Cultivating a vibrant Canadian economy

Transcription

1 Cultivating a vibrant Canadian economy The contributions of crop protection products and plant biotechnology CropLife Canada

2 Executive summary The impacts of the crop protection/plant biotechnology sector on the Canadian socio-economic structure were examined. Specific metrics that were measured included (a) economic activity, (b) job generation, (c) tax revenue generated, (d) affordability of food and (e) the environment. Crop protection/plant biotechnology creates over $6.4 billion in value through additional yields and quality attained by producers of field crops; over $358 million in additional value through added yield and quality in 29 vegetable crops; approximately $508 million in value in added yields and quality in 13 fruit crops; and nearly $614 million in added yield and quality in potatoes adding up to over $7.9 billion in value in Canada. This additional $7.9 billion that s attributable to the deployment of innovation from the crop protection/plant biotechnology sector generates a further $6.4 billion in economic off-farm activity and 97,121 jobs (full-time equivalent). A large portion of the additional off-farm activity arises in Ontario ($1.75 billion in economic spin-offs and over 22,000 jobs across 19 sectors). About 65 per cent of Canada s $10.4 billion food trade balance (food value exported minus food value imported) arises because of production efficiencies attained through the use of plant biotechnology/crop protection products. Taxes generated for governments as a result of the economic activity generated through yield and quality gains on crops, and the subsequent rippling of those gains through the economy, total almost $385 million, the majority of which goes to provincial governments. The increased efficiency of crop production owing to crop protection/plant biotechnology has allowed us to preserve and leave uncultivated 37 million acres of forest, native grass, wetlands, etc. (Thirty seven million acres is equal to the total annual cropped area of Saskatchewan, or four times that of Ontario.) Since 1990, the reductions in tillage owing to the use of crop protection products and plant biotechnology (specifically biotech canola) have resulted in a 4.1 fold increase in carbon sequestration in cultivated land. The use of modern crop protection and plant biotechnology has resulted in 171 million less litres of diesel fuel burned on farm owing to reduced tillage and reductions in the number of equipment passes on land. For domestically grown produce, on an annual basis, the average Canadian family saves 41 to 53 per cent on vegetables and 34 to 39 per cent on fruit due to the use of modern crop protection. Savings on any food that requires wheat flour or soy products (commonly used in processed foods) may be as high as 69 per cent. Report produced by Mark Goodwin Consulting Ltd. State of the Industry Report CropLife Canada 2

3 Socio-economic impact of crop protection and plant biotechnology in Canada Many have quantified the socio-economic benefit of modern agriculture as a sector, both here in Canada and in other jurisdictions around the world. In many countries, such as Canada and the United States, high efficiencies on the farm have resulted in wealth gains and the development of diverse, urban-centered economies. This report will focus specifically on the role that two key technology areas within agriculture have had within this context; specifically the crop protection industry and the plant biotechnology sector. This report will attempt to quantify the benefits that accrue to the economy owing to the accomplishments of the people who have worked to develop and implement these technologies. Some background on the role of crop protection and plant biotechnology in Canadian society In recent times, agricultural practices have undergone sweeping changes. Revolutions in crop protection techniques, breeding, agronomy and farm equipment design, have led to higher yields and more efficiency with respect to how many people can be fed for every acre of farmland utilized. Canadian agriculture has participated in this revolution, and in many instances, the Canadian industry has been at the forefront of the progress that has been made. The efficiencies that growers and food workers have implemented have led to an agricultural sector that, according to Industry Canada statistics, generated over $70 billion in economic activity (8.8 per cent of our GDP) in Agriculture and the Canadian agri-food system account for one out of every eight jobs, employing two million people. One of the elements that has enabled this growth has been the use of crop protection chemistries and modern plant breeding techniques, including plant biotechnology. Modern crop protection chemistries have been used in Canada since the middle of the 20th century, with the advent of insecticides and early weed control products such as 2,4-D. Since that time, crop protection solutions have been developed and used for other serious pests such as wild oats and potato late blight. Concurrent to this, a rigorous regulatory regime developed, with the federal government demanding that crop protection products undergo exhaustive health and environmental testing. Annual crop protection sales in Canada over the past decade have risen from $1.27 billion in 2001 to $1.42 billion in 2006 (CropLife Canada Annual Report 2008). Of this total, the majority of sales went to weed control products purchased by farmers, with approximately 75 cents of every crop protection dollar spent on herbicides. Biotechnology is a more recent innovation. Biotechnology is a term covering a broad range of scientific activities used in many sectors, such as food, health and agriculture. It involves the use of living organisms or parts of living organisms to provide new methods of production and the making of new products. Of late, plant biotechnology has come to refer to modern, non-classical breeding techniques. The majority of the industry s initial growth has occurred with the advent of herbicide tolerant technologies ( HTCs ) in the early 1990s. Of late, hybrid technology has allowed for enhancements in yield and agronomy that are not specifically tied to herbicides. In 2010, there were nearly 22 million acres of biotech crops (primarily canola) in Canada. State of the Industry Report CropLife Canada 3

