Download Agri-business Research and Development

Agri-business
Research and
Development
An opportunity and a necessity
Introduction
The global agri-business
industry is rapidly
changing, and a policy
shift which emphasizes
research and development
will not only keep Alberta’s
industry competitive, but
also enable the sector
to take full advantage of
future market opportunities.
Alberta has established a reputation the
world over for finding new and innovative
ways to make the most of its natural
resources. However, for decades these
research and development efforts have
been concentrated in the energy industry.
With unprecedented uncertainty in the
provincial economy, transformational
technologies, and changing global trade
dynamics, it is now the time to bring this
same pioneering spirit to another industry,
one as synonymous with Alberta as oil
and gas—agri-business. The global agribusiness industry is rapidly changing, and
a policy shift which emphasizes research
and development will not only keep
Alberta’s industry competitive, but also
enable the sector to take full advantage
of future market opportunities. If done
right, this has the potential to create a new
economic driver in the province, build a
more diverse industry base, and give Alberta
an opportunity to become a hotbed for
technological innovation and research in the
agri-business space.
The agriculture and agri-food (AAF) sector
is going through a period of immense
transformation. The makeup of farms and
This report was made possible through the support of
our Agribusiness series sponsors:
the end markets they serve are changing,
and global competition is growing, therefore
Alberta must find new ways to operate
within these changing dynamics. This
creates a host of challenges for an industry
which for decades has been the lifeblood of
many small towns and prairie economies,
but it also presents an opportunity. While
many macro-factors in the industry, such
as climate and forces of global supply
and demand are outside of the province’s
control, what Alberta can do is work to
optimize productivity in the sector. A
focus on productivity enhancing research
and development stands to create broader
economic benefits for the province, turning
Alberta into a hub for agri-business and
agriculture research and development
activities. These efforts must be supported
by the government if they are to succeed,
however budgetary constraints on all levels
of government require new and innovative
policy solutions. With a strong comparative
advantage in the field, Alberta has the
potential to ensure the competitiveness of
its industry in the face of these structural
changes, while diversifying its economy by
growing a sector in which it already has the
tools, know-how, and resources to prosper.
Agri-business matters
The agriculture and agri-food sector, and
its global competitiveness, is critical to
the present and future growth of both
the Albertan and Canadian economies.
While not currently a major economic
driver like oil and gas or finance, in 2013 it
still accounted for 6.7% of Canada’s GDP,
equivalent to $106.9 billion. That same year,
Canada was the world’s 5th largest exporter
of agriculture and agri-food products. These
exports were predominantly comprised of
three categories: grains & grain products
(25.1% of exports), oilseeds and oilseeds
products (24.3%) and live animals, red
meat & other animal products (17.9%).
With significant growth in export sales of
these products, the Canadian AAF sector is
considered to be a highly export oriented
industry. It is important to note that
whereas the value of Canadian agriculture
and agri-food export sales in 2013 equaled
$46 billion, Canadian import sales for
similar products was $34.3 billion, making
it the world’s sixth largest importer as well.
The sector therefore has the potential
to be a major driver of the nation’s exportled growth, and has significant implications
on the country’s trade position.
Domestically, the sector plays a crucial
role in the growth and prosperity of the
Canadian economy as a whole. In 2013,
2.2 million people were employed in the
agri-business sector, with the foodservice
industry alone accounting for 5.3% of all
Canadian jobs. Moreover, a significant
portion of Canadian household income is
spent on food, making food products, along
with beverages and tobacco products, the
second largest household expenditure
category in the country. Therefore, the
health of the agri-business sector has
significant implications on the country’s
export-led growth, employment, as well as
the welfare and consumption patterns of its
citizens.
Focusing on Alberta’s
competitive advantage
in agri-business has the
future benefits of creating
a less volatile and more
diversified economy,
one which creates new
opportunities by building
upon the province’s
established competencies.
While Alberta’s AAF sector is quite small
relative to the province’s other dominant
industries such as energy, finance, real
estate, and construction, it is still one of the
most active in the entire country. In 2011,
Alberta’s total farm cash receipts accounted
for 21.1% of Canada’s total primary
agricultural production. Alberta’s major
agricultural products, namely beef cattle,
canola, flax, and wheat, led to an astounding
$11.8 billion in farm cash receipts in 2013.
