Agriculture
How oil and gas support food security in Canada and around the world
General view of the ‘TD Canadian 4-H Dairy Classic Showmanship’ within the 101st edition of Royal Agricultural Winter Fair at Exhibition Place in Toronto, Ontario, on November 6, 2023. The Royal is the largest combined indoor agriculture fair and international equestrian competition in the world. Getty Images photo
From the Canadian Energy Centre
‘Agriculture requires fuel, and it requires lubricants. It requires heat and electricity. Modern agriculture can’t be done without energy’
Agriculture and oil and gas are two of Canada’s biggest businesses – and they are closely linked, industry leaders say.
From nitrogen-based fertilizer to heating and equipment fuels, oil and gas are the backbone of Canada’s farms, providing food security for Canadians and exports to nearly 200 countries around the world.
“Canada is a country that is rich in natural resources, and we are among the best, I would even characterize as the best, in terms of the production of sustainable energy and food, not only for Canadians but for the rest of the world,” said Don Smith, chief operating officer of the United Farmers of Alberta Co-operative.
“The two are very closely linked together… Agriculture requires fuel, and it requires lubricants. It requires heat and electricity. Modern agriculture can’t be done without energy, and it is a significant portion of operating expenses on a farm.”
The need for stable food sources is critical to a global economy whose population is set to reach 9.7 billion people by 2050.
The main pillars of food security are availability and affordability, said Keith Currie, president of the Canadian Federation of Agriculture (CFA).
“In Canada, availability is not so much an issue. We are a very productive country when it comes to agriculture products and food products. But food affordability has become an issue for a number of people,” said Currie, who is also on the advisory council for the advocacy group Energy for a Secure Future.
The average price of food bought in stores increased by nearly 25 per cent over the last five years, according to Statistics Canada.
Restricting access to oil and gas, or policies like carbon taxes that increase the cost for farmers to use these fuels, risk increasing food costs even more for Canadians and making Canadian food exports less attractive to global customers, CFA says.
“Canada is an exporting nation when it comes to food. In order for us to be competitive we not only have to have the right trade deals in place, but we have to be competitive price wise too,” Currie said.
Canada is the fifth-largest exporter of agri-food and seafood in the world, exporting approximately $93 billion of products in 2022, according to Agriculture Canada.
Meanwhile, Canadians spent nearly $190 billion on food, beverage, tobacco and cannabis products in 2022, representing the third-largest household expenditure category after transportation and shelter.
Currie said there are opportunities for renewable energy to help supplement oil and gas in agriculture, particularly in biofuels.
“But we’re not at a point from a production standpoint or an overall infrastructure standpoint where it’s a go-to right away,” he said.
“We need the infrastructure and we need probably a lot of incentives before we can even think about moving away from the oil and gas sector as a supplier of energy right now.”
Worldwide demand for oil and gas in the agriculture sector continues to grow, according to CEC Research.
Driven by Africa and Latin America, global oil use in agriculture increased to 118 million tonnes of oil equivalent (Mtoe) in 2022, up from 110 million tonnes in 1990.
Demand for natural gas also increased — from 7.5 Mtoe in 1990 to 11 Mtoe in 2022.
Sylvain Charlebois, senior director, in the Agri-Food Analytics Lab at Dalhousie University, said food security depends on three pillars – access, safety, and affordability.
“Countries are food secure on different levels. Canada’s situation I think is envious to be honest. I think we’re doing very well compared to other countries, especially when it comes to safety and access,” said Charlebois.
“If you have a food insecure population, civil unrest is more likely, tensions, and political instability in different regions become more of a possibility.”
As a country, access to affordable energy is key as well, he said.
“The food industry highly depends on energy sources and of course food is energy. More and more we’re seeing a convergence of the two worlds – food and energy… It forces the food sector to play a much larger role in the energy agenda of a country like Canada.”
Agriculture
Ottawa may soon pass ‘supply management’ law to effectively maintain inflated dairy prices
From the Fraser Institute
Many Canadians today face an unsettling reality. While Canada has long been known as a land of plenty, rising living costs and food insecurity are becoming increasingly common concerns. And a piece of federal legislation—which may soon become law—threatens to make the situation even worse.
According to Statistics Canada, rising prices are now “greatly affecting” nearly half of Canadians who are subsequently struggling to cover basic living costs. Even more alarming, 53 per cent are worried about feeding their families. For policymakers, few national priorities are more pressing than the ability of Canadians to feed themselves.
Between 2020 and 2023, food prices surged by 24 per cent, outpacing the overall inflation rate of 15 per cent. Over the past year, more than one million people visited Ontario food banks—a 25 per cent increase from the previous year.
