Agri-business research and development: An opportunity and a necessity by CalgaryChamber

Agri-business Research and Development An opportunity and a necessity

Introduction

The global agri-business industry is rapidly changing, and a policy shift which emphasizes research and development will not only keep Alberta’s industry competitive, but also enable the sector to take full advantage of future market opportunities.

Alberta has established a reputation the world over for finding new and innovative ways to make the most of its natural resources. However, for decades these research and development efforts have been concentrated in the energy industry. With unprecedented uncertainty in the provincial economy, transformational technologies, and changing global trade dynamics, it is now the time to bring this same pioneering spirit to another industry, one as synonymous with Alberta as oil and gas—agri-business. The global agribusiness industry is rapidly changing, and a policy shift which emphasizes research and development will not only keep Alberta’s industry competitive, but also enable the sector to take full advantage of future market opportunities. If done right, this has the potential to create a new economic driver in the province, build a more diverse industry base, and give Alberta an opportunity to become a hotbed for technological innovation and research in the agri-business space. The agriculture and agri-food (AAF) sector is going through a period of immense transformation. The makeup of farms and

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the end markets they serve are changing, and global competition is growing, therefore Alberta must find new ways to operate within these changing dynamics. This creates a host of challenges for an industry which for decades has been the lifeblood of many small towns and prairie economies, but it also presents an opportunity. While many macro-factors in the industry, such as climate and forces of global supply and demand are outside of the province’s control, what Alberta can do is work to optimize productivity in the sector. A focus on productivity enhancing research and development stands to create broader economic benefits for the province, turning Alberta into a hub for agri-business and agriculture research and development activities. These efforts must be supported by the government if they are to succeed, however budgetary constraints on all levels of government require new and innovative policy solutions. With a strong comparative advantage in the field, Alberta has the potential to ensure the competitiveness of its industry in the face of these structural changes, while diversifying its economy by growing a sector in which it already has the tools, know-how, and resources to prosper.

Agri-business matters The agriculture and agri-food sector, and its global competitiveness, is critical to the present and future growth of both the Albertan and Canadian economies. While not currently a major economic driver like oil and gas or finance, in 2013 it still accounted for 6.7% of Canada’s GDP, equivalent to $106.9 billion. That same year, Canada was the world’s 5th largest exporter of agriculture and agri-food products. These exports were predominantly comprised of three categories: grains & grain products (25.1% of exports), oilseeds and oilseeds products (24.3%) and live animals, red meat & other animal products (17.9%). With significant growth in export sales of these products, the Canadian AAF sector is considered to be a highly export oriented industry. It is important to note that whereas the value of Canadian agriculture and agri-food export sales in 2013 equaled $46 billion, Canadian import sales for similar products was $34.3 billion, making it the world’s sixth largest importer as well. The sector therefore has the potential

to be a major driver of the nation’s exportled growth, and has significant implications on the country’s trade position. Domestically, the sector plays a crucial role in the growth and prosperity of the Canadian economy as a whole. In 2013, 2.2 million people were employed in the agri-business sector, with the foodservice industry alone accounting for 5.3% of all Canadian jobs. Moreover, a significant portion of Canadian household income is spent on food, making food products, along with beverages and tobacco products, the second largest household expenditure category in the country. Therefore, the health of the agri-business sector has significant implications on the country’s export-led growth, employment, as well as the welfare and consumption patterns of its citizens.

Focusing on Alberta’s competitive advantage in agri-business has the future benefits of creating a less volatile and more diversified economy, one which creates new opportunities by building upon the province’s established competencies.

