Gap between export and import of high-value agricultural goods increases

Thursday, April 17, 2014

by MATT MCINTOSH

A recent overview of Canada’s agricultural sector indicates the industry is doing well overall, but highlights a major trade gap between the export and import of primary and high-value agricultural goods, say two agricultural economics experts.

The 2014 Canadian Agriculture and Agri-Food System Overview, released Tuesday, uses data from 2012 – or earlier years when necessary – to calculate the performance and strength of the agriculture industry’s contribution to the Canadian economy. The Agriculture and Agri-Food Canada press release published in conjunction with the official overview notes the farm and food sector displayed a “robust performance” in 2012 and export sales grew by 8.1 per cent to $43.6 billion, with the sector as a whole generating over $103.5 billion, or 6.7 per cent of Canada’s total gross domestic product.

photo: David Sparling

David Sparling, chair of agri-food innovation at Western University’s Ivey School of Business, says the growth in exports is encouraging, particularly since the overview indicates that a sizeable amount of that growth happened in markets outside Canada’s main export market, the United States.

According to the overview, the 8.1 per cent increase in total exports comes from expansions in both the American market and other foreign markets. China, it says, is the second largest market for Canadian agricultural goods as of 2012. In that year, China accounted for 11.7 per cent of the total value of all Canadian agriculture and agri-food exports; in 2011, that number only reached 6.7 per cent.

However, Sparling says that the overview highlights a disparity between primary good exports and the export of processed, high-value goods. More specifically, Sparling says Canada is exporting a huge amount of both raw products and high-value processed food goods, but is still simultaneously importing a substantial amount of the latter. According to the overview, 2012 saw a 5.2 per cent increase in the value of processed products imported into Canada, bringing the total amount to $23.3 billion.

“The trade balance for primary and processed is getting worse,” says Sparling. “We would like to see that balanced out a bit.”

photo: Alfons Weersink

Alfons Weersink, a professor of agri-environmental policy, farm structure, and production economics at the University of Guelph, expresses similar concerns for the disparity between the import and export of high-value agricultural products, but says it is a trending issue that “is likely true for the rest of the economy as well.”

The overview also points out that land prices and land rental rates are increasing, which Sparling says suits the overview’s overall conclusion that primary agriculture –or the part dealing directly with the exchange of raw goods- is doing well.

“It’s pretty natural for land to be more expensive and to charge more to rent land if people are making more money off of it,” he says.

In 2011, says the overview, there were 205,730 farms in Canada, which is a full 10 per cent drop from the number of farms in 2006. The average farm size, however, has continued to increase since the 1941, and now sits at 779 acres.

Weersink says the data on the number and size of farms is not surprising because it continues to follow long-standing trends. However, he points out that a sizeable number of the farms mentioned in the overview had sales of less than $10,000, which he says might skew the overview’s data for both average farm size and the number of farms in Canada.

“People with sales of less than $10,000 are obviously part-time operators,” says Weersink. BF