Setting The Context For Canadian Health And Agri-food Systems

This overview is intended to provide scientists, policy-makers, professionals and managers from the health, agriculture and agri-food systems with an initial understanding of the key issues and challenges in one another’s sectors in order to provide a foundation for their collective future work in developing an integrated strategy. Notably, a full portrait of the Canadian context for health, agriculture and agri-food systems is beyond the scope of this paper. For more detailed information on trends in the health care costs, disease rates, and in the agriculture and agri-food sector, see Appendix 1.

Trends in Health Care Costs and Rates of Diet-Related Diseases and Overweight/Obesity

Between 1975 and 2005, health care expenditures in Canada rose from 7% to 10.5% of the Gross Domestic Product (GDP), and now exact an estimated annual cost of $160 billion.⁴ Per capita health care expenditures have doubled from about $1,700 to about $3,600 (1997 $).⁵ Furthermore, the prevalence of diet-related chronic diseases such as cancer, cardiovascular diseases, diabetes, and stroke (Figure 1)⁶ – which all together take up two-thirds of the direct costs of the health system⁷ – continues to rise and is projected to significantly increase. Chronic diseases are all together estimated to contribute about 60% of indirect health care costs to the Canadian economy, costing $54.4 billion annually (in 1998$).⁸ In addition, the number of Canadians in all age groups who are overweight and obese continues to rise: half of the adult population is now overweight or obese, while weight issues are becoming increasingly prevalent in children and youth. A recent modeling exercise by the Milken Institute in the United States shows that, under an “optimistic scenario” of intervention which assumes reasonable improvements in health due to more comprehensive prevention and lifestyle changes, the rates of chronic diseases could be slowed down from a potential increase of 43% to 17%.⁹

It is now well-established that changes in the individual lifestyle behaviours such as diet and physical activity can significantly reduce the prevalence of chronic diseases. Appropriate nutrition and physical activity could reduce the prevalence of cancer by 24%¹⁰ and lead to dramatic reductions in cardiovascular disease.¹¹ The public health community has devoted considerable efforts to developing a stronger evidence basis to guide individual choices and to assess the impacts of programs to prevent chronic diseases and obesity. Figure 2¹² illustrates the results of a U.K. study that evaluates the impact of different types of programs in reducing the body mass index (BMI) of children. The study suggests that significantly altering the rising rates of obesity in children can only be accomplished through a combination of nutrition and physical activity programs delivered by different sectors and levels of society.¹³ It points out that the agriculture and agri-food sector is one of many sectors that need to engage in delivering some of these programs (e.g. nutrition labelling).

Figure 1. Current state of chronic disease in Canada and examples of economic projections of health care costs.

The Canadian Agriculture and Agri-Food System

In 2006, the agriculture and agri-food sector – including primary production (unprocessed), food processing (value-added), retail/wholesale and food services – contributed $87.9 billion dollars (1997$) to the Canadian economy, representing 8% of the GDP.¹4 The agriculture and agri-food sector employs 2.1 million individuals, representing 12.8% of Canadian active manpower.¹⁵ Overall primary production in Canada is focused on red meats, grains and oilseeds, and dairy. Sixty percent of Canadian farms are considered small (under 400 acres)¹⁶ and more than 20% of Canada’s farms have a yearly farm income of less than $10,000¹⁷ (Figure 3). However, these small farms represent only 10% of the total primary production output, while very large farms (which represent just 17% of total farms) provide 75% of total output.¹⁸ Small farms are often hobby or leisure enterprises, whose owners are employed in other occupations or retired. Large farms in Canada are business-focused and are more likely to be incorporated operations. Furthermore, while the retail and wholesale sectors have undergone significant consolidations in recent years, many small- and medium-sized businesses persevere. Therefore, when considering the challenges and opportunities for the agriculture and agri-food sector, it is important to consider the size, nature and type of businesses operating at each level of the whole value chain within this sector.

Over the past 15 years, productivity growth in primary agriculture has consistently decreased, and is consistently lower when compared with Canada’s lead competitors, the United States and Australia.¹⁹ Conversely, the productivity growth of the remainder of the agriculture and agri-food sector over the same period of time has consistently improved and has been superior to its competitors (U.S. and Australia).²⁰ Government expenditures in support of the agriculture and agri-food sector have increased, presenting a significant burden at both provincial and federal levels. In fact, program payments now surpass market income, with a yearly cost estimate of CAD $5 billion (Figure 4).²¹ Investments in improving productivity in this sector have a strong potential to contribute to the country’s economic performance and competitiveness on the world markets.

Canada remains the world’s fourth largest agriculture and agri-food exporter, after the European Union (EU), the U.S. and Brazil (2007 data).²² Canada accounts for 5.6% of total world agriculture and agri-food exports. Canada is also the sixth-largest agriculture and agri-food importer, after the EU, the U.S., Japan, China and Russia. Canada accounts for 2.5% of the world agriculture and agri-food imports.²3 Over the past two decades, the composition of exports has shifted significantly. Canada’s share of bulk commodities and value-added products remained stable, while consumer-oriented products rose to 30.4% for exports and accounted for 74% of the total imports in 2007.²⁴

This shift presents an opportunity for innovation in the Canadian agriculture and agri-food sector. Innovation requires public and private investments in research and development (R&D) and in both primary production and food processing. Canadian public investment in R&D has been lower in the 2000s compared to the 1980s and 1990s.²⁵ Private investments in R&D have been greater in food processing than in primary agriculture, possibly contributing to the former’s sustained productivity growth.²⁶ However, the share of the R&D expenditure as a share of GDP by private industries in either of the primary agriculture or food processing sectors is significantly smaller than that of the total manufacturing sector. Since the early 1990s, Canada’s business has lagged behind its competitors (U.S. and Japan) in terms of the R&D expenditures as a share of value-added investments in the food processing industry.²⁷

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