AGRICULTURE and AGRI-FOOD SECTOR Report
May 2014
Agriculture and Agri-Food Sector Report 2014
Acknowledgements
This sector report it the first in a series of reports available on Worktrends.ca . Worktrends.ca is a project of the Elgin Middlesex Oxford Workforce Planning and Development Board.
Report written by Emilian Siman © May 2014
Guidance and expertise kindly provided by Debra Mountenay - Executive Director of the Elgin, Middlesex and Oxford Workforce Planning and Development Board (EMO WPDB), Kiran Maniar - Project Coordinator of Worktrends.ca, Martin Withenshaw - Projects and Communication Manager at EMO WPDB, and Justin Dias - Community Coordinator at EMO WPDB.
“The material contained in this report has been prepared by the Elgin Middlesex Oxford Workforce Planning and Development Board and is drawn from a variety of sources considered to be reliable. We make no representation or warranty, express or implied, as to its accuracy or completeness. In providing this material, the Elgin Middlesex Oxford Workforce Planning and Development Board does not assume any responsibility or liability.”
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Agriculture and Agri-Food Sector Report 2014
Table of contents
EXECUTIVE SUMMARY ...... 4 INTRODUCTION ...... 7 International trade ...... 8 NATIONAL AND PROVINCIAL SECTOR ...... 8 Economic performance ...... 8 Sector structure- industrial concentration ...... 10 Export-import activity ...... 17 Labour force, employment, composition, age, entrepreneurship ...... 20 National and provincial sector forecast ...... 22 Growth: demographics and productivity ...... 23 National and provincial competitive advantages ...... 27 ELGIN, MIDDLESEX and OXFORD COUNTIES AGRICULTURE AND AGRI-FOOD SECTOR ...... 28 Counties at a glance ...... 28 Sector's structure - concentration ...... 32 Major employers in the region ...... 35 Economic performance ...... 35 EMO counties competitive advantages ...... 36 Demographics, labour force, employment, age, entrepreneurship ...... 36 CONCLUSIONS ...... 41 METHODOLOGY & LIMITATIONS ...... 42 Including agri-food system in the analysis ...... 42 Clarifying definitions ...... 42 REFERENCES ...... 43
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Agriculture and Agri-Food Sector Report 2014
EXECUTIVE SUMMARY
The report presents the recent dynamics in the agriculture and agri-food sector for various geographies: national, provincial as well as in Elgin, Middlesex and Oxford counties. This geographic allows to funnel the information from the larger perspective captured at national towards a narrower and focused view at the Elgin, Middlesex and Oxford counties. Switching to an economic filter, the document looks first to the output (economic performance) and then goes back to the potential causes( the industrial structure of the sector - employers and employment and productivity) and ends with a brief forecasting.
Forces driving the sector
changes in consumer demand (variety, convenience, value and safety) wider concerns about environment and animal welfare growing awareness about the importance of bio-fuels increasing dependency on export activities increasing international competition from emerging markets like India, China, Brazil, and Mexico increasing business risk and volatility due to fluctuation in the value of national currency and more frequent financial instabilities on the world markets growing dependency of agricultural input suppliers on upstream industries
Agriculture and agri-food sector in Canada and Ontario
The agriculture and agri-food sector is an important component of the Canadian economy contributing about 8-11 percent to the national GDP and employing about 12 percent of the Canadian population. In Ontario the sector contribution to the GDP is limited to around 6 percent while employing about the same proportion of the population as nationally, 12 percent. It was estimated that at provincial level $1 spent in farming operations produces $2.25 aggregate GDP and one job in farming creates another (1.09) indirect, or induced, job (Groenewegen, 2013).
Nationally and provincially, the sector went through several rounds of consolidations resulting in fewer farms with larger operating areas, larger average number of animals per farm, larger capital values, larger average number of operating equipment per farm. This trend suggest continuous efforts to improve productivity, gain economic efficiency and remain competitive internationally. The industrial structure of the sector is heavily skewed towards self-employment and micro-establishments (1-4 employees). Due to the nature of its products (food) the agriculture and agri-food markets were responding more rigidly to fluctuations in prices (lower income elasticity of demand), which played as an advantage during the most recent years when recession affected the economy because the slowing down has been much smaller than for the business sector. Nevertheless, the improvements in the sector productivity are attributed mainly to the increased level of mechanization in the sector, the intensity of intermediate input use and application of research and technology. All these factors lead over time to a major contraction in the number of hours worked in agriculture sector.
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Agriculture and Agri-Food Sector Report 2014
This structural transformation of the sector resulted in a stellar of the associated Canadian export activity, Canada claiming in 2012 the fifth place in the world among the suppliers of agriculture and agri- food products. In conjunction to this, the government marked significant achievement in negotiating major international trade agreements with the European Union (CETA), Korea (CKFTA), India and Japan opening new markets for the sector.
The employment in pure agriculture (NAICS 111 and 112, 1151 and 1152) decreased over time in Canada while in Ontario it's been maintaining at a steady level. The employment in this sector in largely concentrated in Ontario (28% of total Canadian employment in the sector, in 2010). Nationally and provincially the employed in this sector are majority males. The "25 to 54 years old" group tended to decrease their presence among the working people in this sector. In contrast the "55 years old and over" group increased its presence among the working people in this sector. The youngest group, "15 to 24 years old" maintained a level presence among working people in agriculture and agri-food sector. The sector employment is seasonal and very sensitive to weather conditions.
For the next decade the sector growth will be driven by population growth, technological advancement, new market opportunities and the increase in prices of agriculture and agri-food products and services.
Ontario is set to double its annual growth rate of the sector by 2020. Extensive provincial and national government support is offered for funding projects promoting adaptation to the new market conditions, advancing technological innovation, accessing new markets, and proposing local, regional, or provincial economic development.
Competitive advantages:
Geographic proximity to the US, Canada's largest trading partner. Favorable international trading agreements with the EU, China, Korea and Japan Canada's low arable land population density and a high rate of technological adoption Educated labour force Global reputation for producing safe and high quality foods A slight depreciation in the Canadian dollar over the last year Stable financial system and tighter government and industry regulations
Agriculture and agri-food sector in Elgin, Middlesex and Oxford counties
At the county level numerous efforts were conducted towards developing optimal distribution channels, particularly through stronger customer-supplier relationships between local food producers and government institutions (schools, hospitals, nursing homes, and other). These efforts seek efficiencies in the value supply channel and creation of competitive advantages for the local agriculture and agri-food sector producers.
Overall Elgin Middlesex and Oxford (EMO) counties have an about equal split between small and large farming operations ( surface in use under and above 53 hectares or capital value under and above $1 million). Oxford county has a more balanced distribution of farms across the total cash receipt
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Agriculture and Agri-Food Sector Report 2014 categories whereas Elgin and Middlesex counties are skewed towards categories under $250,000. Crop farming (oilseed and grain) industry dominates across all three counties. Oxford county receives the largest portion of the farming cash receipts from animal production (dairy, hogs, poultry), while Middlesex county from animal and crop production (corn, soybeans, hogs, dairy, and poultry). Elgin county receives the majority of its cash receipts from crop and animal production (corn, soybeans, dairy, fruits and vegetables).
The industrial structure of employment in farming sector in the EMO counties is strongly represented by non-employers (self-employed) and micro-establishments (1-4 employees). From 2009 to 2012 there was a slow growth in the number of businesses across all three counties. However, when the analysis is extended to include the food, beverage and tobacco product manufacturing, a much more balanced picture is revealed with a concentration on small-establishments (5-99 employees) and still strong presence on medium establishments (100-499 employees) and micro-establishments (1-4 employees).
Elgin, Middlesex and Oxford counties' employment opportunities in pure agriculture (NAICS 111 and 112) have been following the decreasing national and provincial trends, excepting for Elgin county. The "Food manufacturing" (NAICS 311) has been offering solid employment numbers in Middlesex and Oxford counties, exhibiting slight deviations. Elgin doesn't provide yet major opportunities in "Food manufacturing industry. The indirectly associated industries such as "Food and drinking places" (NAICS 722) and "Food and beverage stores" (NAICS 445) have been providing high levels of employment in all three counties, with changes of direction after 2009.
The future growth of the sector in EMO counties will come from population growth, expanding on new markets through export activity (the EU, China, Korea, India and Japan), finding efficiencies within the distribution (e.g. One Food Hub program) as well as through value added technologies (e.g. Bonduelle - frozen fruits and vegetables processing), and expecting a rise in prices for food products and services.
Competitive advantages for EMO counties: continental climate moderated by the proximity of the great lakes; rich soil leading to high agricultural productivity close proximity to large urban centers: Toronto, Windsor, Detroit, London, St. Thomas, Woodstock, Ingersoll, Tillsonburg excellent highway access close proximity to reputable Canadian Agriculture Universities and Colleges and research centers (Agriculture Sciences at University of Guelph - several campuses, Food and Nutritional Sciences Programs at Brescia University College, Southern Crop Protection and Food research Centre, Centre for Genetic Improvement of the Livestock at University of Guelph) focus on organic farming and agri-food production diverse economic base and access to a responsive economic development team low business costs
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Agriculture and Agri-Food Sector Report 2014
INTRODUCTION
This document provides an economic review of the national, provincial and local state of the agriculture and agri-food sector. We included in the analysis the agri-food system (some value chain members of the food and beverage business) because it accounts for the complex contributions of the agricultural sector to the overall economy. The report intends to reveal the structure and performance of the sector and the associated system, identify trends, refine challenges and opportunities, and suggest potential courses of action at various levels of analysis, national, provincial and local.
The Canadian agriculture and agri-food sector evolved as a highly competitive on international markets, modern through the research and development (R&D), advanced in the equipment used, under continuous consolidations to achieve scale efficiencies, and growing with Canadian economy.