4 Measuring the socio-economic impact of crop protection products The term economic impact analysis refers to the conducting of analytical surveys, research, and modeling to estimate the direct and indirect economic effects of a sector or industry. This report will specifically examine (a) economic value added by crop protection and plant biotechnology, (b) employment arising from the use of the technologies, (c) tax revenue arising from the economic activity created by crop protection/plant biotechnology, (d) income generated by the technologies, and (e) contribution of crop protection/plant biotechnology to gross domestic product and trade balances. Typically, economic impacts fall into (a) direct impacts, (b) indirect impacts and (c) induced impacts. Direct impacts are felt by those individuals, groups and firms directly engaged in the activity being affected. Indirect impacts are the economic value generated through the act of developing the technologies and the economic activity generated as a result of the deployment of the technologies. Induced impacts are the effects of people spending the money that they earned from participating in direct and indirect activities. Diagram 1 depicts these relationships in the context of crop protection and plant biotechnology. The purpose of this report will be to measure the economic impact of the crop protection and plant biotechnology industries in Canada. The first step will be to follow benefit streams as they manifest themselves at the farm gate through deployment of crop protection and plant biotechnology by the grower. We will then follow benefits if/when they ripple out from the farm, downstream into the food chain, or upstream into farm inputs or farm services businesses. We will examine the economic impacts as they impact trade, tax revenues, jobs and other features as the benefits accrue across the economy. Diagram 1 Measuring the impact of crop protection and plant biotechnology on the Canadian economy PRE-FARM ON-FARM POST-FARM Economic value derived from researching, formulating, distributing and selling crop protection products and plant biotechnology Economic value attained on-farm through yield and quality gains in crop production as a result of using crop protection products and plant biotechnology Economic value derived from moving/handling the crop production that arises from the use of crop protection products and plant biotechnology State of the Industry Report CropLife Canada 4

5 Part One Value of incremental crop production produced on the farm due to the farmers use of crop protection/plant biotechnology State of the Industry Report CropLife Canada 5

6 I. Economic impact created at the farm gate national perspective The crop protection/plant biotechnology industries have enabled growers to attain better pest control and field performance through (a) development of crop protection chemistries and (b) development of genetics that allow for enhanced pest control options (e.g. herbicide-tolerant canola, herbicide-tolerant corn, herbicide-tolerant sugar beets, herbicide-tolerant soybeans and insect-tolerant corn). Recently, more companies have been directing efforts towards the goal of driving field performance of crops up through the use of traits that are not directly related to crop protection (e.g. high-yielding hybrids, frost tolerance and drought tolerance). The economic impact of these technologies on the farm can be quantified as a function of two sources of gain (a) incremental yield attained and (b) incremental quality attained with these two factors given final judgment in the marketplace as a combination, through the price received for the crop. To calculate the portion of crop returns that can be reasonably attributable to crop protection technology and plant biotechnology, it is necessary to ask two questions: (1) What is the current value of the crops that Canadian growers produce under management systems that use crop protection/plant biotechnology and (2) What would values be without these specific crop protection/ plant biotechnology tools? Answering the first question logically requires assembling actual production and returns per acre data to see what yields and quality metrics show. Answering the second question requires the use of a proxy that serves to reasonably function as a no crop protection/no plant biotechnology control group. Choosing a method for assessing the current value of the crops that Canadian growers produce under management systems that use crop protection/plant biotechnology Assembling the current quantities of crop production in Canada can be reliably accomplished. Yield and production figures are routinely assembled by Statistics Canada and a review of their methodology shows that it has been consistent over the years and any changes to data collection are well-documented and transparent. Attaching value to that quantity is also straight forward as there are liquid markets that regularly value crops. Quality of crops is easy to document, but the value of quality, however, is more nebulous and it is challenging to quantify empirically as a standalone factor. With many crops, standard grading processes are used on a year-to-year basis, but critical values (e.g. quality values associated with processing) that determine whether a crop is selected for a premium is a function of supply and specific business needs to the buyer. Thus it may be possible to log or record quality increases - but it is impossible to isolate and present a value for quality enhancement due to the use of plant biotechnology or crop protection or at least one that is consistently measureable from year-to-year on crops on a national basis. As well, grade definitions are subject to change, and thus isolating the dollar value of larger or long-term increases in quality is impossible. These facts notwithstanding, we do know that there is irrefutable evidence that crop protection and plant biotechnology do improve the quality of Canadian crops. As an example, a study commissioned by the Canola Council of Canada showed that the use of biotechnology/htc canola led to a six percentage point increase in the proportion of the crop that was graded as #1 (see Chart 1). Similarly, the use of desiccants or harvest management products in certain crops (lentils, beans, flax) allows for timely harvest, and with that, a reduction in quality loss due to weathering. We can measure or estimate the positive impacts of crop protection products or plant biotechnology on the quality of individual crops. Again, quantifying the value on a broad socio-economic basis apart from total crop value is impossible. State of the Industry Report CropLife Canada 6