While Alberta’s AAF sector is quite small relative to the province’s other dominant industries such as energy, finance, real estate, and construction, it is still one of the most active in the entire country. In 2011, Alberta’s total farm cash receipts accounted for 21.1% of Canada’s total primary agricultural production. Alberta’s major agricultural products, namely beef cattle, canola, flax, and wheat, led to an astounding $11.8 billion in farm cash receipts in 2013. Agriculture is also the second largest exports sector for the province, right behind energy. Just as Alberta is fortunate to have large oil and gas deposits, Alberta is endowed with a significant geographic advantage in the AAF sector as well, housing nearly one-third of all arable land, second only to neighboring Saskatchewan. The agriculture and agri-food sector in Alberta has also been a source of job creation in the province even while the sector as a whole was volatile. Between 2012 and 2013, the employment growth-rate in primary agriculture and food increased by 18.4%. During that same period the Canadian economy as a whole saw contraction in employment growth by 1.8%. Therefore, the

province plays a central role in the national industry, and has a unique position which must be leveraged. In a provincial and national economy increasingly dependent on exports, the AFF sector plays an important role in building and maintaining a healthy economy. With oil and gas in the middle of one of its most uncertain times in recent memory, the continued growth and competitiveness of the AFF industry is of the utmost importance. Focusing on Alberta’s competitive advantage in agri-business has the future benefits of creating a less volatile and more diversified economy, one which creates new opportunities by building upon the province’s established competencies.

Shifting Competitive Landscape The economic importance and exportdriven nature of Alberta’s agri-business sector means that it must remain competitive both within Canada and abroad. World population is expected to increase over the coming decades, some estimating it will grow by more than 2 billion by 2050. If the Canadian agri-business industry is to take advantage of the growing demand driven by these demographic pressures, it must out-compete other jurisdictions. For example, China, with one of the world’s fastest growing economies and an increasingly affluent middle class, is currently Canada’s second largest export market for agri-food. This demand will only grow in the coming years and decades as China’s economy develops and its domestic consumption patterns mature. Given the Chinese domestic appetite for oilseeds and beef, the market provides significant growth opportunities for Alberta’s agri-business products, but only if the industry and the policy frameworks which govern it are correctly positioned to meet the additional demand. While Alberta’s AAF sector is considered competitive relative to other Canadian provinces, its productivity must be enhanced if it is to maintain its competitive edge and play a bigger role in the global market. Australia, Mexico, the United States, Brazil, the European Union and Russia all stand to be significant economic competitors in growing markets such as China. Australia, as the world’s third largest exporter of beef and tied with Canada as the world’s third largest exporters of wheat, may be the most significant rival. Unlike the AAF sector in Alberta, which represents only 2% of the province’s GDP, it accounted for 4% of Australia’s GDP in 2012. In terms of productivity, Australia is a relatively low-cost producer and a major exporter of dairy products in comparison to Alberta and other provinces in Canada. On top of these domestic economic considerations, Australia is also geographically better positioned to export to developing Asian markets. Mexico is another major competitor particularly in meat, fruits and vegetables. Mexico’s growing competitiveness was evident in 2013 when the country ended the year with a $208 million surplus in primary agriculture trade with Canada after having

been in a $21.5 million deficit in 2012. It is without a doubt that Australia and Mexico constitute significant competition for Alberta’s AAF sector, and therefore it is necessary for Alberta to ensure that its industry stays competitive if the province is to economically benefit from growing market opportunities. The United States is by far Canada’s largest agriculture and agri-food trade partner. Although they import more Canadian agricultural products than any other country, the U.S.’ high agricultural productivity also enables it to be the world’s largest beef and pork exporter and the world’s second largest wheat exporter. The European Union can also be considered one of Alberta’s global competitors, partially due to the significant government support their producers receive, particularly in the cereal market. Moreover, the E.U.’s Common Agricultural Policy reforms have resulted in a more integrated European industry, allowing agricultural producers to leverage economies of scale and become more competitive and efficient. The threat of global competition is only enhanced by the growing number of free trade agreements which potentially opens up Canada’s domestic market to foreign producers. The makeup of the agriculture and agri-food industry has changed drastically over the past ten years; with agricultural productivity growth in Brazil and other major transition economies surpassing many developed countries, and significantly impacting the market. With Alberta having to deal with the increasing competitiveness of established global economies such as Australia and the U.S. while also facing the likely future competition from developing economies, the province’s agricultural industry needs to focus on maintaining and improving its competitive edge or risk being left behind in a rapidly changing global marketplace.