Agriculture is also the second largest
exports sector for the province, right
behind energy. Just as Alberta is fortunate
to have large oil and gas deposits, Alberta
is endowed with a significant geographic
advantage in the AAF sector as well, housing
nearly one-third of all arable land, second
only to neighboring Saskatchewan. The
agriculture and agri-food sector in Alberta
has also been a source of job creation in
the province even while the sector as a
whole was volatile. Between 2012 and 2013,
the employment growth-rate in primary
agriculture and food increased by 18.4%.
During that same period the Canadian
economy as a whole saw contraction in
employment growth by 1.8%. Therefore, the
province plays a central role in the national
industry, and has a unique position which
must be leveraged.
In a provincial and national economy
increasingly dependent on exports, the AFF
sector plays an important role in building
and maintaining a healthy economy. With
oil and gas in the middle of one of its most
uncertain times in recent memory, the
continued growth and competitiveness
of the AFF industry is of the utmost
importance. Focusing on Alberta’s
competitive advantage in agri-business has
the future benefits of creating a less volatile
and more diversified economy, one which
creates new opportunities by building upon
the province’s established competencies.
Shifting Competitive Landscape
The economic importance and exportdriven nature of Alberta’s agri-business
sector means that it must remain
competitive both within Canada and abroad.
World population is expected to increase
over the coming decades, some estimating
it will grow by more than 2 billion by 2050.
If the Canadian agri-business industry is
to take advantage of the growing demand
driven by these demographic pressures,
it must out-compete other jurisdictions.
For example, China, with one of the
world’s fastest growing economies and
an increasingly affluent middle class, is
currently Canada’s second largest export
market for agri-food. This demand will only
grow in the coming years and decades as
China’s economy develops and its domestic
consumption patterns mature. Given the
Chinese domestic appetite for oilseeds and
beef, the market provides significant growth
opportunities for Alberta’s agri-business
products, but only if the industry and the
policy frameworks which govern it are
correctly positioned to meet the additional
demand.
While Alberta’s AAF sector is considered
competitive relative to other Canadian
provinces, its productivity must be
enhanced if it is to maintain its competitive
edge and play a bigger role in the global
market. Australia, Mexico, the United
States, Brazil, the European Union and
Russia all stand to be significant economic
competitors in growing markets such as
China. Australia, as the world’s third largest
exporter of beef and tied with Canada as
the world’s third largest exporters of wheat,
may be the most significant rival. Unlike
the AAF sector in Alberta, which represents
only 2% of the province’s GDP, it accounted
for 4% of Australia’s GDP in 2012. In terms
of productivity, Australia is a relatively
low-cost producer and a major exporter of
dairy products in comparison to Alberta and
other provinces in Canada. On top of these
domestic economic considerations, Australia
is also geographically better positioned to
export to developing Asian markets. Mexico
is another major competitor particularly
in meat, fruits and vegetables. Mexico’s
growing competitiveness was evident in
2013 when the country ended the year
with a $208 million surplus in primary
agriculture trade with Canada after having
been in a $21.5 million deficit in 2012.
It is without a doubt that Australia and
Mexico constitute significant competition
for Alberta’s AAF sector, and therefore it
is necessary for Alberta to ensure that its
industry stays competitive if the province
is to economically benefit from growing
market opportunities.
The United States is by far Canada’s
largest agriculture and agri-food trade
partner. Although they import more
Canadian agricultural products than any
other country, the U.S.’ high agricultural
productivity also enables it to be the world’s
largest beef and pork exporter and the
world’s second largest wheat exporter. The
European Union can also be considered one
of Alberta’s global competitors, partially
due to the significant government support
their producers receive, particularly in the
cereal market. Moreover, the E.U.’s Common
Agricultural Policy reforms have resulted
in a more integrated European industry,
allowing agricultural producers to leverage
economies of scale and become more
competitive and efficient. The threat of
global competition is only enhanced by the
growing number of free trade agreements
which potentially opens up Canada’s
domestic market to foreign producers. The
makeup of the agriculture and agri-food
industry has changed drastically over the
past ten years; with agricultural productivity
growth in Brazil and other major transition
economies surpassing many developed
countries, and significantly impacting the
market. With Alberta having to deal with the
increasing competitiveness of established
global economies such as Australia and
the U.S. while also facing the likely future
competition from developing economies,
the province’s agricultural industry needs
to focus on maintaining and improving its
competitive edge or risk being left behind in
a rapidly changing global marketplace.