The authors' hope is that the study will be used by a variety of user groups such as: planners, economic developers, labour market advisors, policy makers, educators, job seekers, and students. However, the value provided by the report is limited by authors' abilities to identify the dynamics of this complex sector and its ramifications into Canadian economy, as well as by the publicly available data generously provided Statistics Canada and the Agriculture related Canadian government departments.
Overall, the agriculture and agri-food sector plays an important role in the Canadian economy, at all levels of analysis suggested here, accounting roughly for 8% of the national Gross Domestic Product (GDP) and employing 2.1 million people (12 percent of total Canadian employment) while primary (pure) agriculture accounts for a small share of the total economy, 1.7% of GDP (Agriculture and Agri-Food Canada, 2013; Farm Credit Canada, 2014). Other sources (CAFTA, n.d.) estimated that Canadian agriculture and food processing account for 11% of Canada's goods GDP, while food processing alone is considered the largest employer in Canada supporting 250,000 jobs across Canada. Seems well supported to estimate that the agriculture and agri-food contribution to the Canadian GDP is somewhere between 8 and 11 percent.
As any other part of the economy, the agriculture and agri-food sector is exposed to national and international social and economic forces. Prior reports (Miller Dickinson Blais Inc., 2009) have identified several of those that are still driving the sector today:
changes in consumer demand consumers are asking for variety, convenience, value, and safety wider concerns about environment and animal welfare growing awareness about the importance of bio-fuels increasing dependency on export activities increasing international competition from emerging countries like India, China, Brazil, and Mexico, still enjoying significantly lower production costs. more intense competition combined with currency fluctuations expose Canadian farmers to higher business risk and volatility growing dependency of agricultural input suppliers on upstream industries
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Agriculture and Agri-Food Sector Report 2014
International trade
Experts indicate a shift in the composition of trade after the late 1990s, with a focus on higher value- added processed goods. However, more recent export growth data indicate a reversion towards primary agriculture products (Agriculture and Agri-Food Canada, 2013). The recent economic performance of countries like China and Brazil (BRIC counties) have added challenges and opportunities of exporting to these destinations. In 2011, Canada positions itself on the sixth place in the world as exporter-importer of agricultural products, with exports and imports valued at $40.3 billion and $31.0 billion, respectively. By CAFTA (n.d), in 2012 Canada occupied the fifth place among the world's agri-food exporters, immediately after the EU, the USA, Brasil and China (CAFTA, n.d.). According to the same source, the top export markets for the Canadian agri-food products are: the USA, China, Japan, the EU, The Russian Federation, India, South Korea, the United Arab Emirates, and Netherlands. These sources point out that Canada makes the right steps towards regaining its place among the top three world suppliers of agriculture and agri-food products and services.
NATIONAL AND PROVINCIAL SECTOR
Economic performance
In Canada, the GDP associated to Agriculture, Forestry, Fishing and Hunting (NAICS 11) sector increased from 23.1 billion in 2007 to24.8 billion in 2012 (Industry Canada, n.d. b), which translates into a compound annual growth rate for the sector of 1.2 percent. After the 2009 drop in performance due to the World's economic recession, the sector GDP has been regaining its growth through year by year better performance. At the provincial level, a similar pattern could be observed for the GDP associated to Agriculture, Forestry, Fishing and Hunting (NAICS 11).
A major drop in GDP (millions of chained 2007 $CADs) by NAICS - Ontario economic performance during 2009 followed 6,000.0 by a recovery during 5,000.0 4,716.6 4,815.9 4,855.7 4,721.5 4,516.0 2010 and 2011. In 4,469.9 4,000.0 3,984.3 2012, Ontario's GDP 4,056.3 4,022.8 4,118.8 from Agriculture, 3,000.0 3,742.0 3,921.4 Forestry, Hunting and 2,000.0 Fishing (NAICS 11) has 1,000.0 been dropping again to 0.0 $4,721 millions of 2007 2007 2008 2009 2010 2011 2012 chained dollars (see Figure 1). Agriculture, forestry, fishing & hunting (11) Primary Agriculture (111-112, 1151-1152)
Source: OMAF (n.d. b). Ontario Gross Domestic Product (GDP) for Ontario Economy Figure 1
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Agriculture and Agri-Food Sector Report 2014
A more complete Agri-food sector GDP (millions of chained 2007 $CAD) by picture of the agri-food NAICS - Ontario sector contribution to 40,000.0 the provincial GDP 33,938.7 33,527.8 33,545.5 33,775.0 component by 35,000.0 33,267.2 33,185.1 component is provided 30,000.0 in Figure 2. The graph 25,000.0 18,084.0 18,724.0 17,974.6 18,183.2 17,829.0 18,492.1 shows a drop in 20,000.0 economic performance 15,000.0 15,292.6 15,755.5 15,356.1 15,443.8 15,053.4 15,051.0 in 2009 and a 10,000.0 11,550.6 11,732.7 11,434.7 11,325.0 10,997.1 11,066.7 continuous positive 5,000.0 3,742.0 4,022.8 3,921.4 4,118.8 4,056.3 3,984.3 recovery since then. 0.0 Various components of 2007 2008 2009 2010 2011 2012 the agri-food system Total Agri-food sector GDP adds or diminish the Sub-Total GDP (411, 413, 4183, 445, 722, 316) economic performance fluctuations around Sub-Total GDP ((111-112 1151-1152, 311, 312 ) year 2009 and 2012. Food, Beverage and Tobacco Manufacturing (311, 312) Crop and Animal Production (primary agriculture ) (111-112 1151-1152)
Source: OMAF, (n.d. c).Ontario Gross Domestic Product (GDP) by Agri-Food Sector, 2007-2012
Figure 2 It is important to note Percentage of Agri-Food sector GDP from provincial GDP - that the GDP Ontario contribution of the agri- food sector to the 6.3 Ontario's GDP has been 6.2 marginally decreasing 6.1 after 2009 from 6.2 6 percent to 5.9 percent 5.9 (see Figure 3). Various 5.8 scenarios can explain 5.7 this change. 2007 2008 2009 2010 2011 2012
Source: OMAF (n.d. c) Ontario Gross Domestic Product (GDP) by Agri-Food Sector, 2007-2012 Figure 3
In conclusion, nationally, the agriculture and agri-food sector has a contribution somewhere between 8 and 11 percent to the overall economic performance of the country. At the provincial level, the agri- food sector has a lower percentage (between 5.9 and 6.2) contribution to the aggregate economy of Ontario. The historical data shows a performance dent in 2009 followed by a slow recovery afterwards with signs of instability in 2012, at national and provincial levels. In Ontario, the farming sector shipments (around $40 billion) represent the major source for the $63 billion sales of food products to Ontario consumers (Groenewegen, 2013). One dollar spent in the farm economy produces $2.25 at the aggregate level of Ontario's economy (multiplier effect).
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Sector structure - industrial concentration
According to the latest statistics released by Statistics Canada, family farms continue to consolidate and evolve towards a smaller number, but with larger areas for operations, a trend basically reflecting the improvements in labour productivity.
Number of Farms Total area of farms (acres)
300,000 180,000,000 160,000,000 250,000 140,000,000 200,000 120,000,000 100,000,000 150,000 80,000,000 100,000 60,000,000 40,000,000 50,000 20,000,000 0 0 1991 1996 2001 2006 2011 1991 1996 2001 2006 2011
Canada Ontario Canada Ontario
Source: CANSIM, Table 004-0001 Source: CANSIM, Table 004-0001 Figure 3 Figure 4 Based on 2011 Census of Agriculture, there were 205,730 farms in Canada (Figure 3), down 10 % from 2006, with an average farm size growing to 779 acres (Figure 5) and total area of farms slightly decreasing (Figure 4). Ontario has been following the same trend: a reduction in the number of farms (49,886 in 2011 vs. 55,208 in 2006, in Figure 3) and an increase in overall acreage under management ( average farm size of 244 acres in 2011 vs. 233 acres in 2006, in Figure 5)
Average area per farm (acres) Ratio of area owned to total area (acres) % 900 800 75.00 700 600 70.00 500 400 65.00 300 200 60.00 100 0 55.00 1991 1996 2001 2006 2011 1991 1996 2001 2006 2011
Canada Ontario Canada Ontario
Source: CANSIM, Table 004-0001 Source: CANSIM, Table 004-0001 Figure 5 Figure 6
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Agriculture and Agri-Food Sector Report 2014
Figure 6 illustrates the reduction of the ratio of area owned to total area under management (%) nationally and provincially. The decreasing trend indicates that across time more farm operators have been forced out of business and preferred to rent the land. However, the Ontario ratio of area owned to total area is larger than national ratio, indicating more ownership involved at provincial level than nationally.
The large improvements in Average number of animals per farm per category of efficiencies due to livestock or poultry economies of scale achieved from Turkeys consolidations into larger operations is also Total hens and chickens
demonstrated by the Total sheep and lambs Ontario increasing the average Total pigs number of animals per Total cattle and calves farm for various categories of livestock (Figure 7). Turkeys Total hens and chickens
Total sheep and lambs Canada Total pigs
Total cattle and calves
0 1000 2000 3000 4000 5000 6000 7000
1991 1996 2001 2006 2011
Source: CANSIM, Table 004-0004 Figure 7
Number of farms by farm size in Canada The number of farms by farm size in Ontario 45,000 40,000 20,000 35,000 18,000 30,000 16,000 25,000 14,000 20,000 12,000 10,000 15,000 8,000 10,000 6,000 5,000 4,000
0 2,000
0
…
10 to 69 acres 69 to 10
Under 10 acres 10 Under
70 to 129 acres 129 to 70
10 to 69 acres 69 to 10
130 to 179 acres 179 to 130 acres 239 to 180 acres 399 to 240 acres 559 to 400 acres 759 to 560
Under 10 acres 10 Under
70 to 129 acres 129 to 70
3,520 acres and acres 3,520
760 to 1,119 acres 1,119to 760
130 to 179 acres 179 to 130 acres 239 to 180 acres 399 to 240 acres 559 to 400 acres 759 to 560
1,120 to 1,599 acres 1,599 to 1,120 acres 2,239 to 1,600 acres 2,879 to 2,240 acres 3,519 to 2,880
760 to 1,119 acres 1,119to 760
3,520 acres and above and acres 3,520
1,120 to 1,599 acres 1,599 to 1,120 acres 2,239 to 1,600 acres 2,879 to 2,240 acres 3,519 to 2,880
1991 1996 2001 2006 2011 1991 1996 2001 2006 2011
Source: CANSIM, Table 004-0005 Source: CANSIM, Table 004-0005 Figure 8 Figure 9
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If prior arguments were not convincing enough about the consolidation trend, Figures 8 and 9 show an overall decrease in the number of farms with areas less than 2880 acres favoring an increase in the number of farms with areas over 2880 acres across all the years considered for analysis.