Alberta’s Competitive Standing [Productivity] To determine how Alberta stacks up to these competitors, the productivity of its agriculture and agri-food sector must be assessed. In layman’s terms, productivity simply represents how much output is produced per unit of input used, and this measurement can be expressed in growth rates or levels. Essentially, it is a way to measure how much can be produced if other factors such as land and labour are held constant. Because minimizing inputs minimizes costs, this provides a strong comparative metric of different jurisdictions. According to the OECD,

in Canada, and had declined at an average of 2.2% per year— well below the national average. Even considering partial productivity indicators with single inputs such as labor and capital, productivity growth rates ranks Alberta last in both. However, the agriculture, forestry, fishing and hunting sector had an average growth rate of 4.1% per year, the highest in the country across all provinces. Despite slow growth in overall productivity, this shows that Alberta’s agriculture industry is still leveraging more out of its labour and capital—hinting at the industry’s investment and growth potential.

“Productivity is commonly defined as a ratio between the output volume and the volume of inputs. In other words, it measures how efficiently production inputs, such as labour and capital, are being used in an economy to produce a given level of output. Productivity is considered a key source of economic growth and competitiveness and, as such, is basic statistical information for many international comparisons and country performance assessments.”

It must be noted that when specifically referring to the productivity of the agriculture and agri-food sector, the measure represents an aggregate view of all the crops and products in the industry. Therefore, attention should be given to the differences in productivity amongst the major agricultural commodities produced in Alberta to get a more nuanced understanding of the industry and its relative strengths. In the agriculture space, yields per acre acts as a very effective measurement of productivity across time and jurisdictions. In comparison to other prairie provinces (Manitoba & Saskatchewan), Alberta is very productive in producing wheat, canola and barley, however it does not perform as well for oats production. Therefore it can be concluded

Despite its importance, the Centre for the Study of Living Standards found Alberta’s multifactor productivity (productivity relative to a mix of inputs) growth rate between 1997 and 2010 to be the lowest

Labor and Capital Productivity Growths in Canada and the Provinces 1997-2010 (Average Annual Growth Rates in %)

3 2 1 0 -1 -2 -3 -4 -5

Canada

Capital Productivity Growth Rate

PEI

Labour Productivity Growth Rate

that Alberta’s AAF sector performs better than its regional competitors. However, an international market competitor such as the United States performs better than Alberta in barley and wheat yields, with Alberta’s average crop yields for canola and oats being better than those of the U.S. This exemplifies how the province remains more productive than its competitors in some agricultural goods while lagging behind rivals in others.

Alberta must effectively compete on multiple fronts to be successful, and focusing on productivity enhancement is where it needs to start. Alberta must not only compete with other jurisdictions in Canada, which operate within the same bounds of regulation and international trade, but also with other economies around the world. It is vital that the province stay competitive against all of them, not only for market share, but for critical inputs of capital and labour—two things which have become increasingly mobile in the global economy. Staying competitive in the face of shifting economic forces will be the biggest challenge for the AFF sector going forward. Even though Alberta is one of the nation’s leading agricultural exporters and possesses many of the advantages necessary

to meet rising demand, the structural changes occurring throughout the world, and volatility of inputs, requires Alberta to focus on productivity in order to remain competitive. If Alberta is able to do more with less, then it can keep costs down while still taking advantage of growing demand, placing itself in a much stronger position relative to its competitors. By focusing on productivity, Alberta can create an AAF industry which can grow independent of volatile market inputs, and help stir up technological innovation within the province.

