Innovation, investment and collaboration are keys to boosting productivity

This is a follow-up to my earlier post about how we can improve Canadian productivity and seize what we’re calling a “$30 Billion Opportunity” for Agriculture.

Support for entrepreneurs

We must continue to innovate – growing more by using fewer resources and utilizing better plant genetics and high-tech precision machinery. In an industry that resists change, we need to help our producers adopt digital technology and provide them with a road map of how it can improve their business and make their lives easier. Support from the federal CDAP program has now ended (a $15,000 subsidy to help with digital adoption) and some think this program, or something similar, should be taking its place. Programs like this de-risk technology for farmers who are unwilling to try things unless they can show direct environmental and economic impacts. I am not saying CDAP is the best option, but let’s start thinking about what this type of program should encompass and encourage. 

A while back I talked about creating an Innovation Cluster and a Soil Cluster, similar to the Protein Industries Canada Cluster, which successfully brought together various stakeholders to drive growth in the plant-based protein sector. 

Our government spends too much time and money looking backwards, with programs like Crop Insurance and Agristability. Yes, they’re important but should they consume 60% of the federal agriculture budget? I would argue it should spend more on innovation, value add, streamlining research and development between government, grower groups and private as well as incentives to encourage investment and entrepreneurship. Furthermore, it is critical we continue to invest in global relations for continued export growth

Things like the capital gains tax punish entrepreneurs and farmers who have worked hard to build their companies and then go to sell. Don’t even get me started on Bill C-59, the anti-greenwashing legislation that gags entrepreneurs and companies from making forward-looking statements about their products or services. How do we expect to encourage entrepreneurship and innovation when misguided policies prevent aspirational claims? I really enjoyed this podcast with the Business Council of Alberta, which broke down the debate around this policy.

In my opinion, we need more incentives and less regulation. We need the government to start acting like Intrapreneurs, leading, and having a dream…. It has been a number of years in our country where we went to the polls excited about a candidate rather than just ticking the box beside less awful. 

 

Investment money 

It is terribly frustrating to see investment dollars going south of the border and across the pond. Typically seen as a high-risk and low-reward industry for investment dollars due to a perceived lack of economies of scale, venture capital funding went elsewhere. In the early days, the industry saw a lot of money go into things like vertical farming and alternative proteins and those have not turned out to be great investments. 

Globally, we’re seeing a decrease in investment dollars into early-stage ag tech, from 53 billion in 2021 to 22 billion in 2023. Canada is somewhat bucking the trend with ag-tech investment. I applaud the work of two prairie ag-tech funds, Emmertech and Tall Grass Ventures, and FCC for its support of this sector. We need to get more producers on board too, so they can test and give valuable feedback on what will actually work on the farm. I think the potential in ag-tech is largely untapped. 

Data 

There is tons of data out there – between farmers, grower groups, university, and private research programs and varying levels of government. But, the problem is that it’s in so many different places, it’s difficult to make good use of it. This is where Artificial Intelligence is already helping, utilizing AI to train models on historical data to make predictions for the future. I think that will be key to unlocking even more innovation in our sector. Of course, at the very basic level, we need to make sure farms have good connectivity (broadband internet or Starlink), before they can even consider utilizing some of these digital tools.  This all can unlock what I have coined as “BlackJack Farming.” 

Improving Scale 

We need to get more capital into the hands of farmers so they can grow or scale their businesses. No, this doesn’t necessarily mean creating a mega-farm or encouraging them to sell to private or foreign ownership. It means getting capital to entrepreneurs, who tend to deploy capital at some of the best IRR rates on the planet.  Even smaller farms can and must grow if they want to stay alive. 

We’re talking about lowering the cost of capital and encouraging farmers to consider the massive real estate assets they have when it comes to land. Too many farmers spend their lives trying to pay off their land, but I’m suggesting maybe you don’t have to. Maybe lenders could make it easier for farmers to negotiate lower interest payments, freeing up capital to buy more acres when the opportunity arises. Buying land and renting it out is a great strategy and one that too few farmers are using.  Investing in value-add on the farm and vertical integration are all capital-intensive ideas that can unlock positive margins.

Value Add 

It makes no sense to send our products overseas, process them there, and then ship them back to Canada. Saskatchewan has been making investments in value-added facilities, but this is an untapped market in Canada. We should double down on our efforts to expand agriculture’s value-added industries.

Value addition allows producers to capture a larger share of the food dollar, improving their profitability and financial viability. It fosters local supply chains, connecting producers with consumers and reducing dependence on distant markets.

Don’t let the dash become a mountain

Agri-food.

Why the dash? As my good friend Kim McConnell pointed out, too often it seems like the dash is a mountain between the two. The word “agriculture” does not resonate with Canadians and many politicians. But the word food certainly does. We eat three times a day, we’ve created a “foodie” culture, and the world needs more food. We need to work together to make sure consumers (who drive public policy), government, investors and international customers realize that Canadian farmers are providing food for the world. And, if we can make it easier for them to do it, they’ll be able to provide more of it in a sustainable way. 

It’s the right thing to do, for the world….and our economy.