Value-added processing provides key for rural renewal

Source: Saskatchewan Agriculture and Food

The latest census data from Statistics Canada has provided more fuel for the debate about rural revitalization.

While the numbers showed that the overall trend towards urbanization continues, an expert in rural population with the agency says it has little to do with the amount of money flowing through the rural economy.

Statistics Canada Research Economist Ray Bollman’s recent report, entitled “Factors Driving Canada’s Rural Economy,” found that the three fundamental drivers for rural Canada are technology, prices, and demography. His conclusions provide some food for thought for those who believe that rural revitalization is linked to the price of agricultural commodities.

Bollman says commodity industries like agriculture are not likely to be big drivers of rural population increases if the benchmark for success is job growth or population growth.

“The price of machinery is going down relative to the price of labour to do a unit of work, whether that is to make a bale of hay, produce a litre of milk, or cultivate an acre of land. So there is always an incentive there to substitute machines for workers,” he said.

“Communities that are intensive in commodities should work towards finding something extra or something new to export, to stabilize their work force, because you need fewer and fewer people to simply produce commodities,” said Bollman.

That thought runs counter to those who suggest a more profitable farm economy would result in more rural population. Bollman says more money flowing through a rural economy is not the solution.

“If commodity prices go up, you do not get more workers in communities. If the objective is workers or people, then the change in commodity prices will not have a big impact. I think you might even predict that people would buy bigger machines and you would need even fewer workers,” he explained.

Bollman says adding a manufacturing base or value-added processing is one approach that might more effectively create jobs.

“If you think about a successful rural community 20 years from now, it will likely have a manufacturing base. Successful communities will be those that find a new product or service to export in order to maintain their employment base,” he said.

Bollman’s report concludes that the falling price of transporting goods will make rural Canada more competitive when it comes to attracting manufacturing and processing. When transportation costs drop, opportunities arise to create jobs in these areas, and jobs create population growth.

That may sound like an overly simple solution, and Bollman admits that may not be the answer for all communities. But he contends that communities that choose to grow will find their way.

“I don’t think rural depopulation is inevitable, because no matter how you classify groups of communities or sizes of communities or the major commodity being shipped in the community, there are always some that are growing and some that are declining,” he stated.

“It’s not inevitable. There is always some community that, through good luck or good management, is able to grow.”

Bollman’s report, “Factors Driving Canada’s Rural Economy,” is available through Statistics Canada’s website at www.statcan.ca.

For more information, contact:
Ray Bollman, Research Economist
Statistics Canada
Phone: (613) 951-3747
E-mail: ray.bollman@statcan.ca