7 Chart 1 Example of the impact of plant biotechnology canola Grade Canola crops grown using transgenic varieties/hybrids Conventional canola #1 91% 85% #2 6% 9% #3A <1% 3% #3B 0 0 Source Canola Council of Canada An Agronomic and Economic Assessment of GMO Canola Koch et al 2001 Given these complexities, the best assessment of quality lies in addressing quality through the use of ultimate measurement that being the price that the market actually paid for the crop. Yield and quality can be assessed on a combined basis by tallying up the actual prices that the market was willing to pay for the production as a function of both quantity and quality on a national basis. Choosing a proxy for non-use to compare crop protection/plant biotechnology There are three approaches for attaining a comparison with a non-treated proxy; Approach #1 We could compile yields from peer-reviewed, Canadian trials wherein there is a valid treated versus untreated in the experiment. Such a comparison would contain treated plots being sprayed with a crop protection product, or seeded with a variety or hybrid developed through the use of biotechnology, or both. The yields and quality derived from these would be compared to untreated checks contained in the same trial. Approach #2 We could compile crop insurance data wherein treated (i.e. sprayed or biotechnology-based production) could be compared to fields where no crop protection products or plant biotechnology was used. The database would be actual fields, with yields reported by the producer to crop insurance entities. Approach #3 We could compile organic/low input trials or grower-based yield data wherein there are valid comparisons to conventional farming. In the first two instances, comparisons are not likely to be fair as they will likely overstate the value of crop protection chemistries. With Approach #1, the untreated checks often will (by design) not have any mitigating management efforts to minimize the impact of pests. An untreated check would essentially constitute abandonment as opposed to farming without crop protection chemistries/plant biotechnology. We do not want to compare the value of crop protection to the value of abandonment as this will overstate the impact of crop protection. There is a second reason that this approach would likely overstate the value of crop protection products. Use data shows that less than half of field crop acres are sprayed for wild oats (the major grass weed) and many producers go several years without spraying insecticides for grasshoppers or outbreak pests. Many pests are treated on a patch basis or on portions of fields only (e.g. patch treatment of Canada thistle, perimeter spraying for grasshoppers or flea beetles, etc.). In contrast, small plot work tends to be conducted in areas where maximum pest pressure is present. Projecting yield data attained in small plots would likely overstate yield differences because pest pressure is usually not field-wide and applications are often not field wide. State of the Industry Report CropLife Canada 7

8 In Approach #2 (crop insurance data), confounding effects are possible because the untreated fields constitute a mixture of fields that (a) were not sprayed because they did not require a crop protection product, and (b) fields wherein pest control failed potentially due to poor management issues. Thus we would be pooling very wellmanaged, integrated pest management (IPM) fields with very poorly managed or failed fields. It is the third approach that is the most reasonable namely the comparison between organic versus conventional production. Although not perfectly symmetrical, this approach gives the most realistic measure of the yield contribution that crop protection chemistry and plant biotechnology makes because it takes into account additional management steps that non-use producers would make in order to mitigate or lessen the yield losses due to pests. Organic producers are the most experienced in society at making do without the majority of crop protection products and plant biotechnology. This in itself guards against us overstating the value of crop protection products/plant biotechnology. The organic sector is mature enough to allow for an assumption that the current yield performance they experience is the best metric for use as a non-use control. This contrasts with the former two approaches where the absence of pest control products is not countered with the use of compensatory management steps (e.g., delayed seeding, altered crop rotations). Note, however, that the use of organic production as a non-use control is not perfect. Firstly, organic farms also tend to be smaller in scale than conventional production. Yields attained on small scale basis may not be attainable across the tens of millions of acres farmed in large tracts or management units. Secondly, organic producers actually do rely on crop protection companies for production of biologicals or organically certified pesticides that strictly meet the definition of a crop protection product. (In fact, a number of these products are produced by CropLife Canada members.) Thus organic production is not a pure non-use of crop protection products proxy. Thirdly, there are some differences in how inputs such as fertilizers are applied in organic agriculture as well. Fertilizer sources will be different in the organic production sector than fertilizer sources used in the conventional crop production sector. Organic sources of nitrogen are (a) manure and (b) nitrogen fixing crops/green manures. In the case of the former, N content is lower (N content ranges from 0.5 to 1 per cent) than synthetic fertilizer (N content of up to 46 per cent) and so access to large quantities of manure or a scale down in farm field size is required. In the case of the latter, legume based rotations are required. There is evidence that shows that on a small farm scale organic producers can maintain N levels at or near those seen in commercial dry land production. Phosphorus fertilization is markedly different in organic versus conventional production. Organic producers must rely on less available phosphorus sources (such as rock phosphate) and so a small portion of the increase in yields of conventional versus organic production may be attributable to the fact that better phosphorus fertility occurs with conventional production. In general, however, these three asymmetries all tend to err on the conservative side in estimating the incremental crop production derived from crop protection and plant biotechnology because they assume that the results that smaller scale farming as practiced in organics could be conducted over the entire Canadian agricultural sector on a large scale basis. It also values the crop protection/plant biotechnology sector because it does not credit the crop protection sector with the value that CropLife Canada members provide to organic farming. We must be aware then, that the figures that arise from this comparison will likely somewhat understate the value of crop protection and plant biotechnology. The relevant equation for deriving the value of production achieved through use of crop protection products and plant biotechnology in Canada then is as follows: Production with crop protection/plant biotechnology = 100 Production under non-use State of the Industry Report CropLife Canada 8