Amid this crisis, a recent academic report highlighted an unforgivable waste. Since 2012, Canada’s dairy system has discarded 6.8 billion litres of milk—worth about $15 billion. This is not just mismanagement, it’s a policy failure. And inexcusably, the federal government knows how to address rising prices on key food staples but instead turns a blind eye.
Canada’s dairy sector operates under a “supply management” system that controls production through quotas and restricts imports via tariffs. Marketing boards work within this system to manage distribution and set the prices farmers receive. Together, these mechanisms effectively limit competition from both domestic and foreign producers.
This rigid regulated system suppresses competition and efficiency—both are essential for lower prices. Hardest hit are low-income Canadians as they spend a greater share of their income on essentials such as groceries. One estimate ranks Canada as having the sixth-highest milk prices worldwide.
The price gap between the United States and Canada for one litre of milk is around C$1.57. A simple calculation shows that if we could reduce the price gap by half, to $0.79, Canadians would save nearly $1.9 billion annually. And eliminating the price gap would save a family of four $360 a year. There would be further savings if the government also liberalized markets for other dairy products such as cheese, butter and yogurt. These lower costs would make a real difference for millions of Canadians.
Which brings us back to the legislation pending on Parliament Hill. Instead of addressing the high food costs, Ottawa is moving in the opposite direction. Bill C-282, sponsored by the Bloc Quebecois, has passed the House of Commons and is now before the Senate. If enacted, it would stop Canadian trade negotiators from letting other countries sell more supply-managed products in Canada as part of any future trade deal, effectively increasing protection for Canadian industries and creating another legal barrier to reform. While the governing Liberals hold ultimate responsibility for this bill, all parties to some degree support it.
Supply management is already causing trade friction. The U.S. and New Zealand have filed disputes (under the Canada-United States-Mexico Agreement and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership) accusing Canada of failing to meet its commitments on dairy products. If Canada is found in violation, it could face tariffs or other trade restrictions in unrelated sectors. Dairy was also a sticking point in negotiations with the United Kingdom, leading the British to suspend talks on a free trade deal. The costs of defending supply management could ripple farther than agriculture, hurting other Canadian businesses and driving up consumer costs.
Dairy farmers, of course, have invested heavily in the system, and change could be financially painful. Industry groups including the Dairy Farmers of Canada carry significant political influence, especially in Ontario and Quebec, making it politically costly for any party to propose reforms. The concerns of farmers are valid and must be addressed—but they should not stand in the way of opening up these heavily regulated agricultural sectors. With reasonable financial assistance, a gradual transition could ease the burden. After all, New Zealand, with just 5 million people, managed to deregulate its dairy sector and now exports 95 per cent of its milk to 130 countries. There’s no reason Canada could not do something similar.
Bill C-282 is a flawed piece of legislation. Supply management already hurts the most vulnerable Canadians and is the root cause of two trade disputes that threaten harm to other Canadian industries. If passed, this law will further tie the government’s hands in negotiating future free trade agreements. So, who benefits from it? Certainly not Canadians struggling with food insecurity. The government’s refusal to modernize an outdated inefficient system forces Canadians to pay more for basic food staples. If we continue down this path, the economic damage could spread to other sectors, leaving Canadians to bear an ever-increasing financial burden.
Author:
Agriculture
2024 harvest wrap-up: Minister Sigurdson
As the 2024 growing season comes to a close, Minister of Agriculture and Irrigation RJ Sigurdson issued the following statement:
“While many Albertans were enjoying beautiful fall days with above-average temperatures, farmers were working around the clock to get crops off their fields before the weather turned. I commend their continued dedication to growing quality crops, putting food on tables across the province and around the world.
“Favourable weather conditions in August and early September allowed for a rapid start to harvest, leading to quick and efficient completion.
“The final yield estimates show that while the South, North West and Peace regions were slightly above average, the yields in the Central and North East regions were below average.
“Crop quality for oats and dry peas is currently exceeding the five-year average, with a higher rate of these crops grading in the top two grade categories. In contrast, spring wheat, durum, barley and canola are all grading in the top two grades at rates lower than the five-year average.
“Crop grading is a process that determines the quality of a grain crop based on visual inspection and instrument analysis. Factors like frost damage, colour, moisture content and sprouting all impact grade and affect how the grain will perform during processing or how the end product will turn out. Alberta generally produces high-quality crops.
“Farmers faced many challenges over the last few years and, for some areas of the province, 2024 was a difficult growing season. But Alberta producers are innovative and resilient. They work constantly to meet challenges head-on and drive sustainable growth in our agricultural sector.
“Alberta farmers help feed the world, and I’m proud of the reputation for safe, high-quality agricultural products that this industry has built for itself. Thank you to our producers, and congratulations on another successful harvest!”
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