THE ECONOMIC IMPACTS OF THE CANADIAN DAIRY INDUSTRY IN Annual Dairy Policy Conference Dairy Farmers of Canada

Transcription

1 THE ECONOMIC IMPACTS OF THE CANADIAN DAIRY INDUSTRY IN 2013 Annual Dairy Policy Conference Dairy Farmers of Canada February 5, 2015

2 CONTEXT: ECONOMIC IMPACTS

3 CONTEXT: ECONOMIC IMPACTS Study series: 2009, 2011 and 2013 Methodology: Input/output model Comparison with the results of 2009 Inputs: Expenses, employment Sources: CDC, Statistics Canada, provincial offices

4 CONTEXT: ECONOMIC IMPACTS Impacts assessed: Employment (TEC) Wealth creation (GDP) Government revenue Three impact levels: Direct Indirect Total impacts Induced

5 CONTEXT: ECONOMIC IMPACTS What do these impacts depend on? Among others: the industry s activity level the industry s interactions with its suppliers the location of its suppliers its suppliers interactions with their own suppliers salary level

6 OVERVIEW OF THE PRESENTATION

7 OVERVIEW OF THE PRESENTATION Changes in the dairy industry s activity Economic impacts at the national and provincial levels Case studies: regional impacts

8 SOME BACKGROUND INFORMATION

9 SOME BACKGROUND INFORMATION Recovery from recession In 2009, the Canadian economy experienced a downturn The situation turned around, but slowly Quota: Increase in the MSQ and provincial allocation Demand for dairy products changes: e.g. people are consuming less milk, more cream Product and promotion development Canada-US: Upcoming impacts?

10 CHANGES IN DAIRY ACTIVITY

11 CHANGES IN DAIRY ACTIVITY PRODUCTION Decrease in the number of farms In all provinces The pace has slowed 20,000 18,000 16,000 14,000 12, ,000

12 CHANGES IN DAIRY ACTIVITY PRODUCTION Increase in national milk production 1,000 s of hectolitres 81,000 76,000 Increase in the number of cows and milk production per farm. Between 2009 and 2013: from 73 to 79 cows per farm (+ 8%) from 5,800 to 6,400 hl per farm (+ 10%)

13 CHANGES IN DAIRY ACTIVITY PRODUCTION The remaining farms incorporated the production of the defunct farms They reduced their production cost Removing the impact of inflation, the total cost of production dropped slightly since 2009, despite an increase in production Automated milking continues to spread slowly In 2013: nearly 5% of farms Can impact employment

14 CHANGES IN DAIRY ACTIVITY PRODUCTION Cash receipts remain steady $5.9 billion in % increase since 2009 (in inflation-adjusted dollars)

15 CHANGES IN DAIRY ACTIVITY PROCESSING Concentration: the large processors continue their consolidating Fewer plants, but larger capacities Parmalat, Saputo, Agropur process 80% of the milk Total number of plants increases slightly 465 plants in 2013 (+ 9 plants since 2009) Increase in the number of small processors

16 CHANGES IN DAIRY ACTIVITY PROCESSING Same number of employees Increase in manufacturing sales $16.4 billion in % increase since 2009 (in inflation-adjusted dollars)

17 ECONOMIC IMPACTS

18 IN 2013, THE DAIRY INDUSTRY GENERATED: 218,000 jobs 1.5% increase since 2009 Production/processing distribution: roughly 50%/50% These jobs represent: 1.2% of jobs in Canada 15% of jobs in the Canadian agricultural sector 7.6% of jobs in the ABT sector For comparison: Tar sands: 514,000 jobs Aerospace industry: 163,000 jobs Federal public service: 263,000 employees

19 IN 2013, THE DAIRY INDUSTRY GENERATED: $19.4 billion in GDP 18% increase since 2009 (without inflation) Represents 1.1% of Canada s GDP $3.7 billion in tax revenues 13% increase since 2009 (without inflation)

20 ECONOMIC IMPACTS CANADA AND PROVINCES The provincial distribution of the impacts depends on many factors, including: Distribution of dairy activities (farms, plants) Size of the businesses Location of suppliers Number of farms Total employment Total GDP British Columbia 3.9% 6.2% 7.1% Prairies 8.6% 12.6% 16.2% Ontario 32.7% 32.9% 32.1% Quebec 49.4% 42.8% 39.5% Maritimes 5.4% 5.4% 5.1% CANADA 100% 100% 100%

21 ECONOMIC IMPACTS CANADA Distribution between production and processing Production Total employment (TEC) 127, ,601 Total GDP ($M) 7,257 8,079 Total tax revenues ($M) 1,396 1,526 Processing Total employment (TEC) 87, ,826 Total GDP ($M) 7,926 11,239 Total tax revenues ($M) 1,620 2,150 Note Dollar values given in current dollars.

22 CASE STUDIES

23 CASE STUDIES Objective: to assess the impacts of the dairy industry in certain federal electoral districts (FEDs) Secondary objectives: To assess feasibility (e.g. data availability) To determine the industry s significance at the local/regional level

24 CASE STUDIES 4 regions consisting of 2 to 4 FEDs: Alberta, Ontario, Quebec, Nova Scotia Similar methodology, but: Adjustments in the input/output tables Involvement of the provincial offices: Identification of farms and processing plants Data on production and milk sales

25 CASE STUDIES REGION 1: ALBERTA 3 FEDs (377,000 residents) 262 farms and 5 processing plants

26 CASE STUDIES REGION 2: ONTARIO 3 FEDs (310,000 residents) 1,329 farms and 11 processing plants

27 CASE STUDIES REGION 3: QUEBEC 4 FEDs (395,000 residents) 1,292 farms and 15 processing plants

28 CASE STUDIES REGION 4: NOVA SCOTIA 2 FEDs (168,000 residents) 132 farms and 3 processing plants

29 CASE STUDIES ECONOMIC IMPACTS Total employment and GDP (direct, indirect and induced) created in the target regions All Industries Dairy Industry Compared to All Industries Region 1: Alberta Region 2: Ontario Region 3: Quebec Region 4: Nova Scotia Employment 207,485 1, % GDP ($M) 31, % Employment 161,290 7, % GDP ($M) 13, % Employment 196,985 7, % GDP ($M) 14, % Employment 77,765 1, % GDP ($M) 5, %

30 CASE STUDIES Great variability is seen among the regions: QC and ON: the industry generates roughly 1 out of jobs, and roughly $1 of GDP out of $25 of GDP NS: roughly 1 out of 55 AB: roughly 1 out of These differences depend mainly on: the number of dairy companies QC and ON: 3 or 4 farms per 1,000 residents AB and NS: less than 1 farm per 1,000 residents the economy of the target region AB: GDP per person roughly 2X that of the other regions the features of the farms and plants there

31 CASE STUDIES The dairy industry in these regions also generates impacts elsewhere in the country AB and NS: Impact within the region Impact outside the region ON and QC: Impact within the region = At least 2X the impact outside the region These differences depend mainly on: the location of suppliers the places where employees make their purchases

32 KEY MESSAGE TO TAKE AWAY Dynamic and job-creating sector Considerable and increasing impacts In all provinces At the local level: In some regions, the industry plays a major economic role

33 Thank you Any questions?