Boosting Canada’s agricultural productivity through investment and innovation

Canada’s agricultural sector stands at a pivotal moment, as global food demand intensifies, profit margins tighten and climate pressures mount. Ag tech innovation offers a powerful solution, but research alone isn’t enough. We must accelerate commercialization of these technologies and create an investment environment that attracts venture capital. Innovation, boldness and ambition are urgently needed.

Despite our reputation as a global leader in food production, Canada lags international peers in ag tech investment. Indeed, the country captured less than 2% of global venture capital ag tech deal values in 2024 compared with 45.3% for the United States. U.S. venture capital ag tech deals that year outvalued their Canadian counterparts by a ratio of 23 to 1. This imbalance is reflected in the relative importance of U.S. and Canadian agriculture and food exports, with the U.S. ranking 1^st globally (accounting for more than 9% of global exports), and Canada ranking 8^th (capturing less than 4% of global exports). We remain an important linchpin in the global food system, relative to our size. But we could be doing better.

To remain competitive, we need to increase research spending and foster a thriving ecosystem in which startups, researchers, and investors collaborate to bring breakthrough technologies from lab to field. As a new report by FCC Thought Leadership shows, it’s time to look beyond our borders and find opportunities to import innovation to Canada. The opportunity is immense — and the time to act is now.

Current state of investment

Here’s why. Research and development (R&D) not only drives innovation, it also helps power the economy. It’s estimated that every dollar invested in agricultural R&D yields a return of $10 to $20. Until the mid-2000’s, Canada was a global leader in agricultural research and development (R&D), ahead of the U.S., Japan, and OECD average. Today, that is sadly not the case.

Figure 1: Agriculture R&D spending as a percentage of industry revenue

Sources: OECD, FCC calculations

Figure 2: Global ag tech venture capital deal values for Canada and the U.S.

Source: PitchBook Data, Inc.; FCC calculations. The cited data has not been reviewed by PitchBook analysts and may be inconsistent with PitchBook methodology. Deal values are based on limited data.

The importance of increasing ag tech investment in Canada

How to proceed? The way forward is clear: By investing in the commercialization and adoption of emerging technologies both at home and abroad – such as artificial intelligence, robotics, and data-driven tools – Canada can significantly enhance agricultural productivity and efficiency, bolstering its position in the global food system.

How to catalyze investment and innovation in Canadian agriculture

The report provides some key recommendations for boosting agricultural investment and innovation in Canada:

• Drive agricultural knowledge generation with a strategic focus

• Seek strategic opportunities at home and abroad

• Strengthen the ag tech ecosystem

• Harvest low-hanging fruit

• Focus on sustainability

An industry call to action

In short, the future of Canadian agriculture lies in our ability to innovate and adapt. Embracing new technologies and investing in research and development is crucial to boosting productivity and ensuring the sector's future growth and sustainability. By fostering a culture of innovation, we can address current challenges and seize new opportunities resulting in a $30 billion opportunity for Canadian farmers.