Number of farms by gross farm receipts at Number of farms with gross farm 2010 constant dollars in Canada recepits in 2010 constant dollars in Ontario 70,000 60,000 20,000 18,000 50,000 16,000 40,000 14,000 12,000 30,000 10,000 8,000 20,000 6,000 10,000 4,000 2,000 0 0
1991 1996 2001 2006 2011 1991 1996 2001 2006 2011
Source: CANSIM, Table 004 - 0006 Source: CANSIM, Table 004 - 0006 Figure 10 Figure 11
The same trend towards efficiency is demonstrated when looking at the number of farms by gross farm receipts, Figures 10 and 11. One could observe a reduction in the number of farms with gross farm receipts less than $500,000 and an increase in the number of farms with gross receipts larger than $500,000. The trend maintains across years, nationally and provincially. The type of crop and livestock dynamics reflect the change in consumer preferences, prices and technology non-durum wheat is no longer the dominating crop, it was surpassed by canola and soybean, see Figure 12. Nationally and provincially (Ontario), the livestock numbers are significantly lower from previous censuses (Figure 13) although due to the consolidation the average number of livestock per farm increased over time (Figure 14), which further demonstrates a shift towards increasing the overall efficiency of farming operations .
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Agriculture and Agri-Food Sector Report 2014
Number of farms by selected crops - Ontario vs. Canada
Soybeens
Canola (rapeseed)
Total Rye
Corn For Silage
Corn for Grain Ontario
Mixed Grain
Barley
Oats
1991 Total Wheat 1996 2001 Soybeens 2006 2011 Canola (rapeseed)
Total Rye
Corn For Silage
Corn for Grain Canada
Mixed Grain
Barley
Oats
Total Wheat
0 20,000 40,000 60,000 80,000 100,000 120,000
Source: CANSIM, Table 004-0003 Figure 12
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Agriculture and Agri-Food Sector Report 2014
Total number of animals per livestok and poultry
Turkeys
Total hens and chickens
Total sheep and lambs Ontario Total pigs
Total cattle and calves
Turkeys
Total hens and chickens
Total sheep and lambs Canada Total pigs
Total cattle and calves
0 20,000,000 40,000,000 60,000,000 80,000,000 100,000,000 120,000,000 140,000,000
1991 1996 2001 2006 2011
Source: CANSIM, Table 004-004 Figure 13
Average number of animals per farm per category of livestock or poultry
Turkeys
Total hens and chickens
Total sheep and lambs Ontario Total pigs
Total cattle and calves
Turkeys
Total hens and chickens
Total sheep and lambs Canada Total pigs
Total cattle and calves
0 1000 2000 3000 4000 5000 6000 7000
1991 1996 2001 2006 2011
Source: CANSIM, Table 004-0004 Figure 14
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Agriculture and Agri-Food Sector Report 2014
In December 2012, Number of establishments in Canada Canada accounted Agriculture, Forestry, Fishing and Hunting (NAICS 11) 179,833 establishments with Alberta British Columbia primary business Manitoba New Brunswick activity classified as Newfoundland and Labrador Northwest Territories Agriculture, Forestry, Nova Scotia Nunavut Ontario Prince Edward Island Fishing and Hunting Quebeck Saskatchewan (NAICS 11), from which Yukon Territory 29 percent (52,480) have reported having 0% employees while the 19% 19% rest of 71 percent (127,353) were classified as non- employer 9% (indeterminate) 17% establishments, Figure
15. 8% 1% 0% 2% 1% 3% 21% 0%
Sources: Industry Canada and Statistics Canada, Canadian Business Patterns, Dec 2012 Figure 15 The province of Number of employer establishments by type and region Ontario owns the (Agriculture, Forestry, Fishing and Hunting - NAICS 11) largest (21 percent) piece of the national Canada Ontario list of establishments from which 10,035 127353 were classified as employers and 27,770 non-employers (see 52480 Figure 16). 27770 10035
Employers Non-employers/indeterminate
Sources: Industry Canada and Statistics Canada, Canadian Business Patterns, Dec 2012 Figure 16
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Agriculture and Agri-Food Sector Report 2014
Further Figures 17 and 18 show that in 2012 the Canadian primary agriculture sector (NAICS 11) demonstrated a high concentration (72 percent) on micro establishments (1- 4 employees). The rest (28 percent) of establishments were classified as small (> 4 but < 100 employees). Additionally, it is important to acknowledge the large presence of non-employer (self-employed) establishments in the sector. A similar employment structure is mimicked at provincial level by Ontario, with slightly more establishments in the small category (36 percent) and less establishments in the micro category (63 percent). The Ontario's figures might indicate a larger percent of agricultural establishments that evolved towards a stronger and more consolidated business size. According to Industry Canada (n.d.), an establishment is placed into a NAICS category according to its primary business activity - the product whose revenues are the highest in terms of dollar value.
Canada - number of establishments Ontario - Number of establishments by employment size category by employment size category Medium Medium Large 500+ 100-499 100-499 Large 500+ 0% 0% 1% 0%
Small 5-99 Small 5-99 28% 36%
Micro 1-4 Micro 1-4 63% 72%
Sources: Industry Canada and Statistics Canada, Sources: Industry Canada and Statistics Canada, Canadian Business Patterns, Dec 2012 Canadian Business Patterns, Dec 2012 Figure17 Figure 18
Therefore, the agriculture and agri-food sector has been suffering major structural changes in the past 50 years leading to major consolidations of farming operations. These consolidations generated conditions for major improvements in labour productivity and achievement of economies of scale. However, the sector is still heavily concentrated on micro (1-4 employees) and medium (5-99 employees) establishments. These two facts together raise questions regarding the viability of one person and micro- operations.
Overall, the Agriculture, Forestry, Hunting and Fishing (NAICS 11) sector in Canada and Ontario can be described heavily concentrated on non-employers (self-employed) and micro-establishments (< 5 employees). This comes somewhat counterintuitive to the fact that a lot of consolidation has been going on in the last fifty years.
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Agriculture and Agri-Food Sector Report 2014
Export-import activity
As many other sectors of the Canadian economy, agriculture and agri-food sector relies heavily on export activities. The total net exports accounted for more than a half of the agriculture economy in 2012. During the same year, one third of Canada's agriculture exports and over two-thirds of agri-food exports went to the United States (Farm Credit Canada, 2014), Canada's largest agriculture and agri-food trade partner, see Tables 1 and 2. Canada's exports to the US peaked in 2008 then dropped to a low in 2010, and recovering each year since. Different opportunities might open in the US markets due to the current fiscal challenges, potential changes of the U.S. farm subsidy program, as well as the change in the U.S. dollar parity relative to the Canadian dollar. The current low U.S. interest rates favors capital expansions offering conditions for Canadian companies in the greenhouse and dairy sectors to invest in the U.S.
Although 75 percent of the agriculture and agri-food trade goes with a select number of OECD countries (Australia, Japan, Mexico, the EU and the US) , the overall growth rates in Canadian exports to these selected OECD countries have decreased. In contrast, the growth in exports to BRIC (Brazil, Russia, India and China) countries have taken the lead despite the fact that the volume of trade with these countries represent only 10 percent of overall agriculture and agri-food trade (Farm Credit Canada, 2014).
In a brief review, Japan is Canada's third-largest export market of crop production and sixth-largest export market for animal production. Mexico is the second-largest Canadian export markets (12 percent) and fourth-largest Canadian export markets for crop production. Mexico represents also a competing entity on the US agriculture and agri-food markets. In 2012, Canada's fourth-largest export market was the European Union (EU) with some of the largest-value beef and wheat exports. The EU competes directly with Canada on the international agricultural and agri-food markets, especially in the cereal market. A bilateral trade agreement would be beneficial for Canada's beef industry (Farm Credit Canada, 2014), as shown latter in the text efforts in this directions have been unfolded. The proximity and historical ties with some important wheat importing countries (e.g. Egypt), provides a significant competitive advantage to the EU over Canada. Furthermore, some trade disputes have been developing due to the European consumer demand for hormone-free beef, which will require some changes to the Canadian farming sector. China is Canada's third largest animal production export market and the second-largest crop production export market. Canada more than doubled its agriculture trade with China since 2011. China's social and economic changes will lead to an increase in individual wealth and consumption levels, thus creating new opportunities for the Canadian agricultural and agri-food sectors. Canada's third-largest importer of pork (by volume) is Russia. According to Farm Credit Canada (2014), in 2013 Russia's imports of Canadian pork decreased by two thirds compared to prior year due to Russia's ban on pork fed with the additive Ractopamine. Russia was not historically a significant trade partner for Canada, but the growth in Canadian exports to Russia starting with 2010 shifted the priority for the Russian markets. Russia is also a competitor for Canadian agriculture and agri-food products in China. Its geographical proximity and historical ties gives Russia a competitive advantage over Canada in regard to the Chinese markets.