Alberta’s Competitive Standing [Productivity]
To determine how Alberta stacks up to
these competitors, the productivity of its
agriculture and agri-food sector must be
assessed. In layman’s terms, productivity
simply represents how much output is
produced per unit of input used, and this
measurement can be expressed in growth
rates or levels. Essentially, it is a way to
measure how much can be produced if
other factors such as land and labour
are held constant. Because minimizing
inputs minimizes costs, this provides a
strong comparative metric of different
jurisdictions. According to the OECD,
in Canada, and had declined at an
average of 2.2% per year— well below the
national average. Even considering partial
productivity indicators with single inputs
such as labor and capital, productivity
growth rates ranks Alberta last in both.
However, the agriculture, forestry, fishing
and hunting sector had an average growth
rate of 4.1% per year, the highest in the
country across all provinces. Despite slow
growth in overall productivity, this shows
that Alberta’s agriculture industry is still
leveraging more out of its labour and
capital—hinting at the industry’s investment
and growth potential.
“Productivity is commonly defined
as a ratio between the output volume
and the volume of inputs. In other
words, it measures how efficiently
production inputs, such as labour
and capital, are being used in an
economy to produce a given level of
output. Productivity is considered
a key source of economic growth
and competitiveness and, as such,
is basic statistical information for
many international comparisons and
country performance assessments.”
It must be noted that when specifically
referring to the productivity of the agriculture and agri-food sector, the measure
represents an aggregate view of all the
crops and products in the industry.
Therefore, attention should be given to
the differences in productivity amongst
the major agricultural commodities
produced in Alberta to get a more nuanced
understanding of the industry and its
relative strengths. In the agriculture space,
yields per acre acts as a very effective
measurement of productivity across
time and jurisdictions. In comparison
to other prairie provinces (Manitoba &
Saskatchewan), Alberta is very productive
in producing wheat, canola and barley,
however it does not perform as well for oats
production. Therefore it can be concluded
Despite its importance, the Centre for the
Study of Living Standards found Alberta’s
multifactor productivity (productivity
relative to a mix of inputs) growth rate
between 1997 and 2010 to be the lowest
4
Labor and Capital Productivity Growths in Canada and the Provinces 1997-2010
(Average Annual Growth Rates in %)
3
2
1
0
-1
-2
-3
-4
-5
Canada
ON
QC
NS
NB
MB
Capital Productivity Growth Rate
BC
PEI
SK
AB
Labour Productivity Growth Rate
NL
that Alberta’s AAF sector performs better
than its regional competitors. However,
an international market competitor such
as the United States performs better than
Alberta in barley and wheat yields, with
Alberta’s average crop yields for canola and
oats being better than those of the U.S. This
exemplifies how the province remains more
productive than its competitors in some
agricultural goods while lagging behind
rivals in others.
Alberta must effectively
compete on multiple fronts
to be successful, and
focusing on productivity
enhancement is where it
needs to start. Alberta must
not only compete with other
jurisdictions in Canada,
which operate within the
same bounds of regulation
and international trade, but
also with other economies
around the world.
Alberta must effectively compete on
multiple fronts to be successful, and
focusing on productivity enhancement is
where it needs to start. Alberta must not
only compete with other jurisdictions in
Canada, which operate within the same
bounds of regulation and international
trade, but also with other economies around
the world. It is vital that the province stay
competitive against all of them, not only
for market share, but for critical inputs of
capital and labour—two things which have
become increasingly mobile in the global
economy. Staying competitive in the face
of shifting economic forces will be the
biggest challenge for the AFF sector going
forward. Even though Alberta is one of the
nation’s leading agricultural exporters and
possesses many of the advantages necessary
to meet rising demand, the structural
changes occurring throughout the world,
and volatility of inputs, requires Alberta to
focus on productivity in order to remain
competitive. If Alberta is able to do more
with less, then it can keep costs down while
still taking advantage of growing demand,
placing itself in a much stronger position
relative to its competitors. By focusing on
productivity, Alberta can create an AAF
industry which can grow independent
of volatile market inputs, and help stir
up technological innovation within the
province.
