Can Canada feed the world?
- Canada’s ability to help alleviate a global food crisis by increasing food exports is limited.
- Constraints on land conversion for agriculture make expanding production of war-affected crops in Ukraine unlikely in the short term.
- But as a global fertilizer powerhouse, Canada can help sustain crop yields in other countries.
- Canada can increase its potash fertilizer production in the short term, but expanding nitrogen fertilizer production will require more time and investment.
- The bottom line: Boosting fertilizer production is one way for Canada to make a difference, but it will require careful consideration of the impact on costs and emissions.
Canada cannot easily fill the gaps in the global food supply
The war in Ukraine, the pandemic and the energy shock have upended the global food system. It has also pushed countries in the Middle East and sub-Saharan Africa to the brink of a food crisis. Ukraine and Russia are the main suppliers of grains and oilseeds, with their crops contributing about 12% of the calories traded globally. But many Russian exports have been disrupted by the war while there are still about 20 million tons of cereals (equivalent to 2.54% of annual world wheat consumption). trap in warehouses in Ukraine.
Can Canada produce more food to fill the void? Not in the short term. Canada is the world’s fifth largest exporter of agricultural products and the fourth largest exporter of wheat, behind Russia, the European Union and the United States. Cropland is already sown for this year’s growing season, with Canadian farmers indicating their intention to plant 7.2% more wheat. But despite Canada’s large size, vast tracts of additional land cannot be converted to agricultural production due to climate and terrain barriers. And the expansion of farms involves expensive undertakings to prepare the land, acquire new supplies and install irrigation systems. In the future, increased productivity will largely depend on more efficient farming techniques and technologies.
But Canada is a world leader in fertilizer production
What is Canada box to do is to help ensure that the situation does not worsen, by filling another critical gap. Canada is a leading player in the global fertilizer market, [CUTaccounting for 40% of global potash exports]. It is the world’s largest producer of potash, a type of potash fertilizer, and the 14th largest exporter nitrogen fertilizers.
Around the world, the availability of these key inputs is increasingly under threat. Russia, Ukraine and Belarus account for nearly 15% of global nitrogen fertilizer exports. The combined impact of war and sanctions imposed on both Russia and Belarus has cut off much of this supply. And amid growing shortages, other major supplier countries, including China, have imposed fertilizer export restrictions to protect domestic production. In total, around 20% of nitrogen and potassium fertilizer exports were disrupted.
The Canadian fertilizer industry still has room to grow and could play an important role in alleviating this global shortage. In addition, 85 to 90% of nitrogen fertilizers in Eastern Canada come from Russia. This suggests an opportunity to increase self-sufficiency in this region (although this would require major improvements to transportation infrastructure to bring supplies from Western Canada.)
Increasing part of the production will require investments
Yet there is a delicate balance to be struck between maintaining agricultural productivity, increasing fertilizer production and achieving Canada’s zero emissions ambitions. Major domestic and international fertilizer producers have made investment commitments in Saskatchewan, with the goal of increasing production in the short term and increasing capacity and efficiency in the longer term.
But increasing nitrogen fertilizer production is More difficult. Canadian nitrogen facilities are operating at full capacity. And while expanding potash production doesn’t necessarily require new facilities, the investment needed to increase nitrogen fertilizer production would be significant. This requires the construction of new manufacturing plants, which could take a year or more.
And it all comes at a time when the federal government is aiming to reduce emissions from chemical fertilizer use by 30% by 2030 and move growers faster toward Net Zero. Canada has the ability to expand its role as a supersized player in the global fertilizer market, but this will require a coordinated impact assessment and significant effort from government, farmers and other stakeholders.
Ben Richardson is responsible for researching articles for RBC Economics and Thought Leadership. Prior to joining RBC, he earned a master’s degree from the University of Toronto and worked in Washington, DC at the Woodrow Wilson Center researching topics related to Canada-US relations.
Naomi Powell is responsible for editing and writing articles for RBC Economics and Thought Leadership. Prior to joining RBC, she worked as a business journalist in Canada and Europe, most recently reporting on international trade and the economy for the Financial Post.
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