Where is Agriculture Important to Canada’s Rural Economy?

1. Where is Agriculture Important to Canada’s Rural Economy? Presentation to seminar with Bioresource, Policy, Business and Economics University of Saskatchewan, February 17, 2012 {originally presented to Growing Canada’s Rural Economies: Toward an economic renaissance in agri-food and other sectors Canadian Agri-Food Policy Institute, Winnipeg, February 28, 2008} Ray D. Bollman RayD.Bollman@sasktel.net 613-297-5826

2. Where is Agriculture Important to Canada’s Rural Economy? Outline Introduction What is rural? What is driving rural? What are the major sectors in rural? What is agriculture? How important is agriculture? Where is agriculture important? How important is agri-food processing? Where is agri-food processing important? Linkages between rural areas and households of operators of agricultural holdings Wrapping up . . .

3. Where is Agriculture Important to Canada’s Rural Economy? . . . The Canadian Agri-Food Policy Institute (CAPI), which is mandated to assist in policy development for the agri-food sector, wishes to undertake a project to identify policies that could enhance economic activity in rural Canada . . . . . . We wish to seek your assistance in devising a potential policy framework that could guide a rural renaissance . . .

4. Where is Agriculture Important to Canada’s Rural Economy? Ever since my first experience with a rural development project {the ARDA-FRED rural development project in the Interlake area of Manitoba in the 1968 to 1978 period}, I have noticed very little conversation about using sectoral approaches to pursue rural development. The Interlake ARDA-FRED project was called “integrated rural development.” The idea was to invest in the best project(s) in the territorial unit – rather than trying to pick the winning sector(s).

5. Where is Agriculture Important to Canada’s Rural Economy? • OECD. (2006) The New Rural Paradigm: Policies and Governance (Paris: OECD). • The evidence suggests that the shift in policy towards a "new rural paradigm" concerns both: • changes in the policy focus; and • adjustments to the governance structure. • Most notably: • a shift from an approach based on subsidising declining sectors to one based on strategic investments to develop the area's most productive activities; • a focus on local specificities as a means of generating new competitive advantages, such as amenities (environmental or cultural) or local products (traditional or labelled); • more attention to quasi public goods or “framework conditions” which support enterprise indirectly; a shift from a sectoral to a territorial policy approach, including attempts to integrate the various sectoral policies at regional and local levels and to improve co-ordination of sectoral policies at the central government level; • decentralisation of policy administration and, within limits, policy design to those levels; and increased use of partnerships between public, private and voluntary sectors in the development and implementation of local and regional policies.

6. Where is Agriculture Important to Canada’s Rural Economy? • So, first, what is rural development? • If rural development is “new ideas”, • I would invest in the nurture and nutrition of children from minus 9 months to 3 years of age(as I argued in my plenary address to the AIC in 2001 entitled “Rural Canada: From Strength to Strength.)

7. Where is Agriculture Important to Canada’s Rural Economy? • So, first, what is rural development? • If rural development is “jobs”, • I would invest in market research to find niche markets for rural entrepreneurs and entrepreneurial rural communities. • Rural has a low population density(by definition -- therefore, rural firms cannot access agglomeration economies -- and agglomeration economies are trump)and thus rural production must necessarily imply small production runs, likely artisanal goods and services which would likely be targeted at expanding segmenting rich niche markets in metro areas.

8. Where is Agriculture Important to Canada’s Rural Economy? • So, first, what is rural development? • If rural development is “helping rural people help themselves”, • I would invest in the capacity of community members to bring the community to a consensus on development objectives, trajectories, options, decisions and the implementation of the decisions. • Community Futures

9. Where is Agriculture Important to Canada’s Rural Economy? Outline Introduction What is rural?

10. Where is Agriculture Important to Canada’s Rural Economy? • What is rural? • Density and distance to density • Little of the former and a lot of the latter • World Bank. (2009) Reshaping Economic Geography (Washington, D.C.: World Bank, World Development Report).