Alberta Average Crop Yields, in % difference to Prairie Province Averages 20 15

10 5

5.7

4.1

7.6

7.1

5.9

2.6

6.3

13 7.5

5.5 1.7

1.5

3.2 1

0 -5 -10

-2.7 -5.2

1960-1969

1970-1979 Wheat

1980-1989 Oats

Canola

1990-1999 Barley

2000-2010

R&D Support Framework For Alberta’s agri-business sector to remain a strong and competitive industry, independent of volatile market trends and structural changes, a policy framework which places emphasis on enhancing productivity is required. This means a shift toward greater research and development support in the province. The relationship between agricultural R&D and productivity and the need for government intervention is well rooted both in economic theory and the practical reality faced by Alberta, and the benefits go beyond just a healthier and more competitive agri-business industry. Structural issues within the industry’s intellectual property regime, and the positive effects it would have on policy and economic development goals, makes a robust case for greater government-led support in a variety of forms. The provincial government must begin by correcting market failures that inhibit the industry’s own ability to invest in productivity. Attention must also be given to the various means of intervention that can be implemented so as to encourage and expand R&D in the province.

R&D: Cost effective way to grow productivity Greater investment and support for research and development leads to increases in productivity, and such investments would have a profound effect on Alberta’s agribusines sector. The economic linkages between increased agricultural R&D and productivity growth have been studied greatly, with the bulk of these findings asserting that these investments have a high rate of return relative to the cost of capital. By finding new and innovative cost-cutting technologies, research and development activities allow producers to get more benefits out of their inputs, thus increasing productivity. These productivity-growing technologies can come in the form of new, more efficient, machinery, genetically superior crops, or even human resources techniques and farming practices. While not all research and development is purely aimed at reducing costs, increased scientific and technological research builds upon itself and creates long-term secondary and tertiary benefits in the industry.

Especially in the agri-business space, studies have found that research and development activities tend to pay significant dividends. One of the most cited studies on the topic of returns on agricultural R&D, Alston et al. (2010), concludes that the annual value of expenditures on research is significantly less than the annual value of agricultural productivity gains. More specifically, this study suggests that at times benefits from productivity growth caused by investments in agricultural R&D exceed the costs of these investments by a factor of 10 or more. This study confirms the findings determined a decade ago by Alston et al. (2000) in which a comprehensive analysis of returns on agricultural R&D was conducted which found that the mass distributions of the internal rates of return reported in literature lied between 20-80%. Therefore, research and development in the agriculture and agri-food space stands to not only increase productivity and competitiveness in the industry, but these significant rates of return show that it can also be cost-effective to do so. The link between increased productivity and agricultural R&D provides an incentive and a need for policymakers in Alberta to implement measures that result in a more competitive agriculture and agri-food sector. Domestic pressures such as fewer and older farmers in the province, rising labour costs, and volatile input costs all point to a need to increase productivity. Although Alberta has a large amount of productive agricultural land, the opportunity costs of using this land for agricultural purposes increases as other businesses flourish. These structural changes are occurring throughout the world and by all indications the trend will continue into the future. Therefore, for the agricultural sector to increase its productivity given the significant limitations on land and labour, there needs to be more emphasis placed on improving capital costs through innovation, which can only be achieved through more research and development.

Current state of Ag-R&D and the case for intervention

Currently, Alberta’s public and private investments in agricultural R&D are far from sufficient to improve the competiveness of Alberta’s agri-business sector. Given this situation, the question is whether government intervention is necessary to improve agricultural R&D investments. Economic theory states that government intervention is appropriate in situations where the market fails and is incapable of correcting itself. In this case, market failure is when private investments in R&D are significantly below socially optimal levels. Experts argue that without some form of government intervention, private investments in agricultural R&D will never be socially optimal. This is because even when firms incur significant costs to bring a new product or technology to market, and shoulder significant risk (both financial and legal), they rarely capture the full reward of their work. The private costs therefore often outweigh the private benefits of these activities. This would however not be the case if the full social benefits were accounted for. Due to structural issues around costs, litigation, and uncaptured benefits in the intellectual property regime, firms invest in R&D if they feel they will receive enough future profits, yet the true benefits of these investments