9 Where production with crop protection/plant biotechnology is the value of production that is attributable to the use of modern crop protection and plant biotechnology, and production under non-use is equal to the percentage of production attainable if crop protection products are not used the proxy for this term in the equation being organic production. Assembling the data for the current value of the crops that Canadian growers produce under management systems that use crop protection/plant biotechnology With respect to data on conventional crop production, the primary data source for this aspect was Statistics Canada compilations of yields and average annual prices. On a crop-by-crop basis, the most recent two years of total production were chosen as a measure of yields attained. The most recent two years of gross income by crop were chosen as a measurement of quality since this represents what the market was willing to pay for each year s crop. Combining these two measurements tell us what the market was willing to pay for quality and quantity combined. To measure the impact of crop protection and plant biotechnology on a broad measure of agricultural crops, these numbers were tabulated on the most commonly grown crops. The crops/crop groups included constitute 96.5 per cent of annual area cropped as presented in the 2006 Census and include; The 16 largest grain/field crops cereals, oilseeds, pulses and special crops The 13 largest fruit crops The 29 largest vegetable crops Potatoes Assembling data for use versus non-use of crop protection products and plant biotechnology reviewing organic production data Calculating a number for non-use requires the assembly of organic/low input yields and quality so that we can compare that experience to the experience of conventional agriculture. There is a broad range of data that permits a calculation for yield arising out of use of plant biotechnology/crop protection. A list of studies reviewed and evaluated is in Appendix 1. Some authors of organic versus conventional comparisons reported on actual yields attained in their studies while others used projected or theoretical values for organic production. For the purposes of this report, actual yields were considered as being more credible than theoretical. Some studies reported actual yields but did not conduct the trial with any pest pressure, while others did conduct trials with typical pest pressure. Again, studies that were conducted with meaningful pest pressure were considered more relevant than those conducted with zero pest pressure. Lastly, some studies reviewed were conducted within Canada, or in US states with production systems that approximated Canadian agricultural practices, and others consisted of comparisons within farming systems and practices that did not resemble those used in Canadian agriculture. North American studies were considered to be more relevant than studies conducted in the EU or elsewhere due to differences in agronomic practices and intensity of production, among others. State of the Industry Report CropLife Canada 9

10 1. The incremental value created by crop protection and plant biotechnology at the farm gate the 16 most frequently grown field crops For the purposes of this report, Statistics Canada data regarding production during 2008 and 2009 of the 16 largest field crops produced in Canada include the following: Wheat Oats Barley Corn Buckwheat Dry peas Dry beans Flax Soybeans Mustard Canola Sunflowers Sugar beets Lentils Canary seed Fababeans Prices per tonne were obtained on October 14, 2009 from Agriculture and Agri-Food Canada s market website for the periods noted previously ( ). Prices per tonne figures were multiplied by tonnages produced to derive a gross annual value created by producers on a Canada-wide basis. The same figures were broken down to examine regional figures for the Maritimes, Ontario, Quebec, the Prairies and British Columbia. With respect to determining what portion of this value can reasonably be attributed to the use of crop protection chemistries, a number of key resources were referred to wherein the researchers reported on yields on a comparative basis organic versus conventional. A list of studies reviewed and evaluated for this purpose can be found in Appendix 1. The most useful studies within this cohort were ones that contained the following characteristics: Canadian or US third-party studies (universities, agricultural colleges or commodity groups) Peer-reviewed journals that reported on either (a) replicated field trial data or (b) farm yield surveys Federal/provincial/state government studies with estimates wherein assumptions were transparent There was some variability in results, with some research workers finding greater differences between the crops grown using conventional crop protection versus non-use. Where there was more than one data source available, an average was derived. There were several papers that were particularly useful as sources for yield comparisons; Productivity of Organic Cropping in the Eastern Prairies: On-Farm Survey and Database Development, M. H. Entz, R. Guilford and R. Gulden Ten per cent organic in 15 years: Policy and program initiatives to advance organic food and farming in Ontario, R. MacRae, RC Martin and J Langer Safeguarding production losses in major crops and the role of crop protection. Oerke et al Vlachostergios, D. N.; Roupakias, D. G. Euphytica, Oct 2008, Vol. 163 Issue 3, p Mazzoncini et al Aspects of Applied Biology 79, 2006 J.D. Kelly, B. Long, N. Blakely, E. Wright, and J. Heilig 2008 DRY BEAN YIELD TRIALS Within these papers, the authors recorded yields for individual crops that were treated with crop protection products and yields for crops where non-chemical measures were deployed. The Entz study was performed in Western Canada and examined actual yield data from 14 organic farms in the eastern Prairie region. A total of 1078 field records were collected for the time period 1991 to The researchers (Entz, Gulden and Guildford) found that organic producers could produce an average of 75 per cent of the amount of grain produced in conventional agriculture. Peas and flax in organic agricultural systems could be produced to 54 per cent of conventional yields, and canola yields were 44 per cent of conventional canola yields. State of the Industry Report CropLife Canada 10

