Canadian Farmers Income Increased by 53% in 2011

Canada's prairie provinces produce the majority of agricultural products in Canada. The province of Saskatchewan is sometimes known as the 'breadbasket' of the country for producing nearly 60 percent of grain grown in the country

Canadian farm income increased by 53 percent in 2011 from 2010 according to Statistics Canada. Realized net income, meaning farm income after operating expenses and depreciation, amounted to $5.7 billion last year, with farmers making gains despite a large increase in costs.

The 2011 gains follow a 19 percent increase in income in 2010 and a 19.6 percent decline in 2009 following the global financial crisis.

Agriculture and agrifoods is an important sector of the Canadian economy, accounting for 8 percent of its GDP, over $40 billion in export revenue, and nearly one in eight jobs in the country.

Canada is one of the largest agricultural producers in the world. Its prairie provinces: Alberta, Saskatchewan and Manitoba, produce a bulk of the agricultural products in the country. Nearly 60 percent of Canadian grain is grown in Saskatchewan, while nearly 50 percent of Canadian beef is produced in Alberta.

The prairie provinces have outperformed the rest of Canada in economic growth over the last several year and have among the best labour markets in North America.

Canada Has Fastest Population Growth in G8, Driven By Immigration and Led by Prairies

The Prairie provinces, prospering from their abundance of natural resources, led Canada in population growth in the year ending June 30th, 2012. Two thirds of the world's potash reserves are near Saskatoon, pictured above, the largest city in Saskatchewan.

A Statistics Canada report released today estimates that Canada’s population grew by 1.1 percent in the year ending June 30 2012, giving it the fastest population growth among the G8 countries.

In comparison, the second fastest growing population in the G8 was that of the United States, which grew by 0.7 percent over the same period. Japan, with its shrinking population, had the lowest population growth rate, at negative 0.3 percent.

The largest source for Canada’s population growth was immigration, as the country has continued to sustain the highest immigration levels in the world as a percentage of its population.

Among Canadian provinces, Alberta saw the fastest population growth, at 2.5 percent, as the province, which has the highest per capita GDP in Canada, continued to lead the country in inter-provincial and international immigration and natural population growth.

The economy of Alberta has benefited in recent years from a booming oil sector as production in the Athabasca oil sands, which is one of the largest oil deposits in the world, continues to ramp up.

Other Prairie provinces also saw rapid population growth, with Saskatchewan and Manitoba’s populations growing by 2.1 and 1.2 percent respectively.

A recent Fraser Institute study found that Alberta, Saskatchewan and Manitoba have the best labour markets in Canada, with the lowest unemployment rates and fastest employment growth in the country, thanks to strong performance from their resource sectors.

Bank of Canada Governor: Commodities ‘Unambigiously Good’ For Canada

Spruce Meadows, south of Calgary, where Bank of Canada Governor Mark Carney was a marquee speaker for the annual Spruce Meadows Changing Fortunes Round Table

Wading into a national debate that was ignited by a controversial claim by Thomas Mulcair, leader of Canada’s left-leaning National Democratic Party (NDP), that Canada’s booming resource sectors harm the overall Canadian economy- the so-called ‘Dutch Disease’ hypothesis, Bank of Canada Governor Mark Carney on Friday strongly rejected the notion and endorsed the view that high commodity prices are a net benefit to the Canadian economy.

The Dutch Disease argument Mulcair first put forth in April is that higher revenues from Western Canadian oil exports have increased the value of the dollar, which has made Canadian manufacturing less competitive in international markets, and that in the long-run, the contribution made by the resource sectors to the Canadian economy does not make up for the resultant decline in manufacturing.

In a presentation given to the annual Spruce Meadows Changing Fortunes Round Table near Calgary, an event that attracts business leaders from across Canada, Carney roundly dismissed the argument, saying “the [Dutch Disease] diagnosis is overly simplistic and, in the end, wrong.” He added that “Canada’s economy is much more diverse and much better integrated than the Dutch Disease caricature”, and that much of the decline in manufacturing is not related to the rising value of the dollar.