There is a persistent shortfall in R&D spending in Canada. Although aggregate spending on research and development has been increasing over the years, the amount spent on R&D as a percentage of the economy’s gross domestic product has been declining. In the AAF sector, between 2004 and 2013, Canada’s public R&D spending as a share of Gross Farm Receipts declined from an average of 1.6% to 1.4%. As the chart below illustrates, Canada lags behind its major agricultural competitors, particularly the U.S. and the E.U., in the proportion of the economy’s GDP attributed to domestic spending on R&D. In 2004, Canada’s domestic spending on R&D was 2.01% of its GDP, which was higher than both China and the E.U. However, by 2011 only 1.62% of the economy’s GDP was from domestic spending on R&D, whereas China and the E.U. spent 2.08% and 1.91% respectively. This serves to express how there is relative under-spending in agri-business R&D, and when compared to other jurisdictions, spending must be increased so as to maintain competitiveness in global markets.

Gross Domestic Spending on R&D, % of GDP 3.0 2.5 2.0 1.5 1.0 0.5 0.0

2004

2005

United States

2006

2007

2008

2009

OECD - Total China (People's Republic of)

2010

2011

2012

2013

European Union (28 countries) Canada

are not entirely captured within a single private sector actor. The true benefit of such research is rarely reflected in a firm’s profit statement, leading to persistent underinvestment.

The underlying point is that there is a lack of provincial support for R&D in the province during a crucial cross-road for the industry, and a new, innovative, policy prescription which helps spur R&D investment is required.

Although Alberta demonstrates a great need for these investments, the private sector is lagging behind its provincial rivals. In 2010, Alberta-based firms spent only $3 million on food-related research, whereas food manufacturers in Ontario spent $64 million, those in Quebec spent $60 million, and those in British Columbia spent $12 million. The fact that investments from Alberta’s domestic food manufacturers constituted less than two percent of the total amount spent on R&D nationally shows that provincial policies are needed to encourage private investments that provide benefits for the overall economy. Alberta is also falling behind in intellectual property, with only 19 agriculture patents being assigned to the province between 2000 and 2011. Therefore, both a theoretical and practical case exists for greater government intervention to increase agricultural R&D. While this lag in private R&D in the province persists, the current level of public investment is not enough close the gap, and budgetary constraints may not make it feasible to do so. Canadian government’s R&D spending in the AAF

sector has actually declined from 3% to 2% of Gross Value Added in the agricultural sector over the past 20 years. Even though the Government of Alberta’s expenditures on scientific activities grew from $234.5 million in 1999 to $814.4 million in 2013, these scientific activities were not primarily related to agriculture or food-related research, and therefore the province’s AAF sector does not reflect the same upward trend in R&D investment. According to Agriculture and Agri-Food Canada (AAFC), public R&D spending in support of the AAF sector demonstrated a declining trend prior to 2008. Moreover, the federal portion of these expenditures averaged a notable 69%, indicating that the majority of public R&D spending was from the federal government, with provincial government expenditures in R&D both small and declining over time. The underlying point is that there is a lack of provincial support for R&D in the province during a crucial cross-road for the industry, and a new, innovative, policy prescription which helps spur R&D investment is required. The current provincial government contribution to AAF R&D expenditures is weak and overshadowed by those granted to other sectors of the economy. The Ministry of Agriculture and Rural Development is responsible for the provincial government’s expenditures in the sector. Between

Objectives of GoA total research expenditures, 2012/2013 Protection and improvement of human health Control and care of the environment

20%

26%

19%

Basic research 14%

Other objectives

8% Agriculture production and technology

Production distribition and rational utilization of energy

Forestry

2012 and 2013 only 6% of the total public research expenditures ($48.5 million) were allocated to this particular ministry, illustrating an apparent underinvestment of R&D funding relative to other industries. By comparison, the same period saw the Ministry of Environment and Resource Development spend $199.6 million and the Ministry of Energy spent $179.4 million on R&D. By objectives, only 8% of total Government of Alberta research investment was dedicated to agriculture production and forestry. Only forestry and basic research were allocated less funding. Agri-business is vital to the future of the province’s export oriented growth and is an industry which is uniquely placed to take advantage of changing global demand. Therefore a strong incentive exists for increased public support of the industry. Research and development is one of the main determinants of productivity. Therefore to correct for private sector underinvestment, and ensure that the agriculture and agri-food sector can continue to compete, there must be greater public involvement and a potential reframing of provincial priorities.