11 Similar observations were noted by Oerke et al, with this paper reporting on actual yield losses in the field in comparison with what potential yield losses would be without crop protection products. These results are compiled on a worldwide basis, and for the purposes of the current study, yield reports that appeared to be irrelevant to North America were omitted. Another key study was produced by MacRae, Martin, Juhasz and Langer in Ontario. These authors examined the yield that could be attained with conventional agriculture versus organic agriculture in Ontario. The authors data essentially agreed with Entz and Oerke regarding the scale of loss for the first season after production is switched from conventional to organic agriculture but they propose that these differences will lessen as the seasons pass. They contend that that the yield differences between organic and conventional agriculture would narrow over a three or four year period. After that period, they postulate that losses would be approximately 10 to 15 per cent for grains and 20 to 25 per cent for horticultural crops. On one hand, it must be recognized that these are modelled forecasts and not actual production. Still, the authors contentions are well-founded in that they present the data as being reasonable for small to medium-sized enterprises. Other researchers support their conclusions, noting that smaller farms have an easier time producing grains and horticultural crops without the same degree of inputs. Thus the best case figures from the third season/ small to medium farm yield comparisons of the MacRae et al study were included in the averages for this study. There were studies that looked at yield comparisons for smaller crops grown on a medium to smaller acreage basis. These included field peas, dry beans, canaryseed, lentils, and sugar beets. A grid follows (Table 1) that records which papers were used for each of the field crops noted above. At least one Canadian trial for each of these crops was identified and these are presented in Table 1 as well. The figures in Table 2 give the percentage of yield that can be conservatively attributed to the use of crop protection products, based on the range of yield differentials attained in the papers noted in the literature review. (Note that most of the crops do not currently employ biotech applications. Corn, soybeans, canola, potatoes and sugar beets are the crops that do have biotech applications). With respect to biotechnology, many of the key papers were published either before or during the wide spread adoption of plant biotechnology in Canada as it was applied to crop protection (herbicide-tolerant canola). The value of plant biotechnology as deployed through adoption of herbicide-tolerant crops generally was accounted for under crop protection as the plant biotechnology portion of this system generally requires the use of chemistry to attain the benefit of higher value per acre. Beyond the herbicide tolerant biotechnology, there have been increases in yield on the order of 20 per cent and five per cent attributable to biotech in canola and corn respectively. These were noted in estimates presented in Global impact of biotech crops: Income and production effects from 1996 through 2007 (Brookes and Barfoot). These are incremental yields owing to non-pesticidal benefits of plant biotechnology (hybridity, etc.). State of the Industry Report CropLife Canada 11

12 Table 1 Data sources used to develop proxies for crop yields attained when no crop protection products are used Crop Entz MacRae et al Johnson Vlachostergios Mazzoncini Kelly Oerke Wheat X X X Oats X X Barley X X X Corn X X Buckwheat Peas X X X X Beans X X Flax X X Soybeans X X Mustard Canola X X Sunflowers Sugar beets Lentils Canaryseed Fababeans (pea average used) X X X X X Table 2 Portion of crop value (in percentage) that can be attributed to the use of crop protection products/plant biotechnology Crop Proportion of crop value that can be attributed to use of crop protection/plant biotechnology Wheat 24% Oats 17% Barley 18% Corn (See Footnote 1)* 29% Buckwheat 10% Peas 30% Beans 30% Flax 31% Soybeans 35% Mustard 10% Canola (See Footnote 2)* 53% Sunflowers 34% Sugar beets 79% Lentils 19% Canaryseed 25% Fababeans 30% *FOOTNOTES Footnote 1 Figure includes 24 per cent yield enhancement due to crop protection and 5 per cent enhancement due to plant biotechnology advances (non crop protection related) Footnote 2 Figure includes 33 per cent yield enhancement due to crop protection and 20 per cent enhancement due to plant biotechnology advances (non-crop protection related) State of the Industry Report CropLife Canada 12

13 Using the percentages attained in Table 2, Table 3 calculates the gross value of field crop production that is attributable to the use of crop protection chemistries and plant biotechnology. For these crops, two year averages for production and prices were obtained from the CANSIM database (Statistics Canada). As an example, the two-year average production for wheat in 2008/09 and 2009/10 was over 26.5 million tonnes nationally (all wheat) and the gross value of this production (using average prices for the two crops years) was $7.22 billion. The portion of this amount that can be attributed to the judicious use of crop protection products is 24 per cent. Twenty-four per cent of this value amounts to approximately 6.4 million tonnes. At a two-year-average price of $269 per tonne, the net benefit is over $1.7 billion in value created for the Canadian economy on the farm. This number accounts for the volume and average quality of the incremental wheat produced in that year. Using a similar approach for all cereals, oilseeds, pulses and special crops, the net value created due to judicious use of crop protection products over all field crops in the table sums to a total of over $6.4 billion per year. Note that with respect to plant biotechnology, the main source of incremental value of this technology lies in (a) biotechnology directed at pest control, and (b) biotechnology deployed to drive yield enhancements (hybridization in canola). The early applications of plant biotechnology were directed towards better pest control, specifically weed control in canola. Estimates of weed control advantages attained due to biotechnology give us a figure of a 33 per cent gain in net value. To account for yield advances over and above the crop protection benefits, Canola Council of Canada data for average yields was examined for the years since There is a 20 percentage point increase in canola yields in the years from 2000 to It is assumed that these yields gains have accrued because of superior genetics largely powered by biotechnology and that this needs to be accounted for beyond the increases realized from biotechnology s contribution to crop protection. A similar adjustment is made with regards to corn and genetics that target corn rootworm. Brookes and Barfoot note that there is a five per cent incremental yield gain owing to the development of this technology and thus these five percentage points are calculated into the figures for the crop protection/plant biotechnology versus no crop protection/plant biotechnology figures. No incremental benefits were awarded for biotech soybeans or corn because yield enhancements due to these technologies are reflected in the production figures on Table 3 within the crop protection calculation. State of the Industry Report CropLife Canada 13