Alberta Average Crop Yields, in % difference to Prairie Province Averages
20
15
12
10
5
5.7
4.1
7.6
7.1
5.9
2.6
16
14
6.3
13
7.5
5.5
1.7
1.5
9
3.2
1
0
-5
-10
-2.7
-5.2
1960-1969
1970-1979
Wheat
1980-1989
Oats
Canola
1990-1999
Barley
2000-2010
R&D Support Framework
For Alberta’s agri-business sector to
remain a strong and competitive industry,
independent of volatile market trends and
structural changes, a policy framework
which places emphasis on enhancing
productivity is required. This means a shift
toward greater research and development
support in the province. The relationship
between agricultural R&D and productivity
and the need for government intervention
is well rooted both in economic theory and
the practical reality faced by Alberta, and
the benefits go beyond just a healthier and
more competitive agri-business industry.
Structural issues within the industry’s
intellectual property regime, and the
positive effects it would have on policy
and economic development goals, makes
a robust case for greater government-led
support in a variety of forms. The provincial
government must begin by correcting
market failures that inhibit the industry’s
own ability to invest in productivity.
Attention must also be given to the
various means of intervention that can be
implemented so as to encourage and expand
R&D in the province.
R&D: Cost effective way to grow
productivity
Greater investment and support for research
and development leads to increases in
productivity, and such investments would
have a profound effect on Alberta’s agribusines sector. The economic linkages
between increased agricultural R&D and
productivity growth have been studied
greatly, with the bulk of these findings
asserting that these investments have a high
rate of return relative to the cost of capital.
By finding new and innovative cost-cutting
technologies, research and development
activities allow producers to get more
benefits out of their inputs, thus increasing
productivity. These productivity-growing
technologies can come in the form of new,
more efficient, machinery, genetically
superior crops, or even human resources
techniques and farming practices. While
not all research and development is purely
aimed at reducing costs, increased scientific
and technological research builds upon
itself and creates long-term secondary and
tertiary benefits in the industry.
Especially in the agri-business space, studies
have found that research and development
activities tend to pay significant dividends.
One of the most cited studies on the topic
of returns on agricultural R&D, Alston et
al. (2010), concludes that the annual value
of expenditures on research is significantly
less than the annual value of agricultural
productivity gains. More specifically, this
study suggests that at times benefits from
productivity growth caused by investments
in agricultural R&D exceed the costs of
these investments by a factor of 10 or
more. This study confirms the findings
determined a decade ago by Alston et al.
(2000) in which a comprehensive analysis of
returns on agricultural R&D was conducted
which found that the mass distributions
of the internal rates of return reported in
literature lied between 20-80%. Therefore,
research and development in the agriculture
and agri-food space stands to not only
increase productivity and competitiveness
in the industry, but these significant rates of
return show that it can also be cost-effective
to do so.
The link between increased productivity
and agricultural R&D provides an incentive
and a need for policymakers in Alberta to
implement measures that result in a more
competitive agriculture and agri-food sector.
Domestic pressures such as fewer and
older farmers in the province, rising labour
costs, and volatile input costs all point to
a need to increase productivity. Although
Alberta has a large amount of productive
agricultural land, the opportunity costs of
using this land for agricultural purposes
increases as other businesses flourish. These
structural changes are occurring throughout
the world and by all indications the trend
will continue into the future. Therefore,
for the agricultural sector to increase its
productivity given the significant limitations
on land and labour, there needs to be more
emphasis placed on improving capital
costs through innovation, which can only
be achieved through more research and
development.
