CANADA - Information Pages dealing with our economy

CANADA

ECONOMY

Agriculture

Because Canada has such a small population in relation to its landmass, it is the second leading exporter of grain in the world even though it is not the second largest producer. Only approximately 5 percent, or 180,000 square miles (466,000 square kilometers), of the nation's land surface is cultivated, and fewer than 1 million Canadians actually are employed on farms. Nevertheless, agriculture is the country's most important economic activity.

In spite of the fact that the total number of farms and farmers has been in steady decline since World War II, the average size of farms has increased, and the total area in production has changed little. More and better farm machinery, better use of fertilizers, and more efficient farming methods combined to more than double agricultural production between 1941 and 1995. Farm implement manufacturing, food processing, and transportation industries are important related economic activities.

Principally because of climate, almost all of Canada's cultivated land lies within 300 miles (500 kilometers) of its southern border with the United States. Unseasonal frosts or snowfalls, spring flooding, and summer drought are the principal hazards faced by the agricultural community.

There are four main types of farming in Canada--grain farms that produce wheat, oats, flax, and canola (rapeseed); livestock farms that produce cattle, poultry and eggs, pork, and lamb; specialized farms that produce potatoes, tree fruits, tobacco, or vegetables; and mixed farms that usually combine livestock and grain cultivation. The trend is to greater farm specialization. There are several distinct agricultural regions in Canada with regional specialties, but none is limited to a single kind of farming.

Atlantic Canada, which includes the provinces of Prince Edward Island, New Brunswick, Nova Scotia, and Newfoundland, is generally an area of mixed farming. Most of the agricultural land is found in the coastal areas and up the river valleys. Uneven ground makes some types of agriculture impractical. Farms tend to be small and have poor soils, and many farmers increase their incomes by fishing or working in the lumber industry.

In Prince Edward Island agriculture is the main occupation and potatoes the main crop, though there is some grain and livestock farming. New Brunswick is also a major supplier of potatoes for sale fresh or for processing, and more than a third of its farms are in dairying. The Annapolis Valley of Nova Scotia is one of Canada's oldest and most productive fruit-growing areas, and poultry farming and dairying are common in the fertile lands surrounding the Bay of Fundy.

The cold weather of Newfoundland makes agriculture on a large scale impossible, though poultry and livestock raising and vegetable farming are of some local significance. Generally the population is sparse and widely scattered throughout the Atlantic provinces, making difficult the marketing of produce other than potatoes and apples, which travel well and find a market in central Canada.

St. Lawrence Valley and Great Lakes. The low land areas of the St. Lawrence Valley and lower Great Lakes, with soils developed from glacial deposits and relatively dense population, form one of Canada's most significant farming areas. The southernmost portions of the country are in this region so that the growing season is relatively long and the climate is generally moderate. The region may be described as mixed farming, but specialty farming is practiced in the areas near the large cities.

Quebec. The traditional mixed farms in Quebec, lying in long ribbons inland from their borders on rivers or roads, are being converted in increasing numbers into larger dairy operations. More than half of the commercial farms in the province are now dairy, and a significant butter and cheese processing industry has developed there.

Crops upon which animals feed account for the major part of the cultivated land and are partly responsible for the area's thriving livestock and poultry industries. Apples and other fruits, vegetables, tobacco, and sugar beets make up most of the rest of Quebec's agricultural economy. A small but traditional activity is the annual springtime production of maple syrup and sugar. Stands of maple trees are tapped and the sap collected and boiled down to produce this uniquely North American confection.

In the Lac St-Jean region of the Canadian Shield is a large flat deposit of clay. It is not rich or well drained, and the growing season is short, but in most years it can produce good crops of hay and other forage and sustain dairy and other livestock operations to supply the nearby mining and forest industries.

Ontario. The soils of south-central and southwestern Ontario are particularly suited to intensive mixed and specialty farming. Dairy farming in particular is important in the western counties, though the thinner soils along the north shore of Lake Ontario support many livestock and dairying operations. Provincial government quota systems that in essence ration the supply of milk, however, have caused drastic reductions in the number of cheese factories, as many producers cannot market enough cheese to sustain a profitable operation.

