Canada Struggles with Just 2% of Global Farm Tech Investment

Canadian farms are facing significant challenges despite a modest increase in cash receipts. In the first quarter of 2025, farm cash receipts reached $25.6 billion, a rise of 3.1% compared to the previous year. While a national campaign promoting Canadian goods has gained traction, farmers are still grappling with geopolitical uncertainties linked to tariffs and the escalating effects of climate change, particularly severe wildfires. A recent report from Farm Credit Canada (FCC) highlights a critical issue: Canada captures just 2% of global farm tech investment, a gap that hampers producers’ ability to adapt and compete in a rapidly evolving agricultural landscape.

A report authored by Bethany Lipka, a business intelligence analyst, and senior economist Isaac Kwarteng, underscores the implications of this investment shortfall. Without a significant increase in research and technology funding, Canada’s agricultural productivity growth is projected to stagnate, jeopardizing its position in the global agtech sector. This trend is part of a long-standing decline in Canada’s agricultural research and development (R&D), which has adversely affected productivity and diminished the country’s previous status as a leader in global innovation.

Declining Investment in Agricultural Research

For over three decades, Canada has experienced a downturn in “agriculture knowledge generation,” a term used by the Organization for Economic Co-operation and Development (OECD) to describe government spending on agricultural research and data dissemination. Once a global frontrunner, Canada has fallen behind countries like the United States and Japan. The report cites a University of Calgary study suggesting that every dollar invested in agricultural R&D can yield returns of $10 to $20.

Public funding remains the cornerstone of agricultural R&D in Canada. In 2023, Agriculture and Agri-Food Canada allocated over $829 million for science and innovation, a figure exceeding the combined investment from agricultural businesses by more than four times. Unfortunately, venture capital funding—crucial for transitioning prototypes into practical applications—has also seen a decline. After peaking in 2021, Canadian agtech deals have reverted to levels similar to those before the pandemic. In 2024, the United States outperformed Canada at a ratio of 6:1 in deal volume and 23:1 in deal value.

Between 2018 and 2024, Canadian companies claimed an average of just 5% of global agtech deals and 2% of total deal value. This trend leaves Canadian innovators with limited opportunities to scale their solutions and restricts farmers’ access to proven technologies.

Learning from Global Leaders

The FCC report points to successful investment strategies employed by the United States, European Union, and Japan as models for Canada.

In the United States, substantial public and private funding, complemented by innovation hubs in regions such as Silicon Valley, has propelled the adoption of advanced technologies like robotics and AI in agriculture. Meanwhile, the European Union’s programs, including Horizon Europe, focus on sustainable practices and climate resilience, with the Netherlands leading in controlled-environment agriculture and collaborative research. Japan, on the other hand, is investing heavily in automation and vertical farming to tackle labour shortages and land constraints.

These regions demonstrate how targeted investments can align innovation with industry needs. The report emphasizes that Canada must develop similar strategies to maintain its export position and seize emerging opportunities.

To address these challenges, the FCC proposes five actionable strategies for Canadian businesses:

1. **Increase private R&D spending** with a focus on commercialization.
2. **Look beyond Canada for technology**, bringing in proven solutions from other markets.
3. **Strengthen networks and hubs** to enhance collaboration among researchers, startups, and investors.
4. **Remove adoption barriers** by simplifying integration of new tools and investing in workforce training.
5. **Prioritize sustainability** by linking innovation investments with practices that enhance yields while minimizing environmental impact.

The findings of the FCC report highlight the urgency for stakeholders in Canada’s agri-food sector to take action. Enhanced productivity is critical, not only for increasing output but also for improving quality and resilience in an unpredictable market.

Darren Baccus, executive vice-president of Agri-Food, Alliances and FCC Capital, emphasizes the importance of innovation in maintaining a competitive edge: “Canada’s economic future requires an agri-food industry that takes an advanced approach to innovation and productivity.” He notes that investment dollars have historically been insufficient to meet the complex demands of the sector.

Closing the investment gap in Canada’s agtech sector is essential to secure its role in global food markets. By leveraging foreign innovations, Canada could realize immediate benefits while scaling domestic R&D efforts. The potential return on investment for agricultural R&D is among the highest in the economy, indicating a critical path forward for industry leaders.