Climate change offers up new vistas for Canadian agriculture

Sunday, October 4, 2015

Warmer temperatures may mean tough times for farmers to the south, but they bring with them a longer growing season and new opportunities for growers from Saskatchewan to Niagara – and likely higher land prices, too

by JEFF RUBIN

Climate change and the inevitable restrictions that it will bring on the future combustion of fossil fuels may pose a lethal threat to the huge planned expansion of the oilsands, but it's going to make Canada's arable land a lot more valuable.

Instead of becoming the energy super power envisioned by the country's oil industry, the country could very well become one of the world's primary breadbaskets. If you think about how climate change will affect both food prices and oil prices in the future, that is not only good news for our carbon-choked atmosphere. It's also a very value-added transition for the Canadian economy to make.

Canada, as most farmers already recognize, is getting warmer and will become even more so in the near future. Since 1895, average temperatures on the prairies have risen by 1.6 degrees Celsius, roughly double the global average, and the warming trend has been accelerating since the 1970s. By 2050, average temperatures are expected to be as much as three degrees warmer than the 1960-1990 period along the northern margins of agriculture like the Peace River and by as much as two degrees in the southern prairies like Lethbridge.

Those temperature increases have already translated into significantly longer growing seasons. Spring is already 26 days earlier on the Prairies than it was only 50 years ago and predicted temperatures changes point to between another 25-40 per cent lengthening in the number of frost-free days on the Prairies by mid-century.  

Lengthened growing seasons not only boost crop yields, but they also open the door to the cultivation of more valuable cash crops like corn and soybeans that could never be grown before in the region.

The agricultural opportunities that climate change is bringing haven't been lost on major seed companies, who have targeted the region as a future corn belt. Monsanto expects acreage under corn cultivation on the Prairies to expand by as much as twentyfold over the next decade. They and other seed companies are investing millions in developing early maturing hybrid corn for a warming prairie climate. Prairie corn production has already risen by a record amount as a growing number of farmers have responded to the lengthened growing season by switching from wheat to corn.

Nor has that potential been lost on investors who are scooping up farmland, including the Canada Pension Plan Investment Board that recently bought over 100,000 acres of prime Saskatchewan farmland. Not only does the value of Canadian farm land increase with rising yields and higher cash crops, but it could also serve as an effective hedge against the negative impact that climate change will have on agriculture elsewhere.

Turn up the thermostat two or three degrees in the U.S. Midwest corn belt and the impact on agriculture is very different from that on the Prairies. American farmers got a glimpse of what that looks like back in 2012 when soaring heat and the worst drought in over half a century baked 70 per cent of the Midwest's corn belt and sent corn prices soaring by almost 50 per cent.

It won't just be the Prairies that will benefit from the climate-change-driven migration of agriculture to higher latitudes. Consider the clay belt in northern Ontario, an oasis of rich soil in the midst of the Canadian shield; the lakebed of ancient Lake Ojibway.

A punishingly short growing season has always stunted the agricultural development of the area. But with the expected increase in average temperature in northern Ontario, it may soon be possible to grow even corn in the region.

Vineyards will also be heading north. California's premier wine-growing areas like Napa and Sonoma are already water-stressed and studies from Stanford University and elsewhere predict the state's wine-growing area could be halved over the next 30 years, due to a drier climate. A similar fate awaits much of the world's other premium wine growing areas, particularly those around the Mediterranean such as Bordeaux, Rhéne and Tuscany which are also expected to become severely water-stressed.

At the same time, a warming climate will allow valuable varietals like cabernet sauvignon to be grown at much higher latitudes than ever before, including regions like the Niagara escarpment and Prince Edward County on the northern shores of Lake Ontario. Ironically, vineyards producing Ontario's signature wine, ice wine, may have to move north towards Georgian Bay as climate change renders the Niagara peninsula's winters too mild for the optimal harvesting of frozen grapes.

From Prairie cornfields to the northern Ontario clay belt to Prince Edward County vineyards, climate change is opening up new vistas for Canadian agriculture. As the temperature continues to rise, don't be surprised if you see a parallel rise in the value of Canadian farmland. BF

Jeff Rubin is an award-winning economist and author. After serving for 20 years as the chief economist of CIBC World Markets, Rubin left to publish his first book Why Your World Is About To Get A Whole Lot Smaller, which won the National Business Book Award in Canada and was published around  the world in seven languages. His latest best-seller is The Carbon Bubble.