Canada Secures Just 2% of Global Farm Tech Investment Despite Growth

Canadian farms are experiencing a complex landscape as they adapt to various challenges. In the first quarter of 2025, cash receipts for farms reached $25.6 billion, marking a 3.1% increase from the previous year. Despite a successful national campaign to promote Canadian goods, farmers are grappling with geopolitical uncertainties related to tariffs and the escalating effects of climate change, including more frequent and intense wildfires.

A new report from Farm Credit Canada (FCC) highlights a significant concern: Canada captures only 2% of global farm technology investment. This disparity hinders Canadian producers from accessing essential tools needed to adapt, compete, and grow in an increasingly competitive market. The report, authored by business intelligence analyst Bethany Lipka and senior economist Isaac Kwarteng, warns that without a substantial increase in research and technology spending, productivity growth will continue to stagnate, jeopardizing Canada’s position as a leader in the agtech sector.

For over three decades, Canada has been losing ground in agricultural research and development (R&D). Once a global leader, the country now ranks behind several nations in terms of budgetary spending on agricultural innovation. The OECD’s measure of “agriculture knowledge generation” illustrates this decline, showing that Canada has fallen from its prominent position in the early 1990s, when it exceeded the United States and Japan in R&D investment.

The impact of this decline is significant. A study from the University of Calgary School of Public Policy estimates that every dollar invested in agricultural R&D yields a return of $10 to $20. Yet, public investment remains the primary source of funding for agricultural R&D in Canada. In 2023, Agriculture and Agri-Food Canada allocated over $829 million towards science and innovation, significantly overshadowing the investment from agricultural businesses.

Venture capital, crucial for translating prototypes into practical tools on farms, has also seen a downward trend. Canadian agtech deals peaked in 2021 but have since reverted to levels comparable to those before the pandemic. In 2024, the United States outperformed Canada, achieving a ratio of 6:1 in deal volume and 23:1 in deal value. From 2018 to 2024, Canadian companies accounted for an average of just 5% of global agtech deals and 2% of total deal value, leaving Canadian innovators with diminished opportunities to scale their solutions.

The report emphasizes lessons from abroad, particularly from the United States, European Union, and Japan, which have successfully implemented coordinated investment strategies. The United States benefits from substantial public and private funding, fostering innovation hubs that expedite the adoption of advanced technologies like robotics and artificial intelligence. The European Union’s Horizon Europe program prioritizes sustainability and climate resilience, while Japan’s heavy investment in automation and data-driven systems addresses labour shortages and land constraints.

For Canada to enhance its competitiveness in the global agtech market, the report suggests several actionable steps. Increasing private R&D spending with a focus on commercialization could potentially elevate farm incomes by billions. Collaborating with foreign markets to import proven technologies can help bridge the innovation gap while domestic capabilities are developed. Strengthening networks among researchers, startups, producer groups, and investors can facilitate a more efficient flow of ideas and capital.

Furthermore, reducing barriers to technology adoption—such as minimizing the costs and complexities of integrating new tools into farm operations—along with investing in workforce training, will be essential. Finally, prioritizing sustainability by linking innovation investments to practices that enhance yields while minimizing environmental impacts is crucial for long-term success.

The findings of the report are particularly relevant for stakeholders within Canada’s agri-food economy. Productivity transcends mere output; it encompasses competing on quality, cost, and resilience amid market volatility. For agtech entrepreneurs, the key takeaway is that solutions with strong commercialization potential are likely to find traction in the market. Established agribusinesses should regard technology adoption as integral to their competitive strategy rather than a secondary consideration.

Darren Baccus, executive vice-president of Agri-Food, Alliances and FCC Capital, underscores the urgency of this situation: “Canada’s economic future requires an agri-food industry that takes an advanced approach to innovation and productivity. Historically, investment dollars have been scarce and have not been scaled to meet the increasingly sophisticated needs of the sector.”

Addressing the investment gap in Canadian agtech is crucial for maintaining the country’s standing in global food markets. Leveraging foreign innovations could yield immediate benefits while domestic R&D capabilities are cultivated. Given the high return on investment associated with agricultural R&D, industry leaders must strategize accordingly to ensure a robust future for Canada’s agri-food sector.