Agriculture, not Energy, Will Fuel Canada’s Economy in Coming Decades: Experts

The agriculture sector will rise in importance in coming decades as the world warms and moves away from fossil fuels.

That’s the most recent prediction from Jeff Rubin, former chief economist for CIBC World Markets, whose latest book, The Carbon Bubble, forecasts a not-so-distant future in which climate change will open up the possibility for cultivating crops, historically grown in places like Kansas and Iowa, much further north. At the same time, Rubin argues, global dependence on fossil fuels will drop, freeing up capital to migrate to crops like corn and soy.

“There could be some tremendous opportunity for Western Canada, in the same provinces that are likely to be victims of the carbon bubble,” Rubin told DeSmog Canada. “Food is the only real sector in the commodity field that has been resilient, that’s kept its pricing power. You could argue that just that alone is sufficient.”

Agriculture has always played a major role in Canada’s economy. Rod MacRae, associate professor of environmental studies at York University and national food policy expert, notes the food sector trails directly behind energy and automobile manufacturing, employing one in every eight Canadians.

Last year, farm cash receipts (the income from selling commodities combined with direct subsidies) totalled $57.4 billion. To put that in perspective, the auto industry sold $82.6 billion worth of products in 2012, with oil and gas contributing $133 billion to the country’s GDP in 2013.

But the energy industry is currently in trouble: projects in the Alberta’s oilsands are stalled out, with low prices and market access woes resulting in shoddy returns.

Rubin calculates that over the last seven years, the oilsands have lost 70 per cent of share value. Yet land in the prairies has seen double digit annual increases in the same window, he says, pointing to the Canadian Pension Plan Investment Board’s 2013 acquisition of 115,000 acres of Saskatchewan farmland as an example of the changing economic terrain.

Droughts in California and British Columbia may further incentivize purchases of prairie lands.

“The strength of food prices themselves are going to make that land valuable,” Rubin says. “But once you start taking into effect the corn belt and a lot of food belts may be migrating to higher latitude regions, which is certainly what all the climate change models are suggesting, then that’s an even more compelling reason.”

Farming in a Hotter World

However, diseases, pests and weeds will also benefit from increased temperatures and atmospheric carbon dioxide, says York University’s MacRae.

Add in the inevitable rise in extreme weather events (like microburst rainfalls that drop several inches of precipitation in a very localized area) and climate change may have some seriously detrimental side effects on Canadian agriculture.

While MacRae likes Rubin’s argument that the food system should be a greater priority, he questions if current agricultural practices will survive such rapid and significant changes.

If Canada promotes local and organic farms, it might be a different story, he says.

“If we dramatically change the food system, we can create resilience and also mitigate emissions,” MacRae said. “Then, we’re in a much better place to deal with climate change. If we manage that properly, we can create a very viable food system economy.”

That requires government intervention — specifically, a national food strategy, he says.

Without one, MacRae says, “We can’t design anything around big pictures challenges and solutions, because it’s so fragmented and nobody wants to take the lead on it so there’s no way to marshal and coordinate resources.”

Rubin said the transition from an energy-centric to a food-centric economy is already being guided by market forces.

But for MacRae the right type of agricultural industry will require a heavy interventionist approach. He added there hasn’t been an adequate level of government participation in the food system since the Second World War.

A future of carbon taxes, biofuels and local power

But a shift to an agriculture-oriented economy may not just revolve around food, according to John Parkins, professor of rural and environmental sociology at the University of Alberta.

In coming years, oilsands majors like Suncor, Syncrude and Shell may be keenly looking for new opportunities to reinvent themselves, especially if a significant economy-wide carbon tax or another type of polluter-pay system is implemented, he said.

Parkins suggests such transformation may take the form of biofuels, which can range in origin from corn to potatoes to vegetable oils to wood chips. Oilsands companies, he says, are ultimately in the business of transportation: as alternative fuels become more viable, they could significantly reduce the need for fossil fuel-generated energy.

“In a big way, [agriculture] is related to questions about how we electrify the grid and how we put fuel in our vehicles,” he said. “If the solutions become more located within agriculture, then I could see a massive transition. That takes the question around agriculture beyond just the food question to a whole bunch of other sectors.”

Yet that shift will also require some power moves from various levels of government.

While a carbon tax may serve as a stick, capital (which Parkins describes as “agnostic about what sector it’s in”) may need more incentive to invest in socially beneficial areas.

Unfortunately, MacRae reiterates that food or agriculture is rarely a priority for the federal government, making such options significantly less probable. Based on the vague planks in the platform of the three major federal parties, he’s not optimistic that will change soon.

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