Setting The Context For Canadian Health And Agri-food Systems

Trends in Health Care Costs, Disease and Obesity

Canada can benefit tremendously by investing in an integrated health and agri-food strategy. Health care costs are rising, and chronic disease and obesity are becoming more common. Lifestyle changes that encourage a better diet and exercise could significantly help combat these trends.

Rising health care costs: In Canada, health care expenditures rose from 7% of Gross Domestic Product (GDP) in 1975 to 10.5% in 2005. The annual cost is an estimated $160 billion.¹ Per capita health care expenditures doubled from about $1,700 in 1975 to approximately $3,600 currently (1997 $).²

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



Figure 2. Farm size and revenue in Canada. Rising incidences of diet related chronic disease: Diet-related chronic diseases, such as cancer, cardiovascular diseases, diabetes and stroke (Figure 1)³ continue to rise and are projected to become increasingly prevalent. All toll, these diseases take up two-thirds of the direct costs of the health system.⁴ Chronic diseases are also estimated to contribute approximately 60% of indirect health care costs to the Canadian economy, costing $54.4 billion annually.⁵ Increasing rates of obesity: The number of overweight and obese Canadians continues to rise. Half of the adult population is now overweight or obese, and this trend is becoming alarmingly prevalent in children.

The link between food and health: Changes in lifestyle, such as diet and physical activity, can significantly reduce the prevalence of chronic diseases. For example, appropriate nutrition and physical activity could reduce the prevalence of cancer by 24%⁶ and lead to dramatic reductions in cardiovascular disease.⁷ A U.K. study suggests that the rising rates of obesity in children need to be addressed through a combination of improved nutrition and physical activity programs delivered by different sectors and levels of society.⁸ The study identifies the need for the agri-food sector to help deliver such programs.

The Canadian Agriculture and Food System

The integrated health and agri-food strategy will have impacts beyond the health of Canadians and health care budgets. It will also provide opportunities for the agri-food industry. Although the industry faces some serious challenges, agriculture is one of Canada’s strongest engines of economic growth and regional prosperity. An important economic force: The agri-food sector — including primary production, through food processing, wholesale/retail and food service — contributed $87.9 billion (1997 $) to Canada’s economy in 2006, or 8% of the GDP.⁹ The sector employs 2.1 million individuals, representing 12.8% of Canadian active manpower.¹⁰ Canada is the world’s fourth largest agri-food exporter and sixth-largest importer.

Challenges at the farm level: Canada’s farms are faced with declining commodity prices, and a concentrated industry structure. Seventy percent of farms sell less than $100,000 annually (Figure 2),¹¹ accounting for less than 10% of total farm sales. The concentration of food processing and retail activities makes it harder for small farms to market their products. Government program payments to farms surpass market income: Estimated at $5 billion annually, government expenditures to supplement farm income are a significant burden on provincial and federal governments (Figure 3).¹² Agricultural productivity growth lags behind competitors: However, in food processing, productivity has consistently improved and is superior to competitors (U.S. and Australia).¹³

Interest in organic food is growing: Organic agriculture is on the rise in Canada. Between 2001 and 2006, the number of farms growing certified organic products increased 60%, from 2,230 to 3,555 farms.¹⁴ Most food retail organizations now offer a wide range of fresh and processed organic products.

Food processing plays a larger role: Food processing revenue and its percentage of value added exports and imports have risen dramatically over the last two decades.¹⁵

Figure 3. Net farm income and program payments.

Canada lags in food related R&D: Public investment in R&D has decreased over the past two decades.¹⁶ Since the early 1990s, Canada has lagged behind its competitors (U.S. and Japan) in R&D expenditures as a share of value-added investments in the food processing industry.¹⁷ Private agri-food R&D expenditure as a share of GDP is significantly smaller than in other sectors of Canadian manufacturing.¹⁸

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