Current state of Ag-R&D and the
case for intervention
Currently, Alberta’s public and private
investments in agricultural R&D are
far from sufficient to improve the
competiveness of Alberta’s agri-business
sector. Given this situation, the question
is whether government intervention is
necessary to improve agricultural R&D
investments. Economic theory states that
government intervention is appropriate
in situations where the market fails and is
incapable of correcting itself. In this case,
market failure is when private investments
in R&D are significantly below socially
optimal levels. Experts argue that without
some form of government intervention,
private investments in agricultural R&D
will never be socially optimal. This is
because even when firms incur significant
costs to bring a new product or technology
to market, and shoulder significant risk
(both financial and legal), they rarely
capture the full reward of their work. The
private costs therefore often outweigh the
private benefits of these activities. This
would however not be the case if the full
social benefits were accounted for. Due to
structural issues around costs, litigation,
and uncaptured benefits in the intellectual
property regime, firms invest in R&D if they
feel they will receive enough future profits,
yet the true benefits of these investments
There is a persistent shortfall in R&D
spending in Canada. Although aggregate
spending on research and development
has been increasing over the years, the
amount spent on R&D as a percentage of the
economy’s gross domestic product has been
declining. In the AAF sector, between 2004
and 2013, Canada’s public R&D spending
as a share of Gross Farm Receipts declined
from an average of 1.6% to 1.4%. As the chart
below illustrates, Canada lags behind its
major agricultural competitors, particularly
the U.S. and the E.U., in the proportion of
the economy’s GDP attributed to domestic
spending on R&D. In 2004, Canada’s
domestic spending on R&D was 2.01% of
its GDP, which was higher than both China
and the E.U. However, by 2011 only 1.62%
of the economy’s GDP was from domestic
spending on R&D, whereas China and the
E.U. spent 2.08% and 1.91% respectively.
This serves to express how there is relative
under-spending in agri-business R&D, and
when compared to other jurisdictions,
spending must be increased so as to
maintain competitiveness in global markets.
Gross Domestic Spending on R&D, % of GDP
3.0
2.5
2.0
1.5
1.0
0.5
0.0
2004
2005
United States
2006
2007
2008
2009
OECD - Total
China (People's Republic of)
2010
2011
2012
2013
European Union (28 countries)
Canada
are not entirely captured within a single
private sector actor. The true benefit of
such research is rarely reflected in a firm’s
profit statement, leading to persistent
underinvestment.
The underlying point is that
there is a lack of provincial
support for R&D in the
province during a crucial
cross-road for the industry,
and a new, innovative,
policy prescription which
helps spur R&D investment
is required.
Although Alberta demonstrates a great need
for these investments, the private sector
is lagging behind its provincial rivals. In
2010, Alberta-based firms spent only $3
million on food-related research, whereas
food manufacturers in Ontario spent $64
million, those in Quebec spent $60 million,
and those in British Columbia spent $12
million. The fact that investments from
Alberta’s domestic food manufacturers
constituted less than two percent of the total
amount spent on R&D nationally shows that
provincial policies are needed to encourage
private investments that provide benefits for
the overall economy. Alberta is also falling
behind in intellectual property, with only
19 agriculture patents being assigned to the
province between 2000 and 2011. Therefore,
both a theoretical and practical case exists
for greater government intervention to
increase agricultural R&D.
While this lag in private R&D in the
province persists, the current level of
public investment is not enough close
the gap, and budgetary constraints may
not make it feasible to do so. Canadian
government’s R&D spending in the AAF
sector has actually declined from 3% to 2%
of Gross Value Added in the agricultural
sector over the past 20 years. Even though
the Government of Alberta’s expenditures
on scientific activities grew from $234.5
million in 1999 to $814.4 million in 2013,
these scientific activities were not primarily
related to agriculture or food-related
research, and therefore the province’s AAF
sector does not reflect the same upward
trend in R&D investment. According to
Agriculture and Agri-Food Canada (AAFC),
public R&D spending in support of the AAF
sector demonstrated a declining trend prior
to 2008. Moreover, the federal portion of
these expenditures averaged a notable 69%,
indicating that the majority of public R&D
spending was from the federal government,
with provincial government expenditures
in R&D both small and declining over
time. The underlying point is that there
is a lack of provincial support for R&D in
the province during a crucial cross-road
for the industry, and a new, innovative,
policy prescription which helps spur R&D
investment is required.
The current provincial government
contribution to AAF R&D expenditures is
weak and overshadowed by those granted to
other sectors of the economy. The Ministry
of Agriculture and Rural Development is
responsible for the provincial government’s
expenditures in the sector. Between
Objectives of GoA total research expenditures, 2012/2013
Protection and improvement of human health
Control and care of the environment
20%
26%
7%
19%
Basic research
14%
6%
Other objectives
8%
Agriculture production and technology
Production distribition and rational utilization of energy
Forestry
2012 and 2013 only 6% of the total public
research expenditures ($48.5 million)
were allocated to this particular ministry,
illustrating an apparent underinvestment
of R&D funding relative to other industries.