14 Table 3 The portion of Canada s field crop production that is attributable to the use of crop protection chemistries/plant biotechnology is over $6.4 billion per year. (NOTE: Due to rounding, numbers presented may not align with computed numbers) Crop Gross $ of production (in Thou $) Tonnes Two crop years avg (in Thou tonnes) % of yield attributable to the use of crop protection products/biotech Tonnes produced that are attributable to the use of crop protection products/biotech (in Thou tonnes) Ave 2 yr px ($Cdn) $ attributable to use of crop protection products/biotech (In Thou $) Wheat $7,220, ,596 24% 6,420 $269 $1,723, Oats $632, ,586 17% 613 $173 $106, Barley $1,764, ,473 18% 1,896 $167 $316, Corn (Pesticide benefit) 1,590, ,165 Corn (biotech benefit) 24% 2,454 $156 $382, % 511 $156 $79, Buckwheat $2, % 2 $331 $ Peas $727, ,366 30% 745 $215 $160, Beans $183, % 75 $770 $57, Flax $396, % 285 $438 $124, Soybeans $1,363, ,467 35% 1,220 $394 $480, Mustard $148, % 19 $770 $14, Canola (Pesticide benefit) Canola (Biotech benefit) $5,262, ,456 33% 3,802 $459 $1,743, % 2,304 $459 $1,056, Sunflower $67, % 38 $610 $23, Sugar beets $15, % 274 $46 12, Lentils $866, ,225 19% 234 $698 $163, Canaryseed $87, % 43 $503 $21, Fababeans $1, % 2 $144 $ Total gross production $ billion Total crop protection/ biotech benefit $6,472 billion State of the Industry Report CropLife Canada 14

15 2. The incremental value created by crop protection products at the farm gate the 29 most frequently grown vegetable crops Within the vegetable crops sector, Statistics Canada data for commercial scale vegetable production was assembled from the most recent year (2008). This production comes from Ontario, Quebec and British Columbia with only small amounts from the rest of Canada. As with the field crops calculation, the fairest available proxy for calculating the portion of production that is due to the use of crop protection products was organic production. As seen with field crops, organic production deploys alternative methods to cope with the loss of use of herbicides, insecticides or fungicides. Thus the yield or quality reduction owing to non-use is mitigated by practices that any farmer would deploy in absence of those tools. Statistics Canada data regarding production during 2008 of the 29 largest vegetable crops produced in Canada was accessed. The crops include the following: Asparagus Beans Beets Brussels sprouts Cabbage Carrots Cauliflower Celery Corn Cucumbers Onions Garlic Leeks Lettuce Melons Parsley Parsnips Peas Peppers Pumpkins Radishes Rhubarb Shallots Spinach Squash/zucchini Tomatoes Turnips Watermelon Prices were obtained from the Statistics Canada CANSIM database for 2008 on October 14, Three key resources were used to develop primary estimates with respect to determining what portion of this value can reasonably be attributed to the use of crop protection chemistries. Key papers used as sources for yield comparisons were as follows; Stats Canada Vista on the agri-food industry and the farm community Catalogue XIE Economic impacts of reduced pesticide use in the US: measurements of costs and benefits (AFPC Paper 99-2 Texas A and M). Figures attained by crop were compiled and presented for review to the Canadian Horticultural Council, which reviewed and edited the figures to account for potential quality downgrades or other adjustments. The yield that can be attributed to use of crop protection chemistries is proportionally larger in vegetable crops than in field crops. Insect and disease pressure tends to be higher in these crops and the visual characteristics of fresh vegetables are important to the consumer. Thus there is low tolerance for quality loss and heavy price penalties for blemished or pest damaged crops. Often, single pests or diseases are endemic and so devastating in terms of inflicting damage that yield loss will frequently be total. Growers of the 29 largest vegetable crops created a total of over $553 million in value in Of this amount, $358 million of value was created because of incremental yield increases resulting from the producers being able to use crop protection tools. State of the Industry Report CropLife Canada 15

