Thriving Against the Odds: How Canadian Agriculture is Navigating a Critical Turning Point

In recent years, Canada’s agriculture sector has been stable, but that stability is starting to crumble. Major challenges, like tariffs from the U.S. and China on Canadian products, are part of a larger, complicated problem impacting agriculture.

This sector is vital to Canada. It employs 2.3 million people and contributes about $150 billion yearly, making up 7% of the country’s GDP. However, with farm debt hitting $146 billion and the value of farmland not being enough to offset these costs, farmers are feeling the pressure.

Today, agriculture faces a mix of economic and environmental challenges. Traditional methods of assessing risks, like market changes and weather, no longer cut it. Experts warn of “tipping points,” where natural resources can no longer recover. Paul Gruenwald, an economist at S&P Global, says, “Once you hit a tipping point, recovery is impossible.” This statement underscores a new understanding of how agriculture must adapt to these changing realities.

Research shows a clear link between environmental health and agricultural productivity. If natural resources degrade, farmers will inevitably face declines in output.

New decision-making tools are essential. Initiatives like the Farm Animal Investment Risk & Return (FAIRR) are making efforts to assess how investments impact the environment. Quebec’s Biodiversity Indicators for Investors is an example of local innovation helping to integrate environmental factors into investment decisions. These tools reveal that while technology is important, returning to nature-based solutions can be significantly beneficial.

Unfortunately, funding for these nature-based projects is limited. They receive a mere 0.1% to 0.2% of total climate finance, while technology-focused projects often receive much more, leading to a “lock-in effect.” Heavy investments in existing models result in missed opportunities for sustainable advancements.

Financial institutions are slowly starting to recognize these risks, but they need to act more decisively. The Canadian Agri-Food Policy Institute’s recent report indicates that many farmers feel 2025 will be riskier than previous years, expecting a sharp decline in income due to climate issues. The agriculture sector needs a holistic approach that considers how environmental health ties into economic performance.

Farmers have shown resilience and adaptability time and again. However, they can’t face these challenges alone. They need support from banks, policymakers, and suppliers to thrive in a changing landscape.

Failure to take action now could lead to irreversible damage to the natural systems vital for farming. The path forward is clear: embrace sustainable practices that not only focus on profit but also prioritize ecological balance.

The agriculture sector in Canada must now navigate a pivotal moment. By investing in sustainable methods and working together, we can ensure a thriving future for both farmers and the planet.

For more insights on sustainable practices in agriculture, read the FAIRR report on nature-based interventions here.

Jean-Michel Couture is an economist and President at Groupe AGÉCO. Sajeev Mohankumar, PhD, is a Senior Technical Specialist for Climate and Nature at FAIRR.

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