By comparison, the same period saw the
Ministry of Environment and Resource
Development spend $199.6 million and the
Ministry of Energy spent $179.4 million
on R&D. By objectives, only 8% of total
Government of Alberta research investment
was dedicated to agriculture production and
forestry. Only forestry and basic research
were allocated less funding. Agri-business
is vital to the future of the province’s export
oriented growth and is an industry which
is uniquely placed to take advantage of
changing global demand. Therefore a strong
incentive exists for increased public support
of the industry. Research and development
is one of the main determinants of
productivity. Therefore to correct for
private sector underinvestment, and ensure
that the agriculture and agri-food sector can
continue to compete, there must be greater
public involvement and a potential reframing of provincial priorities.
Current R&D policies
With significant budgetary constraints
currently ailing the Alberta government,
greater direct investment and grants
for the industry may not be likely in
this economic climate. Therefore, more
innovative solutions must be explored to
help the private sector close the current
gap in R&D investment. However, there
are still programs and services provided by
the provincial and federal government to
support Alberta’s AFF sector, with the main
R&D policy framework presently utilized
being the federal-provincial-territorial
partnership called Growing Forward 2. This
policy framework represents a 5 year R&D
investment of more than $400 million in
Alberta’s agri-business sector with emphasis
on innovation, competiveness and market
development. A few other important R&D
policies that support Alberta’s farmers and
agri-businesses are summarized below:
Advancing Canadian Agriculture
and Agri-Food (ACAAF) Program:
a federal government program that
finds solutions to emerging challenges,
advances research to capture market
opportunities and shares information to
expand the AAFS.
The Alberta Livestock and Meat Agency
Research and Development Grant
Program: a grant program offered by
a provincial government agency that
emphasizes “investing in innovation
delivering productivity gains and
supply chain collaboration for improved
knowledge transfer and profitability”
(Alberta Livestock and Meat Agency
Ltd., 2015)
Alberta Barley Commission Research
Program: a research program provided
by a not-for-profit organization
comprised of Alberta barley producers
with the goal of fostering the
development of new and improved
technologies
Despite these programs, the data still shows
that investment in R&D in Alberta continues
to not match up against its provincial and
international rivals. With provincial budget
shortfalls and a march towards balanced
budgets on the federal level, policies must
be implemented which spur greater private
sector involvement and develop synergies
in the industry to help aggregate investment
in order to reach a level where the province
can become a leader in agri-business related
research.
Policy Alternatives and Solutions
Agricultural research and
development investments in Alberta
are predominantly made up of
public spending, and the current
policy framework with the myriad of
government programs and services
serves to leave the industry that way
for the long-term. Therefore, given the
suboptimal level of R&D investments
in the agri-business space, a policy
framework should be adopted that
encourages more participation and
investments from the private sector.
As public budgetary constraints
persist, and the agricultural industry
changes, with fewer farms that are
larger in size and operated by older
farmers, policy should encourage
the private sector to invest in R&D so
as to maintain their competiveness
given the constraints they already
face on labor and other inputs, and
a changing global market.
1.Supporting Alberta universities as hubs for agri-business R&D
A significant problem which must be addressed is the fact that Alberta universities are
behind other Canadian institutions in acquiring agri-business related funding. Between 1992
and 2012, agricultural-related grants amounted to $79 million for the University of Guelph,
$41 million for the University of Saskatchewan, $39 million for the University of Montreal
and only $26 million for the University of Alberta, with other Alberta universities receiving
significantly less. Moreover, in 2012 Alberta received a $98 million NSERC (National
Sciences and Engineering Research Council of Canada) grant, however only 3% of this was
allocated for agriculture and this proportion has not varied over the years despite variances
in the grant amounts. For the provincial government to truly support agriculture through
investments in R&D, the government must pay greater attention to Alberta universities
in order to enhance their ability to attract research funding. Alberta is renowned for its
research and natural science institutions, however much of the technical attention is given
to the oil and gas industry. The government should work with universities to help attract
greater private sector and federal government funding to leverage the R&D capacity that
already exists at these institutions.
2.Promoting partnerships within industry
Policymakers have the ability to author legislation that enables the establishment of NGOS
that represent the industry; the 1972 Farm Products Agencies Act, being one example.
