is the world's second largest country and has the third-largest endowment of arable land per capita in the world, after Australia and Kazakhstan and yet its food production remained inadequate.

Canada is among the very few nations with the capacity to dramatically boost production.

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.

According to Larry Martin, an agricultural economist at the George Morris Centre, an independent think-tank devoted to agricultural policy, " Canada has nine per cent of the renewable fresh water supply in the world also with its huge available arable land and 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.

"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. 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.

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