The largest tobacco growing area in Canada is found on the north shore of Lake Erie, and most of the country's production of soft tree fruits and table and wine grapes is grown in the narrow strip of lake-level land in the Niagara peninsula. Deep rich soils in the Holland Marsh, north of Toronto near Lake Simcoe, constitute Ontario's most productive market-gardening area. The sheltered lowlands south of Georgian Bay are noted for apple production and the nearby stands of maples for springtime syrup and sugar production.

The counties of the extreme southwest of Ontario produce crops for the canning industries in the region. As in Quebec, there is an extensive deposit of clay in the shield area known as the Clay Belt. It too has marginal farm operations that help meet some of the food requirements of the people working in surrounding mining and forest industries.

Prairie provinces. The provinces of Manitoba, Saskatchewan, and Alberta make up the Prairie Region. The prairies are gently rolling plains, deeply cut by the river valleys that transect them. Centuries of relatively stable weather patterns have produced several distinct soil types. Agricultural activity conforms fairly closely to these climatic and soil zones.

The central area of light brown soils, the driest at less than 13 inches (33 centimeters) of annual precipitation, is termed short grassland and is used primarily for beef cattle ranching. Higher precipitation and dark brown soils permit wheat farming, using strains of grain developed in Canada to withstand cold and to grow to maturity in a short period of time. Farther north and east, in the zone of black soils, rainfall may reach 20 inches (50 centimeters) or more per year. Conditions there are favorable for mixed farming.

Seventy-five percent of the cultivated land in Canada lies within the Prairie Provinces. Although the yield of grain is low, and few cattle can be supported on the grazing, the vastness of the area makes it extremely productive. A zone lying along the edge of the boreal forest has been the site of modern-day pioneering. Land has been cleared and marginal mixed farm operations begun. The rigors of climate and long distances from markets have doomed most of these operations to failure, and an increasing number of farmers have abandoned their land to move south.

The road and rail transportation network is extremely important to prairie farmers. Grain must travel enormous distances to Vancouver for shipment to China, Japan, and other countries of the Far East and to Churchill, Man., on Hudson Bay or Thunder Bay, Ont., on Lake Superior for shipment to the markets of central and eastern Canada, Europe, and Russia. A major debate raged in the country for several years prior to the introduction in 1983 of a change in rail rates for trains that travel through Crowsnest Pass, the first such change in almost a century.

South of Winnipeg, Man., stretching into North and South Dakota in the United States, is a bed of an ancient glacial lake, Lake Agassiz. The bed sediments are laid down in what is the flattest part of the prairies, and it is this area that has given rise to the popular misconception that the entire western plains area is as flat as a tabletop. Rainfall here permits mixed farming and dairying closer to Winnipeg, but the tradition among the predominantly French and metis (mixed French and Indian) population to own relatively small farms has resulted in low incomes for many farmers. Nevertheless, wheat and other grains, canola, sugar beets, and substantial livestock production are features of the region.

Saskatchewan produces nearly two thirds of the wheat grown in Canada and significant quantities of other grains. Gardiner Dam and Lake Diefenbaker south of Saskatoon provide a massive water storage area for power generation and irrigation. Although many farmers refuse to change to farming based on irrigation, preferring the more traditional wheat and livestock production, more crops are grown under irrigation than ever before. In the wetter regions to the north, chicken and turkey raising is common.

The rolling foothills of Alberta's Rockies are too rugged for wheat farming, even though climatic conditions are favorable. The land is used for large-scale cattle and sheep ranching. Southeastern Alberta is the most significant beef production area of Canada. As a result of the irrigation of wide, flat stretches of land near Lethbridge, the province has become noted for sugar beets, vegetables, and forage crops that support feedlots, where cattle are fattened for market. The Peace River district in the north of the province is noted for the purity of its seed grains. Growing conditions are marginal because of the cold, but the cold also limits insects and weeds. Bees, imported to pollinate the seed crops, provide a thriving secondary industry in honey production.

