David Reid drives a seeding rig as he plants a canola crop on the family's farm near Cremona, Alta., on May 16, 2023.Jeff McIntosh/The Canadian Press
John Stackhouse is senior vice-president in Royal Bank of Canada’s Office of the CEO. Lisa Ashton is RBC’s agriculture policy lead.
Drive around Toronto Pearson Airport and you’ll see one of Canada’s quiet economic marvels in the form of hundreds of food producers and manufacturers preparing muffins, croissants and boxed salads to ship that day to the United States. Or head east to Nova Scotia and see lobster trucks destined for Maine. Or west to the Prairies to see trainloads of canola, wheat and potash rolling south.
It’s all part of the great North American food rush – and the decades-long transformation of Canada’s agriculture and food-production sectors, which have been at the forefront of the continent’s economic integration.
Thanks to advances in technology and trade, as well as processing capacity, Canadian exports to the U.S. have grown fourfold in one generation and now supply 20 per cent of America’s agri-food needs. Today, we are to America’s food chain what we’ve long been to autos and steel, with even more economic value.
But now, the threat of Trump tariffs has put that bumper crop of success on notice and given Canada a wake-up call to diversify our global agri-food trade and once again put food and biofuel production at the centre of our economic ambitions.
Over the past year, we’ve criss-crossed the country, talking to farmers and food producers about the role of agri-food in boosting productivity and expanding Canada’s economy. The Trump trade threat has cast a new light on the challenge for a sector that produces almost 10 per cent of our GDP, keeps Canadians well fed and in many ways knits our country together.
So how do we fortify our agri-food sector at home while strengthening it abroad?
A new RBC Thought Leadership report, “Food First,” shows that growth in food-related production in Canada continues to be driven by demand from the U.S. Take our most iconic export, canola (short for Canadian oil): Last year, 96 per cent of exports went stateside.
For a sector already grappling with cost constraints, taxes and regulatory hurdles, the potential imposition of tariffs presents an obvious challenge. On the global leaderboard of agri-food exporters, Canada has already slipped from fifth place to seventh over the past 25 years – and if we stay on our current course, our research shows we’ll fall to ninth by 2035.
And this for a country that was once celebrated around the world for our farm and food exports.
Canada can turn the corner by focusing more on global exports and growth. Our research, based on a model developed by RBC and the BCG Centre for Canada’s Future, shows that with some key investments, Canada can increase its market share by nearly a third over the next 10 years. That could be worth $44-billion to the Canadian economy.
It won’t be easy, as the rest of the world is also competing for the same growth markets. Brazil has aggressively expanded its oilseed and meat exports. Australia has ramped up grain and livestock exports, capitalizing on trade deals and its proximity to Southeast Asian markets. Spain has become a dominant force in high-value exports such as pork, fruits and vegetables, much of them grown in a large greenhouse belt. Kazakhstan, an emerging grains giant, is quickly gaining ground, too.
We can overtake these competitors with a combination of technology, capital and marketing. Continued innovation in precision farming and automation, for instance, can add to the big productivity gains the sector has achieved – especially if we ensure farmers have access to 5G capacity. Our processing sector, widely recognized globally, will continue to need investment to supply overseas markets at scale. And Canada can get behind these food producers with significant investments in export-oriented infrastructure, including inland food terminals, extra rail capacity and expanded seaports. Finally, we need to orient our commercial trade networks to put agri-food front and centre.
By 2035, a world of nine billion people will live overwhelmingly in Asia, Africa, the Middle East and Latin America, and those regions are already on course to earn incomes that will afford better, higher-protein foods, many of them imported. With the right investments, we can help feed a new ambition for those regions, while securing our economic prospects at home.
Even in the face of trade tensions, in Canada the time is ripe for growth.