By Kate Jackman-Atkinson, myWestman
NEEPAWA, Man. — For the last decade, the Canadian government doubled down on the resource sector in general and the petroleum sector in particular. It wasn’t just the government investing though, the private sector and individuals across Canada rushed to Alberta to stake their claim in the black gold rush.
Investment in oil and gas was promoted as a way to shore up the economy and help the country weather the last recession. It wasn’t a bad strategy; after all, oil was worth a lot and Canadian oil was highly regarded since it came from a stable, democratic country.
As the government sought to reduce their overall costs, cuts were made to other areas of the economy, including agriculture. Canadian farmers were left largely to fend for themselves as cut backs to research and programs came into effect. For many farmers, it’s been a tough go over the last decade with depressed livestock prices and transportation challenges faced by crop producers.
How the times have changed.
It seemed hard to believe a year ago, but oil is a cyclical industry. The problem is that all of this investment in oil has left us with eggs in very few other baskets. Today, oil is worth less than $50/barrel, half of what it was about a year ago. Many economists are expecting oil to remain cheap for a while. Oil companies are now feeling many of the challenges cattle producers experienced in the post BSE years.
Additionally, the environmental impact of oil and gas development has begun to tarnish Canadian’s reputation.
Oil is the golden child no more and I think Canadians bet on the wrong industry.
Agriculture is a big part of the Canadian economy, more so than oil and gas. The Canadian agri-food industry employs 2.2 million Canadians and accounts for one in eight jobs. While many people are employed by the oil and gas sector, according to the Canadian Association of Petroleum Producers, in 2014, the sector employed 149,000 people. When you add indirect employment, that number is doubled– still far less than those employed by the agricultural industry.
Looking beyond our borders, Canada is also important to the world food market. According to Agriculture and Agri-Foods Canada, Canada is the fifth largest agricultural exporter in the world and is the world’s largest exporter of flaxseed, canola, pulses and durum wheat.
Agriculture is a surprisingly diversified industry; from grain farmers, to livestock producers, to greenhouses, to processors, the sector is incredibly varied. Not only that, but many sectors offset one another, levelling out the industry as a whole. The industry is also spread across the country, with a presence from coast to coast.
Farmers are also great for the economy, as money rarely stays in their pockets. While improved profits experienced by oil company result in some bonuses and some reinvestment, dividends mostly accrue to shareholders across the world and a few highly paid people at the top. When a farmer has a good year, they invest in local economies. They buy new tractors or vehicles or grain bins. They build new barns or shops or maybe do some work on the house. They buy more land or experiment with different crops or farming techniques. In other words, they spread the wealth and keep other local business going.
All commodity markets are cyclical and whether it’s farming, oil and gas or housing, prices will rise and fall. The government can’t predict the future and would have been best to invest in things that all Canadians can use, than try to pick the winners and losers.