A Ten Year Sprint for Digital Agriculture Policy: A Now-or-Never Moment for Canada’s Agri-Food Sector

Canada’s agriculture sector is facing a pivotal decade. Older farmers are retiring, leading to farm consolidation and a generational shift to younger producers. Many readily available digital technologies, meanwhile, offer the potential to revolutionize farming through improved business practices that enhance productivity, resilience, and sustainability, while offering a better quality of life for producers through reduced physical and mental stress.

Unfortunately, conversations in Canada about digital agriculture often reveal a disconnect between policy objectives, agriculture technologies (agtech) aspirations, and on-farm realities. This must change, as accelerating digital agriculture is not just about modernizing our food system. It’s about building Canada’s agri-food sector as a key national asset in the evolving digital global economy.

Indeed, intensifying external pressures like trade uncertainties, climate volatility, and rising production costs make digital agriculture a strategic necessity – not just an option – for maintaining the competitiveness and resilience of Canada’s agri-food sector.

Agriculture in the 21st Century

Digital agriculture encompasses more than just precision agtechs  like soil sensors and satellite-guided tractors. It includes accounting and human resources software, cameras for livestock monitoring, robotic milking machines, and more. Artificial intelligence (AI) and machine-learning are increasingly integrated into agtech tools to help producers through automation, early detection of livestock and plant disease, and advanced data analysis to help make sense of commodity markets. Given the rapid development of AI in the last decade, this trend will only increase in speed and scope. A June 2024 report by McKinsey & Company argues that the agriculture sector is poised for significant change through AI due to “its high volumes of unstructured data, significant reliance on labour, complex supply chain logistics, and long Research & Development (R&D) cycles”.

However, the adoption of these tools on Canadian farms is uneven across regions and operations of different sizes and production types (see graph below). Large operations in grain and oilseeds, greenhouses, and the dairy industry lead the way with strong uptake. In contrast, horticulture and smaller-scale farms lag behind, often missing out on the potential of digital and AI enabled tools, in part, because there is less technology available on the market for farmers working in these sub-sectors.

Figure 1: Agriculture Technology Adoption Rates in Canada, in 2016 and 2021

Image by Canadian Agri-Food Policy Institute. Sources: Enstroem, et al, 2023; Easher, et al, 2024

This uneven adoption of agtech is creating three main problems. First, some farms are not reaching their full economic potential. Second,existing inequities within the farming community are exacerbated. Third, global competitiveness of Canadian farm products is reduced, especially as peer countries like Australia, the Netherlands, and Israel implement comprehensive digital agriculture frameworks.

By contrast, Canada’s approach to digital agriculture has been largely piecemeal, with uncoordinated provincial initiatives and short-term federal programs. Many current programs are also too complex and ineffective at changing farmers’ technology adoption decisions and the agtech marketplace. In an era of tightening budgets, effective program design and delivery are crucial.

Uneven on-farm technology adoption poses a challenge for Canadian agtech companies as well. Bringing innovations to market is difficult, particularly in specialized industries like agriculture. Weak, or unpredictable use of emerging technologies hinder startups from scaling up, adding to existing challenges such as the difficult venture capital environment. 

Without concerted policy action, Canada’s agricultural sector risks missing a vital opportunity to boost productivity and contribute further to the country’s overall prosperity. Farm Credit Canada (FCC) estimates the sector could generate an additional $30 billion in net revenue over the next decade if annual productivity growth returns to 2%, as seen from 1991 to 2010. To make good on this potential, collaboration will be crucial along with  bold new public policies that incentivize stakeholders in Canadian agriculture, including farmers,  to channel more capital investment into digital tools and technology.

Making Adoption of Digital Agriculture Tools a Priority

A recent report, The future is digital: Digital agriculture and Canadian agriculture policy, published by our two organizations, CAPI and EMILI, explored digital agriculture’s role in strengthening Canadian farming by accelerating the sector’s digital transformation. The research aims to understand not only why on-farm tech adoption lags behind peer countries, and other economic sectors, but also proposes actionable policy prescriptions to drive the digitization of the agri-food sector over the next decade.

One reason for this lag is that incentivizing on-farm adoption of digital tools is not a central goal of the 2023-2028 Sustainable Canadian Agricultural Partnership (S-CAP). Programs arising from the S-CAP policy framework form the backbone of government funding to the agriculture sector at both the federal and provincial levels. Infrastructure challenges and regulatory uncertainty can further blunt technology adoption on-farm. Despite significant investments, there remains considerable challenges to delivering internet connectivity in rural areas, while uncertainty about data privacy and ownership reduce farmers’ trust in digital tools.

It is also crucial to recognize that digital agriculture is not a one-size-fits-all solution, and farmers’ perceived resistance often stems from valid concerns. Producers are strategic business owners who balance short-term needs with long-term goals, manage external pressures, whilst striving to maintain their livelihoods. Adopting digital agriculture is one of many complex decisions they face.

We believe that digital technology is a key tool for strengthening the Canadian agri-food sector and that federal and provincial governments must take decisive action now to make digital agriculture a national strategic priority.

First, support for digital agtech adoption must be a core pillar of the next Federal-Provincial-Territorial (FPT) policy framework agreement. At the same time, FPT governments should develop a 10-year digital agriculture action plan to drive strategic policy responses over a longer time horizon. 

Second, given the host of risks they face, farmers do not trust in unproven technology, and agtech companies often misunderstand farm realities. Governments should fund and facilitate the creation of regional digital agriculture hubs to address these issues and facilitate collaboration between farmers, agtech companies and other stakeholders to develop and adopt digital agriculture tools tailored to regionally specific needs.

Third, farmers need data from technology demonstrations at a scale that matches their own operations, not just experimental test plots. Governments and technology companies should collaborate to compensate producers for large-scale testing of mature technologies, aiming for over 5,000 acres active in commercial technology testing by 2030. This would build on existing successes like EMILI’s Innovation Farms and Area X.O’s Ottawa Smart Farm but must go further to deliver the breadth and depth of technology testing and validation farmers are seeking. 

Fourth, the federal government should foster the development of markets that leverage agricultural data to provide tangible value to farmers, such as premium pricing for traceability in export markets. While farmers can generate valuable data through digital tools, it is not easy to identify the direct benefits. The Dutch FarmTrace system demonstrates how Dutch fruit and vegetable growers can earn higher prices by proving their produce is pesticide-free using farm data.

Finally, the federal government must implement a comprehensive national data strategy to facilitate the integration of agtech tools with the broader digital economy. Proprietary platforms can create lock-in, raise privacy concerns, and limit interoperability. A national data strategy with robust guidelines on data ownership, privacy, security, and interoperability can help to resolve these challenges.

These five steps are bold choices Canada could take to strengthen our agri-food sector using the levers provided by digital agriculture, a key strategic area of the economy and core aspect of Canada’s national identity, especially in rural communities. There is no time to waste.