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India also was not historically a significant trading partner to Canada, but lately the situation has changed. India became the fifth-largest export market for Canada. Trade with India seems to be affected by the political stability, corruption, food tariffs, and market volatility. To stabilize this trade relationship, Canada and India have begun negotiations towards a comprehensive trade agreement. Brazil is not a major importer of Canadian agriculture products, but the Canadian's exports to Brazil increased almost five fold in the past year expanding significantly the Canadian trade opportunities.
Table 1. Canadian agri-food and seafood exports and top 10 trade partners ($CAD)
2012 as 2008- 2008 2009 2010 2011 2012 % of 2012 2011 CAGR
All Countries 42,811,320,582 38,802,045,867 39,351,272,063 44,389,754,918 47,679,156,822 107.41% 2.73%
United States 22,372,727,949 19,958,250,068 19,953,766,383 22,069,387,624 23,606,068,002 106.96% 1.35% China 1,797,535,703 2,712,333,183 2,949,954,075 3,063,754,608 5,399,634,568 176.24% 31.65% Japan 3,946,955,743 3,201,004,940 3,282,950,158 3,950,481,213 4,226,306,694 106.98% 1.72% Mexico 1,568,152,642 1,207,053,661 1,418,665,538 1,726,396,569 1,784,142,781 103.34% 3.28% Hong Kong 542,303,860 543,852,462 666,258,744 597,823,506 753,494,913 126.04% 8.57% Russian Federation 461,312,315 231,134,802 366,377,796 556,859,923 667,715,334 119.91% 9.69% South Korea 491,376,142 424,781,916 596,754,386 1,082,435,812 575,021,205 53.12% 4.01% India 429,554,915 539,486,062 427,463,288 640,831,846 532,220,663 83.05% 5.50% United Arab Emirates 432,846,352 415,793,266 537,290,487 704,621,379 519,911,551 73.79% 4.69% Netherlands 206,588,254 210,763,379 391,949,855 542,605,119 487,703,164 89.88% 23.95% Source: Agriculture and Agri-Food Canada, 2013 Note: CAGR - Compounded annually growth rate
In October 2013 Canada negotiated the Comprehensive Economic Trade Agreement (CETA) with the European Union (EU), one of the largest global markets (approx. 450 million people) with the second- largest per capita pork consumer and a potentially larger export market for beef. Access to the red meat market is still under negotiations as in exchange the EU requests greater access to the Canadian cheese markets (Farms Credit Canada, 2014). This success sets Canada export on the path for more diversification among trading partners. CETA being considered the biggest trade agreement signed by CANADA since NAFTA in 1994.
The Trans-Pacific Partnership (TPP) represents a market of 792 million people and 27.5 trillion in GDP (Farms Credit Canada, 2014).Canada joined the negotiations relatively late, in 2012. Among other Canadian exporters, Canada's pork industry associations see the TPP as an extraordinary opportunity to expand the trade in the Pacific region.
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Table 2. Total Canadian agri-food and seafood imports and top 10 trade partners ($CAD)
2012 as 2008- 2008 2009 2010 2011 2012 % of 2012 2011 CAGR
All Countries 29,711,224,406 30,356,107,413 30,503,224,516 33,821,505,500 35,861,016,546 106.03% 4.82% United States 17,550,411,069 17,954,965,768 17,614,270,740 19,460,589,936 21,301,729,603 109.46% 4.96% Mexico 961,863,085 1,084,587,782 1,231,753,110 1,277,943,353 1,332,232,712 104.25% 8.48% China 895,354,617 950,933,515 969,187,665 1,085,699,438 1,133,552,521 104.41% 6.07% Brazil 700,566,479 791,110,319 820,018,095 1,047,724,991 907,406,084 86.61% 6.68% Italy 785,564,690 789,563,053 813,029,692 866,484,373 889,278,475 102.63% 3.15% France 803,743,201 755,431,492 774,411,304 865,797,121 856,943,293 98.98% 1.62% Thailand 570,584,933 595,804,359 598,202,127 677,742,649 697,417,907 102.90% 5.15% Chile 602,284,988 645,697,730 646,617,364 670,847,440 677,954,045 101.06% 3.00% United Kingdom 423,793,839 434,716,690 432,019,245 440,396,742 465,207,694 105.63% 2.36% Australia 466,628,641 428,776,019 412,595,711 413,797,283 435,827,056 105.32% -1.69% Source: Agriculture and Agri-Food Canada, 2013 Note: CAGR - Compounded annually growth rate
In March of 2014, Canada signed the first free trade agreement with an Asia-Pacific, the Canada-Korea Free Trade Agreement CKFTA), projected to boost the Canadian economy by $1.7 billion and increase Canadian exports by 32 percent (FATDC, n.d.). Currently, Canada makes steps toward sealing bilateral trade agreements with India and Japan. South Korea, India and Japan are important agriculture and agri- food markets.Canada already has signed a number of bilateral free trade agreements (FTAs) with small markets such as: Chile, Colombia, Peru, Panama, Costa Rica, Jordan and Israel.
Canada economic growth depends heavily on its export activities: around 35 percent of Canadian GDP comes from export. Canada already earned a great reputation in the world for its agricultural and agri- food products competing with larger economies for the top places. It's latest evolution demonstrates a great path for regaining the third place in the world as an exporter of agricultural products. The combined efforts of national, provincial and local government are directed towards facilitating access to and partnership on international markets with reduced or inexistent tariffs. The latest negotiations success with the EU and Korea demonstrates government commitment to improve its international competitiveness and presence. Some of the international trade landscape has change, shifting the focus from somewhat away from the traditional partners to new ones (e.g. BRIC countries). The current change in Canadian currency parity to the US dollar combined with the low interest rates provide abundant opportunities to trade and expand operations on foreign markets.
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Labour force, employment, composition, age, entrepreneurship
The employment in Agriculture has been Employment in Agriculture (111-112, 1100, 1151-1152) - Canada and reducing in the past 50 Ontario years due to 400 mechanization,
technological gain, 350 education, and 300 consolidation (see Figure 19). In Ontario, since 250
2006, employment in 200 agriculture (111-112, 1100, 1151-1152) has 150 been maintaining at a 100 steady level, with minor 1000) x (persons Employment fluctuations around 2009 50
(recession), and 2012. 0 May-05 Oct-06 Feb-08 Jul-09 Nov-10 Apr-12 Aug-13 Dec-14
Canada Ontario Linear (Canada) Linear (Ontario)
Source: CANSIM, Table 282-0008 Figure 19 In Canada, the employment by age No. of jobs in Agriculture by age category (111-112, 1100, 1115- category indicates that 1152) - Canada since 2006 until 2013 the age group "25 to 54 years 400 15 years and over old" group suffered a 350 reduction while the "55 15 to 24 years years old and over" 300 25 to 54 years group has expanded its presence among the 250
55 years and over
employed. The youngest 200 Jobs group, the "15 to 24 Linear (15 years and 150 years old," has been over) maintaining a constant 100 Linear (15 to 24 presence across years years) among the employed 50 Linear (25 to 54 years) groups in agriculture 0 sector ( see Figure 20). 2004 2006 2008 2010 2012 2014 Linear (55 years and These figures indicates an over) aging labour force in pure agriculture. Source: CANSIM, Table 282-0008 Figure 20
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Male workers are more numerous in this sector No. of jobs in Agriculture by sex (111-112, 1100, 1151-1152) - than female workers Canada (Figure 21). 300
250
200
150 Jobs 100
50
0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Males Females Linear (Males) Linear (Females)
Source: CANSIM, Table 282-0008 Figure 21
In Ontario, the agriculture sector employment by age reveal some volatility around years 2008 -2009 and 2012. Overall, the sector employment has been following the national trend: a reduction of the number of employed in agriculture.
As indicated at national level, the employment of No. of jobs in Agriculture by age group (111-112, 1100, 1151- the "25 to 54 years old" 1152Nacics) - Ontario group has been exposed to 120 some variation, but overall its presence among the 100 employed has reduced 80
over the years. In contrast 60
the presence of the "55 Jobs years old and over" group 40 has grown constantly since 2006 until 2013. The 20 employment for the 0 youngest group ("15 to 24 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 years old") maintained 15 years and over 15 to 24 years steady across the years for 25 to 54 years 55 years and over the agriculture sector Linear (15 years and over) Linear (15 to 24 years) Linear (25 to 54 years) Linear (55 years and over) (Figure 22). Source: CANSIM, Table 282-0008 Figure 22
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In Ontario also, males are more numerous than No. of jobs in Agriculture by sex (111-112, 1100, 1151- females within the labour 1152 NAICS) - Ontario force in the agriculture sector, Figure 23. 70 60 50
40
Jobs 30 20 10 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Males Females Linear (Males) Linear (Females)
Source: CANSIM, Table 282-0008 Figure 23
In general, the employment in agriculture sector has contracted, mainly due to a slimmer presence of the "25 to 54 years old" group. Males are more numerous than females among the employees in agriculture sector.
National and provincial sector forecast
According to COPS (n.d.), the pure Agriculture industry (NAICS 111, 112, 1151, 1152) employed a total of 300,700 employees in 2010 with approximately equal employment split between crop and animal production. Employment is largely concentrated in Ontario (28%), Quebec (18%), Alberta (16%) and Saskatchewan (14%). Also, the employment in this industrial sector is heavily concentrated on self- employment (approximately 62%). The sector employment is seasonal and very sensitive to weather conditions. The sector is also exposed to high volatility of agricultural product prices. On average the real GDP grew at an annual pace of 1% over the last ten years driven by growth in exports of commodities and processed foods. During the same period, employment dropped by 2.1% annually due to the structural changes and productivity improvements. It is forecasted that over the next decade the sector growth will be driven by the population growth, the new opportunities on the export markets and the increase in prices on the agriculture and agri-food products and services. The real world cereal prices are projected to grow by 20% while the prices of meats are projected to grow by 30% during 2011-2020 decade vs. previous decade (2001-2010) COPS (n.d.). Consequently, it is forecasted that the industry will grow at a much faster pace (2 percent annually) during the current decade (2011-2020) than during the past decade (2001-2010). Faster growth will help to stabilize the employment levels in the industry after so many years of decline. World population growth, increased urbanization, the rise of new agriculture and agri-business competitors (Russia, Brazil, Argentina, etc.), and the continued growth in productivity will put new challenges and opportunities in front of this industry. Worktrends.ca at Elgin Middlesex and Oxford Workforce Planning and Development Board| 647 Wilton Grove Rd., 22 Unit 3. London, ON N6N 1N7. Tel: 519-672-3499.Fax: 519-672-9089
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However, the future looks brighter. At the 2013 Premier's Summit on Agri-Food, Kathleen Wynne Ontario's Premier and Minister of Agriculture and Food challenged the sector to double its annual growth rate and create 120,000 jobs by 2020 (OMAF, n.d. a). A summary of the projected targets is provided in Table 3.