Current R&D policies With significant budgetary constraints currently ailing the Alberta government, greater direct investment and grants for the industry may not be likely in this economic climate. Therefore, more innovative solutions must be explored to help the private sector close the current gap in R&D investment. However, there are still programs and services provided by the provincial and federal government to support Alberta’s AFF sector, with the main R&D policy framework presently utilized being the federal-provincial-territorial partnership called Growing Forward 2. This policy framework represents a 5 year R&D investment of more than $400 million in

Alberta’s agri-business sector with emphasis on innovation, competiveness and market development. A few other important R&D policies that support Alberta’s farmers and agri-businesses are summarized below: Advancing Canadian Agriculture and Agri-Food (ACAAF) Program: a federal government program that finds solutions to emerging challenges, advances research to capture market opportunities and shares information to expand the AAFS. The Alberta Livestock and Meat Agency Research and Development Grant Program: a grant program offered by a provincial government agency that emphasizes “investing in innovation delivering productivity gains and supply chain collaboration for improved knowledge transfer and profitability” (Alberta Livestock and Meat Agency Ltd., 2015) Alberta Barley Commission Research Program: a research program provided by a not-for-profit organization comprised of Alberta barley producers with the goal of fostering the development of new and improved technologies Despite these programs, the data still shows that investment in R&D in Alberta continues to not match up against its provincial and international rivals. With provincial budget shortfalls and a march towards balanced budgets on the federal level, policies must be implemented which spur greater private sector involvement and develop synergies in the industry to help aggregate investment in order to reach a level where the province can become a leader in agri-business related research.

Policy Alternatives and Solutions Agricultural research and development investments in Alberta are predominantly made up of public spending, and the current policy framework with the myriad of government programs and services serves to leave the industry that way for the long-term. Therefore, given the suboptimal level of R&D investments in the agri-business space, a policy framework should be adopted that encourages more participation and investments from the private sector. As public budgetary constraints persist, and the agricultural industry changes, with fewer farms that are larger in size and operated by older farmers, policy should encourage the private sector to invest in R&D so as to maintain their competiveness given the constraints they already face on labor and other inputs, and a changing global market.

1. Supporting Alberta universities as hubs for agri-business R&D A significant problem which must be addressed is the fact that Alberta universities are behind other Canadian institutions in acquiring agri-business related funding. Between 1992 and 2012, agricultural-related grants amounted to $79 million for the University of Guelph, $41 million for the University of Saskatchewan, $39 million for the University of Montreal and only $26 million for the University of Alberta, with other Alberta universities receiving significantly less. Moreover, in 2012 Alberta received a $98 million NSERC (National Sciences and Engineering Research Council of Canada) grant, however only 3% of this was allocated for agriculture and this proportion has not varied over the years despite variances in the grant amounts. For the provincial government to truly support agriculture through investments in R&D, the government must pay greater attention to Alberta universities in order to enhance their ability to attract research funding. Alberta is renowned for its research and natural science institutions, however much of the technical attention is given to the oil and gas industry. The government should work with universities to help attract greater private sector and federal government funding to leverage the R&D capacity that already exists at these institutions.