Carney provided the following chart to demonstrate that the decline in Canadian manufacturing’s share of GDP “is part of a broad, secular trend across the advanced world” as opposed to a Canadian peculiarity owing to the country’s natural resource wealth:

Carney said that an analysis done by the Bank of Canada using its Terms-of-Trade Economic Model (ToTEM) projects that the economic effect of a 20 percent increase in oil prices would be positive for Canada under all three scenarios modelled:

Stronger demand from the U.S. would contribute to a 3 percent increase in GDP over five years. Stronger demand from Asia, as is the case now, would boost GDP by 1 percent over the same time frame, and a short term supply shock would increase GDP by 0.2 percent in the first year.

Maximizing Returns

Carney said that to increase the benefit that Canada derives from high commodity prices, the country should shift “export markets toward fast-growing emerging markets”, in particular in the Asia Pacific region, as U.S. growth had slowed and would likely stay muted for the foreseeable future.

He also prescribed that the country build “new energy infrastructure—pipelines and refineries” to bring Western Canadian oil to Eastern Canadian consumers, who are now importing oil and paying an average premium of $35 over the price in Western Canada. The infrastructure would bring “more of the benefits of the commodity boom to more of the country”.

Other recommendations Carney made were:

  • Improving interprovincial mobility through changes like standardizing occupational licensing across provinces, to help bring more skilled labour from other regions of the country to where it’s needed in Western Canada,
  • Increasing skills of labour force by encouraging more graduates in the sciences, technology, engineering and math (STEM) and focusing “on skills upgrading and (re)training for existing workers”
  • Increasing business investment in light of sufficient “precautionary cash balances” and “the scale of the resource opportunity”

Building on Canada’s Strengths

Carney concluded the talk by saying that the strength of Canada’s resource sectors should be recognized as “a reflection of success, not a harbinger of failure.”

He said that attempting to reverse the effects of Canada’s energy exports on the value of the dollar “requires that we undo our successes in order to depreciate our currency. Taken to its natural conclusion, this logic dictates that we shut down the oil sands, abandon our resource wealth, have high and variable inflation, run large fiscal deficits and diminish our financial sector.”

“Such actions would surely weaken the Canadian dollar, but they would also weaken Canada,” he added.

“In a world of elevated commodity prices, it is better to have them,” he concluded. “Rather than debate their utility, we should focus on how we can minimise the pain of the inevitable adjustment and maximise the benefits of our resource economy for all Canadians.”

Alberta Has Best Labour Market in North America -Study

Suncor Energy Centre in Calgary, Alberta. Alberta has seen the fastest employment growth in North America according to the latest Index of Labour Market Performance report by the Fraser Institute (Chuck Szmurlo)

A new Fraser Institute study finds that Alberta tops all Canadian provinces and US states in labour market performance.

The report, by Nachum Gabler, Niels Veldhuis, and chief economist for the Fraser Institute, Amela Karabegović, rates jurisdictions by five indicators: average total employment growth, average private-sector employment growth, average unemployment rates, average duration of unemployment, and average labour productivity.

In the overall index, Alberta received a score of 8.9 out of 10, higher than any other province or US state. Saskatchewan came second in the rankings, with a score of 8.3, and Manitoba ranked 5th, with a score of 7.2.

All three high-ranking provinces have enjoyed strong employment growth thanks to booming natural resource sectors. Alberta leads the provinces in oil production, followed by Saskatchewan. All three have large mining and agricultural sectors which have benefited from rising commodity prices on the global markets.

In addition to having the best employment growth and the sixth lowest unemployment rate in North America, Alberta’s ranking was helped by low unionization rates, low dependence on the public sector to provide jobs, a low minimum wage relative to average wages, and, among Canadian provinces, the most labour flexibility provided by “worker-choice laws”, which prohibit mandatory payment of union dues as a condition of employment.

Alberta also placed first in Canada, and sixth overall, in labour productivity, with a GDP per worker of $131,040. Newfoundland & Labrador ranked second among the provinces with a per worker GDP of $129,547, and Saskatchewan ranked third with $120,372.

One factor that the study’s authors consider important in labour market performance but did not include in the Index of Labour Market Performance is the number of working days lost to labour disputes.

British Columbia ranked last among all jurisdictions in this metric, with 105.5 working days lost per 1,000 workers, due mostly to strikes by public sector unions.