Table 3. Summary of projected provincial sector targets Indicator Current Forecasted Gross Domestic Product (GDP) $33.8B $36.9B Jobs 739,735 789,343 Exports $10.8B $15.3B Primary Agriculture Sales $12.3B $19.4B Food Processing Revenue $39.4B $45.5B Agriculture Investment $886M $775M Food Processing Investment $1.1B $2.0B Source: OMAF (n.d. a), Proposed benchmarks and sector targets
In 2013, the governments of Canada and Ontario signed a five-year multi-million dollar agreement, named Growing Forward 2, targeting innovation, competitiveness and market development. It includes $2 billion for federal-provincial-territorial strategic initiatives. Ontario's Growing Forward 2 programs will help the provincial sector to take advantage of existing opportunities and develop new markets (OMAF, April 2013).
Growth: demographics and productivity
The economic growth targeted for national and provincial levels can be achieved only through the growth of labour force, or gains in labour productivity, or both. The section will provide a brief overview on population and labour productivity analysis.
Table 4. Population and labour force - Ontario and Canada
% change % change 2006- 2016 2011-2016 2006 2011 2011 (forecast*) (forecast*) Ontario Population 12,160,282 12,851,821 5.70% 13,494,412 5% Labour force 6,587,575 6,864,990 4.20% 7,139,590 4%
Canada Population 31,612,897 33,476,688 5.90% 35,150,522 5% Labour force 17,146,135 17,990,080 4.90% 18,709,683 4%
Source: Statistics Canada, Census Canada Note: * is Worktrends's forecast scenario based on historic trends and new assumptions
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Overall, between 2006 and 2011, the Canadian population has been growing at a healthy rate (5.7 percent). The Ontario province population (38 percent of Canadian population in 2011) followed a similar pattern with a slightly larger rate, 5.9 percent. As illustrated in Table 4, Worktrends's proposes a status-quo maintenance forecast scenario for 2011-2016 taking in account the prior change rates and no significant national and international population changes announced over this short-time horizon, and consequently it advances a rate of change of 5 percent. However, due to an aging population in Canada (2011 Census and National Household Survey (NHS)), labour force size grew at a slower pace during 2006-2011 period, only at 4.2 percent rate. Worktrend's status-quo maintenance forecast scenario for 2011-2016 uses a rage of change of 4 percent.
Labour productivity is a key factor that determines the living standards and competitiveness of a country in a global context. Since 2000, the Canadian labour productivity growth has been marginal (CSLS, 2011). Despite the slowing down trend in overall labour productivity, the Canadian agriculture sector labour productivity kept growing, especially after year 2000. The real GDP from the Canadian primary agriculture sector (NAICS 111 , 112) grew at less than half the rate experienced by the business sector during the period of 1961-2007, 1.8 percent vs. 3.81 percent respectively (CSLS, 2011). This difference is explained by the agri-food low income elasticity of demand. This apparent disadvantage has been working in favor of the agricultural sector during the period of 2000-2007 when annual compound growth rate (ACGR) of the associated GDP dropped to 1.6 percent from 1.8 percent ACGR during 1961- 2000; whereas the business sector has experienced a much larger slow down, 2.59 ACGR over 2000- 2007 period down from 4.04 ACGR for the 1961-2000 period (CSLS, 2011).
The same source indicates that the real gross output in the Canadian primary agriculture sector grew at a much larger annual average rate, 3.1 percent, during 1961-2007 period. The explanation reside in the fact that during more recent years the sector experienced a more intense use of intermediate goods.
In terms of the input use, the most distinguishing pattern during 1961-2007 was the massive contraction of the number of hours worked. In 2007 the number of hours worked in primary agriculture represented 2.7 percent of the total hours worked in the business sector, a significant drop from 14.3 percent in 1961. The total hours worked in primary agriculture dropped at a rate of 1.9 percent per year during 1961-2007 while in the business sector it increased by 1.7 percent per year (CSLS, 2011).
Another significant trend regarding the input use is the growing importance of the intermediate inputs in the primary agriculture sector. In real terms, intermediate input use in the sector increased 4.6 percent per year during 1961-2007. During more recent years (2000-2007) the intermediate input use decreased to 1.3 percent per year from 5.2 percent per year during the preceding period (1961-2000) (CSLS, 2011).
CSLS (2011) analyzed the labour productivity using several productivity measures. Canadian labour productivity (VA1) in primary agriculture increased at almost the double rate of the Canadian business sector during 1961-2007 period, 3.8 vs. 2.1 percent per year respectively (Figure 24). For the primary
1 VA stands for Value Added method of computation Worktrends.ca at Elgin Middlesex and Oxford Workforce Planning and Development Board| 647 Wilton Grove Rd., 24 Unit 3. London, ON N6N 1N7. Tel: 519-672-3499.Fax: 519-672-9089
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Alternatively, the Canadian labour productivity (GO2) growth for the primary agriculture grew during 1961-2007 period to an average annual rate of 5.1 percent. The intensive use of the intermediate inputs boosted up the average annual growth rate well above the annual growth rates assessed for the labour productivity (VA) measure (CSLS, 2011).
The Canadian multifactor productivity3 (VA) measure in primary agriculture demonstrated an average annual increase of 2.1 percent during 1961-2007 period, six times larger than the average annual growth rate computed for the business sector (0.35% per year) (CSLS, 2011). When comparing 1961-2000 period with 2000-2007 period, multifactor productivity growth rate in primary industry has experienced small change, 2.1 percent vs. 1.8 percent respectively whereas the same measure for the business sector dropped significantly, 0.46 percent vs. -0.30 percent respectively.
CAGR - Real GDP per hour worked, sectoral comparison, 1961-2007
4 3.8 3.77 3.5 2.91 2.88 3 2.65 2.5 2.27 2.24 2.06 2
1.5 1.11 0.92 1 0.76 0.51 0.46 0.5
0
Utilities
Retail trade Retail
Construction
Manufacturing
Business sector Business
Leasing
warehousing
Wholesale trade Wholesale
Extraction
Information and and Information
Cultural Industries Cultural
Sector (NAICS 11) (NAICS Sector
Transportation and and Transportation
Primary Agriculture Agriculture Primary
Estate, Rental and Rental Estate,
public administrations public
Other services (except (except services Other
Professional, Scientific Scientific Professional,
and Technical Services Technical and Mining and Oil and Gas Gas and Oil and Mining Finance, Insurance, Real Real Insurance, Finance, (compound annual growth rates, percent - CAGR) Source: CSLS (2011) calculations based on Statistics Canada data (CANSIM Table 383-0022) Figure 24
2 stands for Gross Output method of computation 3 multifactor productivity measures output growth that is not accounted by labour-capital input growth Worktrends.ca at Elgin Middlesex and Oxford Workforce Planning and Development Board| 647 Wilton Grove Rd., 25 Unit 3. London, ON N6N 1N7. Tel: 519-672-3499.Fax: 519-672-9089
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In the same spirit, the Canadian multifactor productivity measure (GO)4 for primary agriculture sector grew at an average annual rate of 1 percent per year during the 1961-2007 time span (CSLS, 2011). The reason for this difference from the same measure using the VA method reflects the increased intensity of use of intermediary inputs.
According to CSLS (2011) calculations, the primary agriculture sector accounted 19.2 percent of the aggregate Canadian labour productivity (VA) growth (business sector). This figure is somewhat surprising relative to primary agriculture sector contribution to national GDP (1.4 percent in 2007) and overall Canadian employment (2.2 percent in 2007).
It is important to note here that the primary agriculture sector experienced significant productivity growth throughout the entire period (1961-2007), well above many other sectors of the economy (see Figure ).
Labour productivity (VA) growth can be decomposed in three components: capital intensity growth, multifactor productivity (MFP) growth, and labour quality growth. CSLS (2011) suggests that during 1961-2007 period the Canadian labour productivity (VA) growth in primary agriculture sector was driven by MFP (VA) growth and capital intensity growth, which accounted for 55.5 percent and 40.2 percent respectively. The rest accounted for labour quality growth.
Labour productivity (GO) growth can be also decomposed in four components: capital intensity growth, intermediate input intensity growth, labour quality growth, and MFP growth. During 1961-2007 period the growth of labour productivity (MO) in primary agriculture sector was driven by the intermediate input intensity growth (62 percent of total growth) , followed by MFP growth (20 percent), capital intensity growth (15.5 percent) and labour quality growth (1.8 percent).
During 1961-2007, the capital services intensity in primary agriculture sector grew at a slower pace than it grew in the business sector, 2.8 percent average annual rate vs. 3.3 percent. One explanation for the difference is the lower ICT capital service use in primary agriculture sector. When looking at the capital stock intensity the picture reverses in favor of primary agriculture vs. business sectors, 2.5 percent average annual rate of growth, vs. 1.5 percent respectively.
Intermediate input (fuel, natural gas, coal, electricity, fertilized land, seeds, fertilizers, feeds, pesticides, services, etc.) use in Canadian primary agriculture increased at an average annual rate of 4.63 percent during 1961-2007 period (CSLS, 2011).