16 Table 4 The portion of vegetable crop production of the 29 most frequently grown vegetables that is attributable to the use of crop protection chemistries is over $358 million per year Crop Farm Value (Thousand $) Portion of yield attained due to use of crop protection products Gross $ attributable to use of crop protection products (Thousand $) Asparagus $13,320 55% $7,326 Beans $23,585 12% $2,830 Beets $5,328 56% $2,984 Broccoli $29,810 72% $21,463 Brussels sprouts $4, % $4,650 Cabbage $35,113 68% $24,052 Carrots $49,760 40% $19,904 Cauliflower $17,475 77% $13,543 Celery $13,087 40% $5,235 Corn (sweet) $52,150 76% $39,634 Cucumbers $17, % $17,035 Dry Onions $41,275 76% $31,231 Garlic $1,670 44% $735 Leeks $2,035 67% $1,363 Lettuce $45,215 73% $33,007 Melons $6,320 44% $2,781 Parsley $2,070 6% $124 Parsnips $1,840 6% $110 Peas $20,695 85% $17,591 Peppers $23,615 60% $14,169 Pumpkins $10,800 44% $4,752 Radishes $9,355 44% $4,116 Rhubarb $1,050 44% $462 Shallots $17, % $17,290 Spinach $5,025 80% $4,020 Squash/zucchini $15,030 80% $12,024 Tomatoes $75,430 63% $47,772 Turnips $10,180 53% $5,395 Watermelons $3,505 80% $2,804 Totals $553,713 $358,404 State of the Industry Report CropLife Canada 16

17 3. The incremental value created by crop protection products at the farm gate the 13 most frequently grown fruit crops Within the fruit crop crops sector, Statistics Canada data (CANSIM) for commercial scale fruit production was assembled from the most recent years 2007 and As with the field crops and vegetable crops calculations, the fairest available proxy for calculating the portion of production that is due to the use of crop protection products was organic production. As with the other crops, organic production deploys alternative methods to cope with the loss of use of herbicides, insecticides or fungicides. Thus the cost of non-use is mitigated by practices that any farmer would deploy in absence of those tools. Statistics Canada data regarding production during 2007 and of the 13 largest fruit crops produced in Canada was purchased. These crops were: Apples Apricots Blueberries Cherries (sour and sweet) Cranberries Grapes Nectarines Peaches Pears Plums Raspberries Strawberries Prices were obtained from the Statistics Canada CANSIM database for 2007 and 2008 on October 14, A key paper used as sources for yield comparisons to organic production was Stats Canada Vista on the agrifood industry and the farm community Catalogue XIE. The average value created in the Canadian economy by producers of fruit crops was $742.8 million. Of this total, $508 million is attributable to the use of modern crop protection tools. Table 5 The portion of fruit crop production in Canada that is attributable to the use of crop protection chemistries is over $508 million per year Crop Average in thou $ Portion of yield attained due to use of crop protection products Gross thou $ attributable to crop protection products Apples $177,425 74% $131,295 Apricots $1, % $1,330 Blueberries $179,073 62% $111,025 Cherries sour $4,030 75% $3,023 Cherries sweet $27,575 75% $20,681 Cranberries $97,055 70% $67,939 Grapes $114,255 89% $101,687 Nectarines $4,028 74% $2,981 Peaches $36,679 70% $25,675 Pears $8,973 48% $4,307 Plums $3, % $3,265 Raspberries $28,218 29% $8,183 Strawberries $60,918 44% $26,804 Totals $742,821 $508,214 State of the Industry Report CropLife Canada 17

18 4. The incremental value created by crop protection products at the farm gate potatoes Potatoes are a key crop for several provinces and a source of export revenue. In order to calculate the portion of potato production that can be attributed to the use of crop protection products, data for potato production for the two most recent years was obtained from the CANSIM data base on December 21, 2009 ( Statistics Canada. Table Area production and farm value of potatoes ). The potato producers of Canada produced $1.076 billion in value for the Canadian economy. Of this, $613.8 million is attributable to the use of crop protection tools in the production system by the producers. Table 6 The portion of potato crop production that is attributable to the use of crop protection chemistries is nearly $614 million per year Geography Farm value in thou $ Portion of yield attained due to use of crop protection products Gross thou $ attributable to crop protection Newfoundland and Labrador 2 $2, % $1, Prince Edward Island $235, % $134, Nova Scotia $6, % $3, New Brunswick $127, % $72, Quebec $129, % $73, Ontario $91, % $52, Manitoba $221, % $126, Saskatchewan $42, % $24, Alberta $174, % $99, British Columbia 3 $45, % $25, Canada 2,3 $1,076, % $613, Crop year refers to the period August 1 to July Prior to crop year 1971/1972, data are not available for Newfoundland and Labrador. 3 Prior to crop year 1910/1911, data are not available for British Columbia. 4 Prior to crop year 1986/1987, excludes the potatoes fed to livestock. State of the Industry Report CropLife Canada 18