British Columbia. Only about 2 percent of the land area of British Columbia can be farmed. Tremendous variation in temperature and rainfall from one district to another makes it difficult to generalize about its agriculture.

There is cattle and pig farming in the interior of the province of British Columbia. The Okanagan valley is the province's most important fruit-growing area. The vast, flat region of rich sedimentary deposits in the Fraser River delta has Canada's longest growing season and forms its most complex agricultural area. Most of the food needs of Vancouver and the other cities of the delta are met from its production. Rapid urban expansion, however, is posing a threat to this limited resource. The southeastern corner of Vancouver Island has good soils and conditions favorable enough to supply most of the milk and vegetables needed by Victoria, the province's capital.

Although there are some farms in the northern part of British Columbia, in the Yukon, and in the Mackenzie River basin, the possibility of frost in any month of the year places severe limitations on what can be grown. Few Canadians are willing to attempt to farm in such a hostile environment.

The marketing of wheat, eggs, turkey, milk, tobacco, and soybeans is controlled by government marketing boards. Producers' associations and cooperatives are common throughout the country.

Forestry

Canada's forests supply the country's building and paper products industries and contribute one fifth of all the nation's exports. In the 1990s the national forest inventory recorded a total of 1.3 million square miles (3.4 million square kilometers) of forest land, of which 83 percent had been surveyed and almost 60 percent was in production. Not all of the forest is suitable for commercial exploitation. Some is located too far from a market to make it economical to cut. Along the northern edges of the boreal forest zone, the trees are too few and too stunted to be of commercial value, and some areas in the more accessible forests have such poor soils that the trees of their forests are not worth exploiting. In parts of the interior of British Columbia, the forests cannot be reached easily, though their timber is highly desirable. About two thirds of all trees cut in Canada are used for lumber, plywood, and wood products and the other third for pulp and paper.

The boreal forests account for four fifths of Canada's forestland. The Great Lakes provide inexpensive and easy transportation of logs from the Shield to the sawmills and pulpmills on their shores. Good supplies of hydroelectricity, large bodies of water to carry off waste materials, and nearness to markets in the densely populated industrial regions of Canada and the United States are the major factors contributing to the profitability of this industry. Much of the hardwood used in furniture making in the southern parts of the provinces is cut from forests along the southern edge of the Shield. The St. Lawrence River provides a passage to the supply in the heart of the continent. Inexpensive newsprint from Canada has become the material used to print almost half the newspapers in the Western world.

Even though the forests of British Columbia make up only about 15 percent of the nation's wooded area, they account for almost half the total volume of wood cut. This is because of the tremendous size of the Douglas firs and Sitka spruces that grow on the Coast Mountains and the moist slopes of the Columbian Range. In the 1970s and 1980s the development of new techniques for using waste materials from sawmills led the provincial government to assist in establishing pulp mills in the interior. This has revitalized the industry in the province.

Mining

More than one third of the total value of Canadian exports is in minerals. The search for mineral deposits to mine has always been a major driving force in the nation's development. When commercially significant deposits are found, towns spring up at the sites.

The products of the mineral industry in Canada may be divided into four main groups: mineral fuels, metallic minerals, nonmetallic minerals, and structural materials. Petroleum and natural gas account for more than half of the dollar value of mineral production in Canada. The first free-flowing oil well in North America came into production at Oil Springs, Ont., in 1857--two years before the first well in the United States. But it was not until 1914, in Turner Valley, near Calgary, Alta., that a sizable petroleum and natural-gas field was discovered in Canada. The threat to oil supplies posed by World War II added urgency to the search for more deposits. The search was rewarded in 1947 when the first well of the huge Leduc field in central Alberta became operational. Later discoveries of oil and gas deposits have led to extensive development. Pipelines carry gas and oil as far east as Toronto and Montreal and gas to markets in the United States.