The multifactor productivity (MFP) growth captures the residual effects of several components of the production process such as: improvements in technology and organization, capacity utilization, increasing returns to scale, and other.
According to CSLS (2011), labour quality in primary agriculture sector grew annually at an average rate of 0.55 percent during the 1961-2007 period, slightly slower than the business sector (0.7 percent).
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During the same period the average years of schooling in the agriculture sector has been increasing at a slightly faster rate than national average in recent years (0.5 percent vs. 0.4 percent respectively). The proportion workers with post-secondary certificate or diplomas increased significantly in recent years, representing 28.2 percent of total workers in primary agriculture sector in 2007.
In conclusion, the productivity performance in Canadian primary industry sector during 1961-2007 period was caused by the increased level of mechanization in the sector, the intensity of intermediate input use and application of research and technology. All these factors lead over time to a major contraction in the number of hours worked in agriculture sector.
Between 2008 and 2012, labour Labour Productivity Index - Canada productivity for Agriculture, Agriculture , Forestry, Fishing and Hunting (NAICS 11) Forestry, Fishing and Hunting sector (NAICS 11) decreased - 140 0.8 percent per year on average, while labour 120 productivity for the Canadian 100 Economy increased by 1.2 80 percent per year (Industry Canada, n.d. b). However these 60 figures are misleading because 40 a big drop in productivity has been experienced between 20
0
2008 and 2009, most likely due to the economic recession
affecting the world economy.
2008 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013
2009 Q2 2009
After 2009, the labour productivity in the sector (NAICS 11) have been Labour Productivity Index Linear (Labour Productivity Index) improving every year since (Figure 25). Source: Statistics Canada, CANSIM, Table 383-0012 Figure 25
Over the most recent year (2011-2012), labour productivity has been increasing by 1 percent in the Agriculture sector (NAICS 11) while in the entire Canadian Economy has been increasing by 1.8 percent (Industry Canada, n.d.b), see Figure 25.
National and provincial competitive advantages
Several advantages give Canada an edge when competing internationally on the agricultural markets:
Geographic proximity to the US, the largest economy in the world and Canada's largest trading partner.
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Recent success in negotiating favorable trading agreements with other international partners such as the EU, China, Korea and Japan Canada's low arable land population density and a high rate of technological adoption Educated labour force Global reputation for producing safe and high quality foods A slight depreciation in the Canadian dollar over the last year Canada's financial system has always been stable under a tighter government and industry regulations
ELGIN, MIDDLESEX AND OXFORD COUNTIES AGRICULTURE AND AGRI-FOOD SECTOR
Counties at a glance
Figure 26 illustrates Farms by surface use - EMO counties the farms' structure in Elgin, Middlesex and Elgin Middlesex Oxford Oxford counties. Proportionally to their group, each of the three 1265 counties in analysis has a large number of farms with a surface in use less than 53 hectares, a 1009 moderate number of farms with a surface in use between 53 and 161 hectares, and a 711 657 smaller number of 575 farms with a surface in use over 162 hectares. 430 There is about an equal 379 split for each county 256 between the number of 231 farms reporting a surface in use under 53 hectares and the number of farms Reporting under 53 Reporting 53 to 161 Reporting 162 hectares and reporting a surface in hectares hectares over use over 53 hectares. Sources: Statistics Canada, 2011 Census of Agriculture and Strategic Policy Branch, OMAF/MRA Figure 26
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Looking at farms from Farms by capital value - EMO counties the capital value perspective, one could Elgin Middlesex Oxford see an about equal split in the number of farms 1230 operating with a capital 1080 value under $1 million and the number of 650 601 423 460 farms operating with a 321 382 231 capital value of $1 42 49 44 million and over, Figure 27. Under $200,000 $200,000 to $500,000 to $1,000,000 and $499,999 $999,999 over
Sources: Statistics Canada, 2011 Census of Agriculture and Strategic Policy Branch, OMAF/MRA Figure 27
In terms of total gross Farms by total gross farm receipts - EMO counties farm receipts, one would observe a more Under $10,000 $10,000 to $24,999 $25,000 to $49,999 even distribution of $50,000 to $99,999 $100,000 to $249,999 $250,000 to $499,999 farms per category in $500,000 to $999,999 $1,000,000 to $1,999,999 $2,000,000 and over Oxford county than in the other two counties. Elgin and Middlesex 213 221 counties are populated 224 by more numerous 242 Oxford 295 farms with total gross 221 216 farm receipts under 135 $250,000 (Figure 28). 48
299 413 364 325 Middlesex 374 244 194 101 38
216 218 170 181 Elgin 226 146 116 50 23
Sources: Statistics Canada, 2011 Census of Agriculture and Strategic Policy Branch, OMAF/MRA Figure 28
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When looking at the Farms by industry group - EMO counties number of farms by industry group, one Elgin Middlesex Oxford would observe a dominating number of farms belonging to the 89 "oil seed and grain Other crop farming 120 farming" followed by 105 "other animal 40 production" and "dairy Greenhouse, nursery and floriculture 60 44 cattle and milk production." Middlesex 35 Fruit and tree nut farming 30 county appears to be 30 strong in the number of "oilseed and grain 87 Vegetable and melon farming 52 farming" farms as well 42 as the number of farms 703 in "other animal Oilseed and grain farming 1320 farming" and "beef 657 cattle ranching and 154 farming." Oxford county Other animal production 258 is dominating in the 187 number of farms in 38 animal farming: "dairy Poultry and egg production 93 113 cattle and milk production, "hog and 35 Sheep and goat farming 47 pig farming," "poultry 60 and egg production," and "sheep and goat 32 Hog and pig farming 103 farming." Elgin county 122 appears to be strong in 73 the number of farms in Beef cattle ranching and farming 159 "vegetable and melon 124 farming" and "fruit and 60 tree nut farming" as Dairy cattle and milk production 110 well as in "oilseeds and 331 grain farming."
Sources: Statistics Canada, 2011 Census of Agriculture and Strategic Policy Branch, OMAF/MRA Figure 29
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Oxford county has Farm cash receipts for main comodities ($ million) larger cash receipts EMO counties - 2012 than the other two counties from animal Oxford Middlesex Elgin production (poultry, hogs, and dairy Eggs 21.2 cattle) while Middlesex county Wheat 21.3 has larger cash 8.8 receipts than the Floriculture, Nursurey & Sod 15 other two counties 13.9 from crop farming 23.4 Cattle & Calves 28.3 (soybeans and corn). 14.9 Elgin county has strong cash receipts Tobacco 15.6 from crop 77.3 production (corn and Poultry 72.2 soybeans) as well as 21.7 from animal 122.2 Hogs 83.7 production (dairy, 26.3 hogs and poultry), 18 Field vegetables 38.5 see Figure 30. 34.1 215.5 Dairy 78.7 53.3
46 Soybeans 113 75.9
110 Corn 171 103.4
Sources: Statistics Canada, 2011 Census of Agriculture and Strategic Policy Branch, OMAF/MRA Figure 30
Overall the EMO counties have an about equal split between small and large operations (surface in use under and above 53 hectares or capital value under and above $1 million). Oxford county has a more balanced distribution of farms across the total cash receipt categories whereas Elgin and Middlesex counties are slanted towards categories under $250,000. Crop farming (oilseed and grain) industry dominates across all three counties. Oxford county receives the largest portion of the farming cash receipts from animal production (dairy, hogs, poultry), while Middlesex county from animal and crop production (corn, soybeans, hogs, dairy, and poultry). Elgin county receives the majority of its cash receipts from crop and animal production (corn, soybeans, dairy, fruits and vegetables).
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Sector's structure - concentration
Table 5 illustrates a picture similar to the one at the national and provincial level. The farming sector in Elgin county is dominated by non-employers (self-employed), 74 percent, micro-establishments (15 percent), and small establishments (11 percent). Across time the total number of establishments increased from 962 in 2009 to 1097 in 2012. In Middlesex county, the farming sector structure seems even more unbalanced, with 79 percent of non-employers (self-employed) and 15 percent of micro-establishments, and only 6 percent of small establishments. Across time the sector grew its number of establishments from 1,679 in 2009 to 1,797 in 2012. Oxford county sector structure looks fairly similar with the other two counties, 74 percent non- employers, 17 percent micro-establishments, and 9 percent small establishments. Overall Oxford county stayed on top in the number of establishments associated to the farming sector. Across time it evolved positively from 1,723 establishments in 2009 to 1,914 establishments in 2012.
Table 5. Employers and non-employers in farming (NAICS 111 and 112)
Medium Total Non- County Month-Year Micro 1-4 Small 5-99 100-499 Large 500+ employers employers Total Jun-09 132 102 0 0 234 728 962
Jun-10 165 90 1 0 256 725 981
Elgin Jun-11 164 106 2 0 272 765 1,037 Jun-12 166 109 2 0 277 783 1,060
Dec-12 162 118 2 0 282 815 1,097 Percent Dec-12 57.45 41.84 0.71 0.00 100.00 Percent Dec-12 14.77 10.76 0.18 0.00 25.71 74.29 100.00
Jun-09 260 115 0 0 375 1,304 1,679
Jun-10 240 115 0 0 355 1,237 1,592
Middlesex Jun-11 252 119 0 0 371 1,316 1,687 Jun-12 266 123 0 0 389 1,361 1,750
Dec-12 269 111 0 0 380 1,417 1,797 Percent Dec-12 70.79 29.21 0.00 0.00 100.00 Dec-12 14.97 6.18 0.00 0.00 21.15 78.85 100.00
Jun-09 316 150 1 0 467 1,256 1,723
Jun-10 306 135 0 0 441 1,255 1,696
Oxford Jun-11 326 150 0 0 476 1329 1,805 Jun-12 351 163 1 1 516 1339 1,855
Dec-12 334 170 2 0 506 1408 1,914 Percent Dec-12 66.01 33.60 0.40 0.00 100.00 Percent Dec-12 17.45 8.88 0.10 0.00 26.44 73.56 100.00 Source: OMAFRA Analyst - EMSI Canadian Dataset
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Table 6 demonstrates that the support activities and services for farming have a stronger presence in Middlesex (88 establishments in December 2012) than in the other two counties (54 establishments in December 2012 in Oxford county and 20 establishments in December 2012 in Elgin county). Overall, the number of establishments servicing the farming sector is small relative to the number of farms present in the EMO region.