2. Promoting partnerships within industry Policymakers have the ability to author legislation that enables the establishment of NGOS that represent the industry; the 1972 Farm Products Agencies Act, being one example. This act enabled the creation of promotion-research agencies, such as the Canada Beef Agency, and national marketing agencies like the Egg Farmers of Canada and Chicken Farmers of Canada. Albertan farmers can benefit from this federal legislation, but they need more assistance through provincial legislation that creates agencies which are more focused on their unique interests and provides greater assistance to R&D than available from federal funding. There is also a role for the industry to integrate a number of associations representing the sector. One estimate puts the number of agriculture industry associations in Alberta at 250 versus only 56 in the oil and gas sector. Greater integration and coordination within the agri-business industry allows it to bolster its advocacy before all levels of government. Associations can also have a significant role in R&D by providing a means to share technology, and lower barriers around intellectual property. For example, the Canadian Oil Sands Innovation Alliance (COSIA) is an association which helps companies in the oil and gas sector share technologies and leverages their collective economies of scale in research and development. Since 2012, COSIA members have shared 777 distinct technologies valued at $950 million. Such a partnership within the agri-business space helps to build the competitiveness of the entire industry by taking advantage of industrywide innovation and accelerating the pace of R&D by working together. The industry, with the help of policymakers, can work together to achieve mutually beneficial goals and build a more mature and globally competitive industry.

3. Developing check-off levy schemes to fund research The provincial government can also support legislation that encourages check-off levies, particularly those that are voluntary rather than mandatory. These easily implemented mechanisms limit free-riding on the benefits of new technologies. A check-off is a voluntary or mandatory deduction of the gross value of the sale of a particular good/product (in this case, an agricultural crop/commodity) at the first point of sale or distribution. An example of this is the $1 national levy that Alberta producers must contribute to the Canadian Beef Cattle Research, Market Development, and Promotion Agency. Industry check-offs have been a significant source of funding for R&D in agriculture. The Saskatchewan Pulse Growers (SPG) have used check-offs as their primary mechanism for financing such activities. Over the 2009-2013 period, R&D expenditures of SPGs averaged $6.6 million. This mandatory levy has benefited growers is Saskatchewan greatly since 1984 and it is a model that must be considered for Alberta’s producers, namely those growing barley, wheat, oats and canola. These crops are Alberta’s major agricultural exports and therefore further investments in R&D should be encouraged so as to guarantee their competitiveness. This scheme can collect funds to contribute directly to R&D funding for the industry and help close the gap between Alberta and other jurisdictions.

4. Encouraging collaboration between industry and research institutions Alberta’s government can also learn from the Netherland’s “Food Valley” to improve on its agriculture and food-related R&D policies. The Food Valley is the world’s leading center of food innovation research and collaboration, and brings together businesses and research institutes for the purpose of innovation. Significant results from this program include the very high application of research into new products, and a research citation impact twice the global average. This shows the importance of building partnerships between the private sector and research institution, and benefits of creating an industry cluster. Just as Alberta competes with other jurisdictions for market share, it also competes for R&D investment and capital. Therefore, Alberta needs to look at building synergies between private sector actors and the strong natural science research capacity which already exists within the province to attract this activity. The success of Netherland’s Food Valley demonstrates how the strong linkages between researchers and businesses can be of immense value. It shows how productivity is enhanced when industry and the market are allowed to select research priorities, and how private interests can be helpful in directing research activity.

Conclusion The Albertan economy is at a cross-road. With the latest downturn in oil and gas showing the dangers of relying too heavily on a single industry, policy makers must look at ways to leverage the provinceâ&#x20AC;&#x2122;s established expertise in new ways. There must first be thought given to growing established industries before developing new, novel ones. This is where the opportunity lies in greater agri-business research and development. Policies which foster competitiveness through ground-breaking research not only safe-guard and grow Albertaâ&#x20AC;&#x2122;s position as a major AAF exporter; they have the potential to make the province a hub of technological achievement. Alberta can become home to a new knowledge-based sector that focuses on agri-business. The environment is fertile for Alberta to not only find growth through greater commodity exportation, but to also develop a sector which exports ideas and technologies the world over. The potential trickle down impact of greater R&D development are economy wide, and can help re-shape Albertaâ&#x20AC;&#x2122;s industrial landscape, but only if the correct framework is in place, one which emphasizes the importance of innovation and discovery. With the rapid pace at which the world economy is changing, this opportunity may be fleeting, and requires direct, immediate, and thoughtful action.

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