19 5. Summary of the incremental value created by crop protection products and plant biotech at the farm gate field crops, fruit, vegetables and potatoes The value created through enhanced yields as a result of the application of crop protection products and biotechnology for the crops discussed above (16 field crops, 29 vegetable crops, 13 fruit crops and potatoes) is over $7.9 billion dollars (see table below). Some 32 per cent of Canada s $20 billion in field crops would not exist if crop protection chemistries and plant biotechnology were not used. In the horticultural sector, 57 per cent (potatoes), 68 per cent (fruit) and 65 per cent (vegetables) of the crops value would not have been produced if not for the ability of produces to use crop protection. Table 7 The portion of crop production for the 58 most common crops that are attributable to the use of crop protection and plant biotechnology is over $7.9 billion per year Sector Value/yr at the farm gate (Thou) Value generated at farm gate resulting from use of crop protection/plant biotechnology products (Thou) Percentage of production value that exists because crop protection/plant biotechnology products were used Field crops 1 $20,330,218 $6,471,962 32% Fruit 2 $742,821 $508,214 68% Vegetable 3 $553,713 $358,404 65% Potatoes 4 $1,076,770 $613,758 57% Total $22,703,522 $7,952,338 35% /9 and 2009/10 figures and 2008 figures figures and 2008 figures State of the Industry Report CropLife Canada 19

20 II. Economic impact created at the farm gate some regional impacts The figures outlined in Table 7 pertain to Canada as a whole. The regional picture differs from area to area owing to differences in cropping patterns and the general size of agriculture. To characterize the nature of the benefits on a regional basis, incremental values accrued due to the use of crop protection products and plant biotech were calculated for each of the 59 crops on a region-by-region basis. The following information pertains to this set of calculations. Note that figures may not total exactly to the national figure owing to rounding errors or data suppression for small acreage crops. 1. The incremental value created by crop protection/plant biotechnology for crops grown in the Atlantic provinces The Atlantic provinces cropping sector focuses on potato production, a variety of fruits (apples, blueberries, cranberries, strawberries, and raspberries, with a small amount of peaches, cherries, plums and grapes), wheat, oats, barley, and smaller amounts of corn and soybeans. The total incremental value added at the farm gate through use of crop protection/plant biotechnology for the 59 crops in the study through the use of crop protection technology/plant biotechnology is estimated to be approximately $283 million per year. Chart 1 Value of crop production produced and proportion attributable to use of crop protection/plant biotechnology in the Atlantic provinces Value generated by crop protection products/plant biotech in the Atlantic provinces Dollars $600,000,000 $500,000,000 $400,000,000 $300,000,000 $200,000,000 $100,000,000 $ Potatoes Fruit Grain crops/ field crops Total Total Farm value in $ $371,937,500 $90,483,000 $61,411,150 $523,831,650 gross $ attributable to crop protection/biotech $212,004,375 $56,756,083 $14,530,138 $283,290,596 State of the Industry Report CropLife Canada 20

21 2. The incremental value created by crop protection/plant biotechnology for crops grown in Quebec Quebec s cropping sector is very diverse. The province grows corn and soybeans on a large scale. Smaller acreages of cereals are also grown. A variety of fruit crops are also produced with strawberries, blueberries and apples being the three largest. Other fruits grown in smaller quantities are grapes and stone fruits. Growers in Quebec also produced nearly $130 million in potatoes and over two dozen different vegetable crops. The total benefit in economic value added to primary production studied in the 59 crops through the use of crop protection technology/plant biotechnology is estimated to be nearly $545 million per year. Chart 2 Value of crop production produced and proportion attributable to use of crop protection/plant biotechnology Value generated by crop protection products/biotech in Quebec Dollars $1,600,000,000 $1,400,000,000 $1,200,000,000 $1,000,000,000 $800,000,000 $600,000,000 $400,000,000 $200,000,000 $ Potatoes Fruit Vegetables Grain crops/ field crops Total Total Farm value in $ $129,717,000 $113,063,000 $238,788,000 $857,223,250 $1,338,791,250 gross $ attributable to crop protection/biotech $73,938,690 $69,912,000 $150,735,000 $250,390,433 $544,976,123 State of the Industry Report CropLife Canada 21

22 3. The incremental value created by crop protection/plant biotechnology for crops grown in Ontario Ontario producers grow corn, cereals and soybeans on a large scale (nearly $2.9 billion per year). The province s growers also produce nearly $232 million per year in fruits and approximately $271.5 million in vegetables. The total benefit in economic value added to primary production studied through the use of crop protection/plant biotechnology is estimated to be approximately $1.23 billion per year. As noted in the other regional discussions, this does not include value generated as a result of further processing of the production, nor the value of economic activity generated in pursuing this incremental yield. Chart 3 Value of crop production produced and proportion attributable to use of crop protection/plant biotechnology in Ontario Value generated by crop protection products/biotech in Ontario Dollars $4,000,000,000 $3,500,000,000 $3,000,000,000 $2,500,000,000 $2,000,000,000 $1,500,000,000 $1,000,000,000 $500,000,000 $ Potatoes Fruit Vegetables Grain crops/ field crops Total Total Farm value in $ $91,842,500 $231,922,000 $271,495,000 $2,865,327,750 $3,460,587,250 gross $ attributable to crop protection/biotech $52,350,230 $166,114,000 $174,328,533 $840,934,349 $1,233,727,112 State of the Industry Report CropLife Canada 22