Table 6. Employers and non-employers in support activities for farming and forestry (NAICS 115)
Medium Total Non- County Month-Year Micro 1-4 Small 5-99 100-499 Large 500+ employers employers Total Jun-09 2 3 0 0 5 13 18
Jun-10 4 2 0 0 6 14 20
Elgin Jun-11 6 0 1 0 7 15 22 Jun-12 5 1 1 0 7 9 16
Dec-12 4 0 1 0 5 15 20 Percent Dec-12 80.00 0.00 20.00 0.00 100.00 Percent Dec-12 20.00 0.00 5.00 0.00 25.00 75.00 100.00
Jun-09 18 11 0 0 29 45 74
Jun-10 23 10 0 0 33 47 80
Middlesex Jun-11 21 12 0 0 33 50 83 Jun-12 18 7 0 0 25 60 85
Dec-12 14 8 0 0 22 66 88 Percent Dec-12 63.64 36.36 0.00 0.00 100.00 Percent Dec-12 15.91 9.09 0.00 0.00 25.00 75.00 100.00
Jun-09 13 7 0 0 20 32 52
Jun-10 12 8 0 0 20 40 60
Oxford Jun-11 12 7 0 0 19 42 61 Jun-12 13 7 0 0 20 45 65
Dec-12 11 4 0 0 15 39 54 Percent Dec-12 73.33 26.67 0.00 0.00 100.00 Percent Dec-12 20.37 7.41 0.00 0.00 27.78 72.22 100.00 Source: OMAFRA Analyst - EMSI Canadian Dataset
When including in our analysis the employers and non-employers from food, beverage and tobacco manufacturing (NAICS 311 and 312), one would observe a more balanced distribution across employer and non-employer categories (Table 7). As of December 2012, the total number of establishments associated to this sector was larger in Middlesex county (72 establishments) followed closer by Oxford county (51 establishments, and at some distance by Elgin county (24 establishments). In this sector the concentration seems to larger on small-establishments ( 44 percent in Middlesex and 41 percent in Oxford and 33 percent in Elgin) with strong presence in micro-establishments and medium establishments.
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Table 7. Employers and non-employers in food, beverage and tobacco manufacturing (NAICS 311 and 312)
Medium Total Non- County Month-Year Micro 1-4 Small 5-99 100-499 Large 500+ employers employers Total Jun-09 2 11 0 0 13 16 29
Jun-10 3 10 0 0 13 14 27
Elgin Jun-11 3 8 0 0 11 17 28 Jun-12 3 8 0 0 11 15 26
Dec-12 4 8 0 0 12 12 24 Percent Dec-12 33.33 66.67 0.00 0.00 100.00 Percent Dec-12 16.67 33.33 0.00 0.00 50.00 50.00 100.00
Jun-09 15 36 4 2 57 27 84
Jun-10 16 34 4 2 56 25 81
Middlesex Jun-11 9 32 3 2 46 24 70 Jun-12 15 28 6 1 50 23 73
Dec-12 11 32 6 1 50 22 72 Percent Dec-12 22.00 64.00 12.00 2.00 100.00 Percent Dec-12 15.28 44.44 8.33 1.39 69.44 30.56 100.00
Jun-09 10 17 5 0 32 27 59
Jun-10 9 21 4 0 34 23 57
Oxford Jun-11 13 18 5 0 36 21 57 Jun-12 11 21 7 0 39 21 60
Dec-12 5 21 7 0 33 18 51 Percent Dec-12 15.15 63.64 21.21 0.00 100.00 Percent Dec-12 9.80 41.18 13.73 0.00 64.71 35.29 100.00 Source: OMAFRA Analyst - EMSI Canadian Dataset
Overall, the structure of employers in the three counties shows a strong presence of employers and non-employers within the farming (NAICS 111 and 112), and light presence of employers and non- employers into the farming support activities and services (NAICS 1151 and 1152) of food, beverage and tobacco manufacturing (311 and 312). Between 2009 and 2012 there was a slight growth in all these industry groups. The farming industry group preserve the same profile as nationally or provincially, with a large concentration on non-employers (self-employment) or micro-establishments (1-4 employees). However, the food, beverage and tobacco product manufacturing reveals a much balanced distribution of establishments across the categories; high concentration on small establishments (5-99 employees) and about equal representation of micro-establishments (1-4 employees) and medium establishments ( 100-499 employees).
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Major employers in the region
It is important to review who are the potential major industry partners for the regional planning and development of the sector.
Table 8. Some major employers in EMO counties (NAICS 311 and 312) Name # of employees Cargill Sun Valley Foods 1000 Cuddy Food Products 180 Continental Mashroom Farm 250 Ontario Plants Propagation 80 Voskamp Greenhouse Inc. 55 London Dairy Farms Ltd. 20 Sources: LEDC Business Directory & Canadian Business Directory
Table 9. Some major employers in EMO counties (NAICS 311 and 312) Name # of employees McCormick Canada 550 Labatt's Breweries Ontario 466 Nestle Canada Inc. 311 Bonduelle North America 300 Masterfeeds 239 Strathroy Foods 170 Cobbi Foods 150 Ingredion Canada Inc. 115 Bright Cheese House 125 Agribrands Purina Canada Inc. 100 Sources: LEDC Business Directory & Canadian Business Directory
Economic performance
In 2005, the Elgin Federation of Agriculture reported that 7,753 jobs in the County were attributed to the agricultural sector and $558 million in sales from farms and businesses that buy from and sell to farms (Miller Dickinson Blais Inc.,2009). The same source indicates that over $216 million has been spent by farms in the regional economy. The agriculture sector in Elgin county has been strong in the production of oilseed, grains, animals, fruits and vegetables.
An earlier assessment of the agricultural sector in Oxford County (Cummings & Associates, 2000) indicated that the employment associated to the agricultural sector directly or indirectly was around 12,955 jobs (approximately 26.2 percent of the county's total) and the sector produced $1,074 million in sales from farms and businesses that buy from and sell to farms. Furthermore, the employment and
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Agriculture and Agri-Food Sector Report 2014 expense multiplier were estimated to 1.18 of the farm job created for every 1 on-farm job and $1.57 additional sales from businesses associated to farming products for each $1 farm gate sale. The study underlined a couple of trends and challenges for the sector collected from direct interviews with farmers from Oxford county, which were: vulnerability of the small farms to integration and consolidation into larger "corporate" farms; finding and retaining quality labour force; low level of public awareness about the sector performance and consequently low level of support for farming
EMO counties competitive advantages
Beyond the competitive advantages reviewed for Canada and Ontario, Elgin, Middlesex and oxford counties provide the following specific ones:
continental climate moderated by the proximity of the great lakes; rich soil leading to high agricultural productivity close proximity to large urban centers: , Toronto, Windsor, Detroit, London, St. Thomas, Woodstock, Ingersoll, Tillsonburg geographic proximity to the United States, Canada's largest trading partner; excellent highway access high rate of technological adoption close proximity to reputable Canadian Agriculture Universities and Colleges and research centers (Agriculture Sciences at University of Guelph - several campuses, Food and Nutritional Sciences Programs at Brescia University College, Southern Crop Protection and Food research Centre, Centre for Genetic Improvement of the Livestock at University of Guelph) global reputation for producing safe, high quality foods slight depreciation of the Canadian dollar starting in 2014 educated labour force focus on organic farming and agri-food production diverse economic base and access to a responsive economic development team low business costs
Demographics, labour force, employment, composition, age, entrepreneurship
In Elgin county although the population has been increasing by 2.5 percent between 2006 and 2011, the labour force has been shrinking by 2.7 percent. During the same period the population of the Middlesex county has been increasing by 4 percent, while the Oxford county population has been increasing by 2.9 percent. The change in population on the EMO counties has been happening at a slower pace than the change of the province of Ontario during the same period of time (5.7 percent), or Canada (5.9 percent).
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However, Worktrends suggests that a 3 percent change in the population across the EMO counties seems a logical and healthy expectation for a status-quo forecast scenario for the period 2011-2016, see Table 10. As indicated about the labour force change at national and provincial level, the rates of change are a lot smaller and even on opposite direction than for province and country. In Elgin county the labour force has been contracting by -2.7 percent, while in Middlesex it increased by 1.7 percent. Oxford's labour force during the same period has been remained almost unchanged (0.5 percent increase). Consequently, it is a safe proposition to consider for 2011-2016 no change in the labour force for Elgin county, a slight increase (1.5 percent) for Middlesex, and a marginal increase ( 1 percent) for Oxford.
Table 10. Population and labour force - EMO counties % change % change 2006- 2016 2011-2016 2006 2011 20011 (forecast*) (forecast*) Elgin Population 85,351 87,461 2.50% 90,085 3% Labour force 45,695 44,465 -2.70% 44,465 0%
Middlesex Population 422,333 439,151 4% 452,326 3% Labour force 231,415 235,400 1.70% 238,931 1.50%
Oxford Population 102,756 105,719 2.90% 108,891 3% Labour force 56,610 56,905 0.50% 57,475 1%
Source: Statistics Canada, Census Canada Note: * is Worktrends's forecast based on historic trends and new assumptions
The agriculture sector, as many other sectors of Hired farm labour (weeks) - EMO counties the economy, due to its nature is exposed to seasonal fluctuations in employment. Excepting Seasonal Year round for Elgin county, the primary agriculture sector (NAICS 111 and 112) hired labour is dominated 19967 Oxford by "year round" employment. However, the 83174 split between crop and animal production Middles 19096 73245 would partly explain the variation in the ratio ex of "seasonal" to "year round" across the 30070 Elgin 30912 counties under analysis (see Figure 31).
