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Agriculture's place in the Alberta economy
Little more than a century ago, Canada was a new nation. Pockets of
settlements dotted that part of the great Northwest now known as the
Province of Alberta, but for the most part the region remained what it
had been since the glaciers departed: unbroken prairie to the south
and east, rolling parkland dotted with trees and lakes across the
central part, and in the north and west, thickly forested expanses.
During the last part of the nineteenth century, the young nation
began to open the Prairies to settlement - primarily to tap the vast
agricultural potential of the area. In the total span of human history
one century is a very short time, but in that period the prairie sod
has been turned and forested areas cleared. Dots on a railway map
became villages and towns, and some of the towns became cities, all
largely a result of the prosperous agriculturally based economy.
Today, about 59,007 farms occupy 51.96 million acres (21.03 million
hectares) of farm land. Those farms, and the processing and service
industries that accompany them, make agriculture the second most
important area of economic activity in Alberta (after the oil and
natural gas industry). And because agriculture is a renewable resource
which, if properly cared for by present generations, will thrive
indefinitely, it is a primary source of the province's economic
well-being and stability.
Farm cash receipts
There are many ways of measuring the size and importance of an
industry to the economy of a region. Speaking in terms of cash
receipts to farmers from the sale of their commodities, agriculture
was a $6.3 billion industry in 1996. The industry that processes these
primary agricultural products generated another $6.6 billion in sales.
Another measure is the amount agriculture contributes to export trade.
In 1996, farm products and processed foods exported from Alberta worth
$4.4 billion were shipped to all parts of the world - about one-fifth
of all Canadian agricultural and food exports.
Related activities
So far we have spoken mainly of the agricultural industry as that
involved with the direct production of primary goods: grains,
livestock, poultry, vegetables, forages, honey, dairy products. But
any industry of significant size in a region has a "ripple
effect" - it produces other economic activity because of its
presence. The "value-added activity" associated with
agriculture - the further processing of raw farm products - is the
most obvious direct outgrowth of the industry. However, there is
another whole category of activity that serves agriculture:
transportation and communication; the production, wholesaling and
retailing of the items farmers buy, and of the products they sell;
financial services; professionals such as lawyers, accountants and
veterinarians; and finally, the public services such as roads, snow
removal, product inspection and education that are necessary to the
proper function of the industry. All this adds up to a province where
many people's lives are directly affected by the health of
agriculture.
Alberta has one of the most balanced agricultural economies in
Canada. On average, receipts from livestock approximately equal
receipts from crop production (in 1996, $2.9 billion for crops and
$3.2 billion for livestock and livestock products). Within the
livestock and crop segments, there is wide diversity. Beef cattle,
dairy cattle, hogs, sheep and poultry are to be found on farms
throughout the province. Wheat, barley, oats, rye, flax, canola and
numerous varieties of forage crops are grown.
The effect of this diversity is important both for individual
farmers and the economy as a whole. The overall economic health of an
industry depends on the cost of producing the product, the amount
produced, the demand for the product, and therefore the price obtained
for it. Because of the many factors influencing agricultural
production, from climate and weather to government policy, and the
global nature of the market for many of the commodities, agriculture
is particularly prone to fluctuations in the production and
profitability of its products. Farmers who do not depend on just one
commodity for their income can weather the inevitable swings in income
that occur with single commodity markets. Similarly, regions in which
there is varied agricultural production experience a more even, stable
overall economic climate, rarely experiencing poor markets for all
products simultaneously. Alberta's farmers are efficient. With just
nine per cent of Canada's population, Alberta regularly produces
around 20 per cent of Canada's agricultural output. The fact that
total output from Alberta farms far exceeds what Albertans consume,
leaving a surplus that is exported to many countries throughout the
world, also has a positive effect on the Canadian economy as a whole.
Because of Canada's small population it has always relied heavily on
export markets for its goods. It is important for Canada to maintain a
healthy export trade so that Canadians can afford imported goods.
Wheat has been the traditional agricultural export of the Prairies,
but in addition, the region exports significant quantities of barley,
canola (rapeseed), and live cattle, as well as lesser-known products
such as honey, dehydrated alfalfa, and breeding livestock and genetic
materials such as frozen cattle embryos. In 1996, for example, wheat
exports from the province totaled $1,046 million; barley $224 million;
canola $371 million; beef and veal $508 million and pork $150 million.
Agricultural processing
Agri-food processing is an integral part of the Alberta economy. Next
to petroleum products, food and beverage processing constitute the
largest manufacturing industry in Alberta. In 1996, the value of
shipments by food and beverage processors amounted to $6.6 billion, or
just over one-quarter of the total value of manufacturing shipments.
The latest statistics (1994) show that Alberta's food and beverage
industry is composed of 271 establishments of which about 254 are
involved in food processing and 27 in beverage processing.
The meat and poultry processing industry is by far the largest
sector both in terms of employment and value of sales. In 1995, these
firms, ranging from small abattoirs to modern multi-million-dollar
high-volume facilities, shipped over $2.8 billion worth of meat
products. Total value of Alberta dairy products in 1995 was $463
million. Other large areas of processing activity are in grain
products ranging from breakfast cereals to cookies, bakery products
and feeds for animals.
The trend in food processing in some sectors such as dairy, meat
and honey has been toward fewer, larger, more efficient establishments
generating a greater volume and greater value of production. But there
is also a trend towards the establishment of a variety of smaller
specialty food processors.
Farm productivity
Down on the farm as well, the trend has been toward larger operations
involving greater investments in land, buildings and equipment. Farm
size has steadily increased for several decades, as has the average
capital investment in each farm. There has been a corresponding
decrease in numbers of farms: in 1951 there were 84,315 farms; by 1991
there were 57,245. Technological advances have been a major factor
influencing this trend. Mechanized farming and modern methods such as
the use of chemical fertilizers and pesticides have enabled one person
to do much more work and produce much more than has ever been
possible. At the same time, these machines and materials are very
costly and only a large-scale operation makes their purchase feasible.
Meanwhile, the productivity of each unit has risen substantially,
especially in terms of the number of people required to keep a farm
unit operating. Currently, farmers make up only about 3.0 per cent of
the province's population. Along with increased farm size there has
been a dramatic increase in sales per farm. In 1970, only 3.6 per cent
of farms reported sales of $50,000 or more. By 1990 that figure had
risen to 42.4 per cent. Even correcting for the effects of inflation
(one 1985 dollar was worth only 32 cents in 1970 terms) this
represents an increase. The category including farms having sales
greater than $250,000 comprised 2.9 per cent in 1980 and 4.9 per cent
in 1990.
This increase in farm sales has, of course, meant that a larger
amount of money circulates within the Alberta economy - and is
particularly noticeable in rural areas because of farmers' spending on
goods and services. For example, in 1995 farmers spent $4.5 billion on
goods and services including rent, wages and taxes. They paid out $103
million in taxes and $390 million in wages. They also paid $462
million in interest charges to service the debt on their land,
buildings, equipment and other purchases. Agriculture is also a major
consumer within the province: farmers spent $778 million on total
machinery expenses, $474 million on fertilizer and lime and $114
million for repairs on buildings and fences in 1995.
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