11. Where is Agriculture Important to Canada’s Rural Economy? Small town near to metro centre; “very” metro re: labour markets “very” rural re: population density Vanscoy Big town far from metro centre; Only “town” jobs – no metro jobs here But quite urban in population density Kindersley

12. Where is Agriculture Important to Canada’s Rural Economy? • What is rural? • Density and distance to density

16. Where is Agriculture Important to Canada’s Rural Economy? Outline Introduction What is rural? What is driving rural? Bollman, Ray D. (2007) Factors Driving Canada’s Rural Economy(Ottawa: Statistics Canada, Agriculture and Rural Working Paper No. 83, Cat. no. 21-601-MIE) (www.statcan.ca/cgi-bin/downpub/listpub.cgi?catno=21-601-MIE). Schultz, T. W. (1972) “The Increasing Economic Value of Human Time.” American Journal of Agricultural Economics, Vol. 54, No. 5 (December), pp. 843 – 850.

18. Where is Agriculture Important to Canada’s Rural Economy? The fact that the price of labour is increasing relative to the price of capital means that bigger machines will replace farmers, regardless of the trend in the price of commodities. Farms will get bigger and farming communities will have fewer farming families.

19. Where is Agriculture Important to Canada’s Rural Economy? Agricultural output is up -- agricultural labour is down. Fewer people are required in agriculture. This trend is on-going – regardless of the price of farm outputs. Consequently, the challenge for rural communities is to find something new to export to maintain a population base.

20. Where is Agriculture Important to Canada’s Rural Economy? Outline Introduction What is rural? What is driving rural? What are the major sectors in rural?

23. Where is Agriculture Important to Canada’s Rural Economy? • Outline • Introduction • What is rural? • What is driving rural? • What are the major sectors in rural? •  manufacturing • and •  rural and small town Canada is competitive in manufacturing

26. Where is Agriculture Important to Canada’s Rural Economy? • Agriculture is shedding jobs in rural Saskatchewan • 1,197 jobs per year (1976 to 1993) • 3,255 jobs per year (2001 to 2010) If 1/3 of Prairie wheat was processed in ethanol plants in rural Saskatchewan, There would be one-time boost of (about) 500 jobs This would compensate for • 6 months of agriculture job decline (at the 1976 to 1993 rate) • 2 months of agriculture job decline (at the 2001 to 2010 rate) • 500 jobs ARE important • But this can happen only once and agriculture is shedding jobs every year • Rural Saskatchewan needs to find something new to export year after year after year . . . . . . .

28. Where is Agriculture Important to Canada’s Rural Economy? Outline Introduction What is rural? What is driving rural? What are the major sectors in rural? What is agriculture?

29. Where is Agriculture Important to Canada’s Rural Economy? Rural is (long) distances and (low) population density. Development is “jobs.” Rural development is “jobs” at a long distance from urban services or long distances to markets or jobs in areas with no agglomeration economies. Rural development policy is a policy initiative to generate jobs that are a long distance from services or markets or jobs in areas with no agglomeration economies. Agriculture is the production of food and fibre commodities. Agriculture policy is a policy initiative to ensure efficient or competitive production of food and fibre commodities.

30. Where is Agriculture Important to Canada’s Rural Economy? Outline Introduction What is rural? What is driving rural? What are the major sectors in rural? What is agriculture? How important is agriculture?

33. Where is Agriculture Important to Canada’s Rural Economy? Outline Introduction What is rural? What is driving rural? What are the major sectors in rural? What is agriculture? How important is agriculture? Where is agriculture important?

34. Where is Agriculture Important to Canada’s Rural Economy? Q: How much of agriculture is in rural and how much is in urban? A: 68% of Canadian agriculture is in predominantly rural regions. Thus, if you use agriculture policy to pursue rural development, 32% will leak to predominantly urban and intermediate regions.

35. Where is Agriculture Important to Canada’s Rural Economy? Q: Within predominantly rural regions, what share of the economy is agriculture? A: 7% of employment in predominantly rural regions consists of (self-employed plus paid) workers on farms. Thus, for the 68% of agriculture policy that gets to predominantly rural regions, it is received by only 7% of rural people.

42. Where is Agriculture Important to Canada’s Rural Economy? Outline Introduction What is rural? What is driving rural? What are the major sectors in rural? What is agriculture? How important is agriculture? Where is agriculture important? How important is agri-food processing?

46. Where is Agriculture Important to Canada’s Rural Economy? Outline Introduction What is rural? What is driving rural? What are the major sectors in rural? What is agriculture? How important is agriculture? Where is agriculture important? How important is agri-food processing? Where is agri-food processing important?