Canada: Cereals throw big economic punch

In the past three years, the estimated average total impact on the Canadian economy from wheat, barley, durum and oats was $68.8 billion per year, supporting more than 370,000 paid full-time equivalent jobs as well as the work by family members that brings the total close to 400,000. The total wage impact of the four crops averaged $27 billion. The geographical spread of these impacts is tied to the location of the major industries in the supply chain. The bulk of cereal grain production takes place in the West, while much of the later-stage processing takes place in the East. | WP graphic

Canada’s grain farmers are the foundation of an economic heavyweight that out-punches other crops and the country’s flashier industries.

That’s the bottom line of a new study funded by Cereals Canada.

“When we look at some of the other studies in agriculture, we can see how the four cereal grains that we looked at… provide a larger economic impact than the… beef cattle or canola sectors,” said Leif Carlson, who oversees markets and trade issues for Cereals Canada.

“We can also see that the economic impact from cereal grains are larger than from the aerospace sector or from the rail transportation operations of the railways in Canada.”

The report, by LMC International, an independent, agriculture-focused analytical firm in the United Kingdom, found hundreds of thousands of jobs and tens of billions of dollars rippling out of Canada’s wheat, durum, barley and oats industries.

It found those four crops’ direct economic impact was $25.9 billion, and 141,000 full-time jobs coming straight out of crop production and crop-based processing. Crop production also engaged 28,000 family members beyond the primary grower on the farm.

Including all the spinoffs from farmer spending, service providers to farms and service providers for primary crop processing, the estimated total economic impact leaps to $68.8 billion per year and 370,000 full-time jobs. Total wages flowing out of crop production and crop-reliant processing are $27 billion.

The study’s analysts stressed these estimates are not torqued-up exaggerations, but err on the conservative side so that the study won’t be accused of overstating the economic reality.

“We do that for credibility,” said David Jackson, lead crops industry analyst for LMC.

Industrial activity that only uses a crop as a minority element in a product, such as oats for breakfast bars, was excluded from the impact estimates.

Despite the crops’ production being overwhelmingly based in Western Canada, more than a third of the economic impact is in the East. That’s because a large part of the food processing industry is based in Ontario and Quebec.

Wheat makes up almost two-thirds of the economic impact, wages and spinoffs from the four crops. Barley makes up much of the rest, with durum and oats bringing up the rear.

The report assesses the cereals industry to have a much greater economic impact than the aerospace and rail transportation industries. It employs more people than telecommunications.

It is bigger than canola and beef.

Of major industries compared, only oil and gas have a bigger national impact. If the cereals industry’s impact is combined with that of beef cattle and canola, agriculture has a greater share of national economic output than even oil and gas, even excluding the hogs and pork industry and the large supply-managed industries.

Tags: Grains, Canada, Production, wheat, economy, crop, oats, durum, barley