This act enabled the creation of promotion-research agencies, such as the Canada Beef
Agency, and national marketing agencies like the Egg Farmers of Canada and Chicken
Farmers of Canada. Albertan farmers can benefit from this federal legislation, but they
need more assistance through provincial legislation that creates agencies which are more
focused on their unique interests and provides greater assistance to R&D than available
from federal funding. There is also a role for the industry to integrate a number of
associations representing the sector. One estimate puts the number of agriculture industry
associations in Alberta at 250 versus only 56 in the oil and gas sector. Greater integration
and coordination within the agri-business industry allows it to bolster its advocacy before
all levels of government. Associations can also have a significant role in R&D by providing a
means to share technology, and lower barriers around intellectual property. For example, the
Canadian Oil Sands Innovation Alliance (COSIA) is an association which helps companies
in the oil and gas sector share technologies and leverages their collective economies of
scale in research and development. Since 2012, COSIA members have shared 777 distinct
technologies valued at $950 million. Such a partnership within the agri-business space
helps to build the competitiveness of the entire industry by taking advantage of industrywide innovation and accelerating the pace of R&D by working together. The industry, with
the help of policymakers, can work together to achieve mutually beneficial goals and build a
more mature and globally competitive industry.
3.Developing check-off levy schemes to fund research
The provincial government can also support legislation that encourages check-off levies,
particularly those that are voluntary rather than mandatory. These easily implemented
mechanisms limit free-riding on the benefits of new technologies. A check-off is a voluntary
or mandatory deduction of the gross value of the sale of a particular good/product (in this
case, an agricultural crop/commodity) at the first point of sale or distribution. An example
of this is the $1 national levy that Alberta producers must contribute to the Canadian
Beef Cattle Research, Market Development, and Promotion Agency. Industry check-offs
have been a significant source of funding for R&D in agriculture. The Saskatchewan Pulse
Growers (SPG) have used check-offs as their primary mechanism for financing such
activities. Over the 2009-2013 period, R&D expenditures of SPGs averaged $6.6 million.
This mandatory levy has benefited growers is Saskatchewan greatly since 1984 and it is a
model that must be considered for Alberta’s producers, namely those growing barley, wheat,
oats and canola. These crops are Alberta’s major agricultural exports and therefore further
investments in R&D should be encouraged so as to guarantee their competitiveness. This
scheme can collect funds to contribute directly to R&D funding for the industry and help
close the gap between Alberta and other jurisdictions.
4.Encouraging collaboration between industry and research institutions
Alberta’s government can also learn from the Netherland’s “Food Valley” to improve on its
agriculture and food-related R&D policies. The Food Valley is the world’s leading center of
food innovation research and collaboration, and brings together businesses and research
institutes for the purpose of innovation. Significant results from this program include the
very high application of research into new products, and a research citation impact twice
the global average. This shows the importance of building partnerships between the private
sector and research institution, and benefits of creating an industry cluster. Just as Alberta
competes with other jurisdictions for market share, it also competes for R&D investment
and capital. Therefore, Alberta needs to look at building synergies between private sector
actors and the strong natural science research capacity which already exists within the
province to attract this activity. The success of Netherland’s Food Valley demonstrates how
the strong linkages between researchers and businesses can be of immense value. It shows
how productivity is enhanced when industry and the market are allowed to select research
priorities, and how private interests can be helpful in directing research activity.
Conclusion
The Albertan economy is at a cross-road. With the latest downturn in oil and gas showing the dangers of relying
too heavily on a single industry, policy makers must look at ways to leverage the province’s established expertise
in new ways. There must first be thought given to growing established industries before developing new, novel
ones. This is where the opportunity lies in greater agri-business research and development. Policies which
foster competitiveness through ground-breaking research not only safe-guard and grow Alberta’s position as a
major AAF exporter; they have the potential to make the province a hub of technological achievement. Alberta
can become home to a new knowledge-based sector that focuses on agri-business. The environment is fertile
for Alberta to not only find growth through greater commodity exportation, but to also develop a sector which
exports ideas and technologies the world over. The potential trickle down impact of greater R&D development are
economy wide, and can help re-shape Alberta’s industrial landscape, but only if the correct framework is
in place, one which emphasizes the importance of innovation and discovery. With the rapid pace
at which the world economy is changing, this opportunity may be fleeting, and
requires direct, immediate, and thoughtful action.
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