Source: Statistics Canada, 2011 Census of Agriculture and Strategic Policy Branch, OMAF/MRA Figure 31
Looking at the overall picture of the agriculture and agri-food labour market in Elgin county, one would observe an increasing trend in employment in pure agriculture (NAICS 111 and 112). The employment in
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"Food services and drinking places" (NAICS 722) and "Food and beverage stores" (NAICS 445) followed a similar growing pattern over the years. Some fluctuations from this overall trend has been created by the 2008-2009 economic recession, but the growing trend is strong for these industries - employment in over one thousand. However, the employment in "Food, beverage and tobacco product manufacturing" (NAICS 311 and 312) is small around 100 each, following a flat pattern (see Figure 32).
Number of jobs by industry in Elgin county
2,500
2,000
1,500
1,000
500
0 2006 2007 2008 2009 2010 2011 2012
111-112 Farms 115 Support activities for forestry 311 Food manufacturing 312 Beverage and tobacco product manufacturing 316 Leather and allied product manufacturing 411 Farm product wholesaler-distributors 413 Food, beverage and tobacco wholesaler-distributors 445 Food and beverage stores 722 Food services and drinking places
Source: OMAF/MRA Analyst - EMSI Canadian Dataset Figure 32
With a major contribution from the City of London, the employment profile of the Middlesex County shows high levels of employment in four distinct industries directly or indirectly associated to the agriculture and agri-food sector: "Food services and drinking places" (NAICS 722), "Food and beverage stores" (NAICS 445), "Food manufacturing" (NAICS 311) and " Farms" (NAICS 111 and 112). While the "Food services and drinking places" exhibits a strong employment growth, the "Food and beverage
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Number of jobs by industry in Middlesex county
18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0 2006 2007 2008 2009 2010 2011 2012
111-112 Farms 115 Support activities for forestry 311 Food manufacturing 312 Beverage and tobacco product manufacturing 316 Leather and allied product manufacturing 411 Farm product wholesaler-distributors 413 Food, beverage and tobacco wholesaler-distributors 445 Food and beverage stores 722 Food services and drinking places
Source: OMAF/MRA Analyst - EMSI Canadian Dataset Figure 33
In Oxford county, working opportunities in "Food and drinking places" (NAICS 722) industry have been shrinking over time while working opportunities in "Food and beverage stores" (NAICS 445) industry have been increasing. The employment level in "Farms" (NAICS 111 and 112) industry decreased between 2006 and 2012 and reverted back to increasing in 2012. A flat trend in employment was
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Agriculture and Agri-Food Sector Report 2014 exhibited by the "Food manufacturing" (NAICS 311) between 2006 and 2012 followed by a slight growth in 2012 (see Figure 34).
Number of jobs by industry in Oxford county
3,500
3,000
2,500
2,000
1,500
1,000
500
0 2006 2007 2008 2009 2010 2011 2012
111-112 Farms 115 Support activities for forestry 311 Food manufacturing 312 Beverage and tobacco product manufacturing 316 Leather and allied product manufacturing 411 Farm product wholesaler-distributors 413 Food, beverage and tobacco wholesaler-distributors 445 Food and beverage stores 722 Food services and drinking places
Source: OMAF/MRA Analyst - EMSI Canadian Dataset Fig. 34
Overall, Elgin, Middlesex and Oxford counties employment opportunities in pure agriculture (NAICS 111 and 112) have been following the decreasing national and provincial, excepting for Elgin county. The "Food manufacturing" (NAICS 311) has been offering solid employment numbers in Middlesex and Oxford counties, exhibiting slight deviations. Elgin doesn't provide yet major opportunities in "Food manufacturing industry. The indirectly associated industries such as "Food and drinking places" (NAICS 722) and "Food and beverage stores" (NAICS 445) have been providing high levels of employment in all three counties, with changes of direction after 2009.
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CONCLUSIONS
As indicated earlier in the report, in 2013, the governments of Canada and Ontario signed a five-year multi-million dollar agreement, named Growing Forward 2, targeting innovation, competitiveness and market development. It includes $2 billion for federal-provincial-territorial strategic initiatives (OMAF, April 2013). The program demonstrates the continuous interest of the government to foster initiatives that enhances the current agricultural capacity and develop new opportunities.
Both Canada and Ontario governments provide funds to support agriculture and agri-food sector initiatives. The Agricultural Flexibility Fund sustains projects that will improve the sector's competitiveness and will help the sector adapt to the new dynamics. The Canadian Agricultural Adaptation Program (CAAP) offers funding for " adaptation and competitiveness initiatives." on the other hand, The Ontario government supports marketing and communication projects that lead to buy locally-produced food through the Ontario Market investment fund (OMIF).
Some of the federal and provincial support is intended with a larger scope than the agriculture and agri- food sector. The federal Community Development Program, Ontario's Rural Economic Development (RED) program and Federal Economic Development Agency (FedDev) for Southern Ontario offer funding for initiatives towards knowledge building and economic development of rural or larger communities (Balpataky, 2010).
Research and Development (R&D) projects are supported for all sectors of the economy, including the agriculture and agri-food sector, through funding provided as tax relief by Canada Revenue Agency's Scientific Research and Experimental Development (SR&ED) program, or through the Industrial Research Assistance Program (IRAP) offered by the National Research Council (NRC).
Other funding programs, more broader in scope but with specific target, would have application for the agriculture and agri-food sector: e.g. the Sector Initiative Fund (SIF) of the Ontario Ministry of Training Colleges and Universities (MTCU) is focused on workforce training.
Government and community agencies serving Elgin, Middlesex and Oxford counties joined their efforts into creating new opportunities and competitive advantages for the regional agriculture and agri-food operators to commercialize their products. South Central Ontario Regional Economic Development Corporation (SCOR) intends to create a regional "Food Hub" to supply more of the regional public sector institutions like schools, hospitals and retirement facilities with locally produced food (Montanini, 2014). The idea has been nurtured and developed for a couple of years (since 2010) by SCOR and promoted through the strategic management planning named The Path Forward. The basis of this initiative was to find an Optimal Food Distribution Model for the South Central Ontario Region as a market solution for regional agriculture and agri-food operators.
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METHODOLOGY & LIMITATIONS
Including agri-food system into analysis
Focusing our attention on purely agriculture production would mislead us about the magnitude and spread of economic activity associated to the agriculture sector. Thus, in our approach here we included in the analyses, where possible, several industries considered members of the agri-business system: crop and animal production (111 and 112 North American Industry Classification System (NAICS) codes), fishing, hunting and trapping (114), support activities for crop and animal production (1151 and 1152), food manufacturing (311), beverage and tobacco product manufacturing (312), clothing and leather and allied product manufacturing (315 and 316), farm product wholesalers-distributors (411), food, beverage and tobacco wholesalers-distributors (413), food and beverage stores (445), warehousing and storage (493), and food services and drinking places (722). But, in some of our findings, due to the limitations induced by the publicly available data we grossly underestimate the true impact of the agriculture to the overall economy. Particularly, it is challenging to identify all the members of the agri- food system and quantify their associated industry contributions. A sample of these industries difficult to separate is: agricultural, construction and mining machinery manufacturing (3331), machinery, equipment and supplies wholesaler- distributors (417), rail transportation (482), and truck transportation (484), support activities for transportation (488), scientific research and development services (5417) and other professional, scientific and technical services (5419), and community colleges and CEGEPs (6112), universities (6113).
Other limitations for the study are introduced by the processes and procedures chosen by Statistics Canada in releasing publically accessed data. Procedures like presenting longitudinal GDP data in chained 2007 data limits our ability to add results across industries and sectors or draw conclusions across time. Rounding number procedures creates sometime inconsistencies about the same data presented in different contexts or formats.
Clarifying definitions
An establishment , as a statistical unit of analysis, is defined as the most homogenous unit of production for which the business maintains accounting records (Industry Canada, n.d.a).
An enterprise, as a statistical unit, is defined as the organizational unit of business that directs and controls the allocation of resources relating to its domestic operations, for which consolidated financial and balance sheet accounts are maintained and from which international transactions, an international investment position and a consolidated financial position for the unit can be derived (Industry Canada, n.d.a).
According to the same source, in the case of most small and medium sized businesses in Canada, the enterprise and the establishment are the same. Large and complex enterprises consisting of more than one establishments may belong to more than one NAICS industry.
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An establishment is placed into a NAICS category according to its primary business activity - the product or service whose revenues are the highest in terms of dollar value.
Statistics Canada, CANSIM provides historical GDP data by industry in constant 2007 or in chained 2007 dollars. The process of chaining accounts for the fluctuations in relative prices and composition of the output over time. The chained GDP preserves the original growth rates of industries and becomes truly helpful for the industries susceptible to high volatility of pricing (e.g. information technologies, agriculture, etc.). However, the chaining process introduces some limitations to the analyses. One limitation of the chaining process is the non-addictivity of the components (industries) to the aggregate economy in non-base years (Industry Canada, n.d. c).
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Agriculture and Agri-Food Sector Report 2014
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Worktrends.ca at Elgin Middlesex and Oxford Workforce Planning and Development Board| 647 Wilton Grove Rd., 44 Unit 3. London, ON N6N 1N7. Tel: 519-672-3499.Fax: 519-672-9089
Agriculture and Agri-Food Sector Report 2014
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Worktrends.ca at Elgin Middlesex and Oxford Workforce Planning and Development Board| 647 Wilton Grove Rd., 45 Unit 3. London, ON N6N 1N7. Tel: 519-672-3499.Fax: 519-672-9089