By Dr. Larry Martin, Principal, Agri-Food Management Excellence as published in the Calgary Herald and Edmonton Journal
Alberta has one of the most productive agricultural economies in the world. It is core to our province’s history, economy, and landscape. The food grown here feeds people all over the world.
Increasingly, value-added agriculture presents an opportunity to expand Alberta’s economic activity and enhance our ability to feed the world. Developing Alberta as a centre for value-added agriculture certainly has its challenges, but significant opportunities also lie within our province.
Already, there is much discussion between farmers, the food industry, and government about how to make Alberta a global leader in competitively produced value-added agriculture. Alignment and collaboration between these partners are needed to ensure this industry can thrive.
To that end, there are six key areas we need to get right:
- Access to raw agricultural products;
- Access to water;
- Access to labour;
- Access to capital;
- A consistent regulatory environment; and
- Access to transportation.
But first, what is value-added agriculture?
A value-added product has been enhanced to make it worth more than its raw material ingredients. It may be more convenient, more attractive, more palatable, easier to use, or transformed into a new product.
Take canola, for example. Canola has some value in the farmer’s field. But located there, it has little value to consumers in Vancouver, Los Angeles, or Tokyo.
It has more value when transported to a crushing plant for processing. More value yet when it is made into oil or canola meal for animal feed. Canola meal’s value increases again when it is transported to a feedlot. And again when the feedlot turns it into a finished animal, and again when the animal is converted into beef.
It is then that a consumer in Vancouver, Los Angeles, or Tokyo realizes value from what was originally canola in that farmer’s field.
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So how does Alberta stack up as a leader in value-added agriculture?
Our biggest strength is that we have an abundance of raw agricultural products to build from.
About a quarter of Alberta’s landmass is devoted to agriculture, and on it, the province produces an incredible amount of grains, canola, pulses, alfalfa, beef, and pork. Alberta can also access more raw crops from neighbouring Saskatchewan. Alberta also boasts a strong horticultural industry, which includes crops grown in greenhouses.
Underlying Alberta’s agricultural productivity is the province’s vast, world-class irrigation system.
Nearly half of the US is currently experiencing drought, including major value adding centers such as California and Minneapolis.
Meanwhile, Canada has the largest endowment of fresh water of any country in the world. And southern Alberta’s irrigation system allows us to grow a range and abundance of products that would not otherwise be possible.
Our final major strength is the educational institutions that support the industry.
The province’s community colleges, especially, are dedicated to providing the training the agricultural industry needs. They are also flexible, able to adapt that training as the needs of the sector evolve.
But we have weaknesses as well.
One of those is needing better access to capital.
Some entrepreneurs in Alberta report that one of the province’s weaknesses is access to capital, especially in value adding. Canadian financial institutions tend to be more risk-averse and less inclined to finance new ventures at reasonable costs and terms than US institutions.
As such, some Alberta entrepreneurs have chosen to make investments in the US that they otherwise would have preferred to make in Canada.
The regulatory environment presents another problem, not just in Alberta but across Canada.
Research shows that institutions like Health Canada and the Canadian Food Inspection Agency lack transparency and consistency in how they apply their requirements to businesses.
Regulatory inconsistency can end up costing Alberta businesses months in delays and hundreds of thousand dollars in unexpected expenses.
Finally, Western Canada’s rail transportation system could become a major constraint as Alberta’s value-added sector expands.
Few new investments have been made in our rail infrastructure, while rival countries have invested billions in transportation. So, while our transportation is likely adequate in the short term, as Alberta’s value-added potential increases, this will soon become a disadvantage.
All things considered, Alberta has tremendous potential to bolster its value-added agriculture sector and help to feed the world. By capitalizing on our existing strengths, and with support in key areas, Alberta could become a world leader in this area.
Dr. Larry Martin is a Principal at Agri-Food Management Excellence and a contributor to the Business Council of Alberta. This opinion is part of a discussion paper series by BCA called Missions & Moonshots.