Thick oil seeps through to the surface of the Earth in the Athabasca Tar Sands in northeastern Alberta. Huge machines scoop up the sands, and an elaborate steam-extraction process separates the oil. This is an expensive process, however, and the project has only been barely worthwhile since the early 1980s, when world oil prices began to drop in response to declining demand. Commercially valuable deposits of oil and gas have been discovered in the Beaufort Sea, in the Arctic archipelago, and off the Ungava coast of Labrador, but the cost of transporting the product to market is prohibitive. Because of the fragile nature of the Arctic environment and the danger posed by icebergs to shipping, an oil spill could become a monumental disaster. Therefore it is unlikely that extensive development of these resources will take place soon. Drilling is proceeding in the Hibernia fields in the Atlantic Ocean off the coast of Newfoundland, however, and in the gas fields near Sable Island, offshore from Nova Scotia.

The provinces control natural resources found on land, but the federal government has claimed control over all offshore deposits within the 200-mile limit of Canadian sovereignty. This has led to disputes with the governments of British Columbia, Nova Scotia, and Newfoundland. In each case the federal government has worked out a revenue-sharing arrangement with the provinces so that their citizens may benefit from the probable profits. This is significant in Canada's Atlantic region, which is considered to consist of poor "have-not" provinces. Corporations based in the United States or in Europe own most of the oil and natural gas industry in Canada. Since Canadians want to control their national energy resources, they have bought several foreign-owned petroleum companies since 1980 and have formed Petro Canada, a federally controlled corporation.

Igneous rock, material once so hot that it was liquid, that flowed into the granitic rock of the Canadian Shield and the sedimentary rock of the other geological areas of Canada is the major source of the great variety and quantity of metallic minerals found across the country. Because of the vastness of the northern region, not all deposits are known; and, because of the great distances from potential markets, not all the known significant deposits are mined. Yet prospecting for metals is pursued with vigor in the Canadian hinterland.

Metallic minerals are of great significance in the Canadian economy. Even though world demand for iron, nickel, and other metals is down and the processing of these metals in areas of the world where labor costs are lower than in Canada has caused a falloff in production since 1980, almost 30 percent of the value of the nation's total mineral production comes from metallic minerals. Gold, mined primarily at Hemlo on the north shore of Lake Superior, is the most important. Copper from all provinces except Alberta and Prince Edward Island and zinc, for which Canada is the world's leading producer, rank next in dollar value of production. Nickel, iron ore, uranium, silver, and other metals also are mined in quantity.

Although the nonmetallic minerals mined in Canada do not constitute a huge share of the dollar value of annual production, they are highly significant to the economy. Coal is required for electrical generation, and Canada is the world's fourth-largest exporter of the mineral. Cement, sand, gravel, and gypsum are essential to the construction industry. Potash from the world's largest deposits in Saskatchewan is the basis for fertilizer manufacture. Although world demand has declined, production of asbestos from the mines in Quebec is an important industry.

Fishing

Fishing, whether coastal or inland, is controlled by the federal government. Management of fishing, however, has been delegated in different ways to the provinces. Quebec has assumed management of its marine and freshwater fisheries. Ontario and the three Prairie provinces manage all the fisheries within their jurisdiction, and British Columbia manages all freshwater fisheries except those dealing with migratory fishes such as salmon. The federal Department of Fisheries manages all fisheries in the Atlantic provinces and the northern territories.

Energy

Canada has been a world leader in the development of energy from nuclear reactors. Completion by CANDU of installations in Argentina and Korea in 1982, however, marked the end of foreign installations. Growing fears of nuclear accidents and of the possible use of fissionable materials to make nuclear weapons have caused a drastic drop in the demand for uranium and reactors.

Electrical energy from hydroelectric, coal, and nuclear generating stations has long been an economic plus for Canada. Production has consistently been higher than domestic demand so that huge amounts have been available for export to the United States. In 1993 Canada exported more than 650 million dollars in electricity.

Manufacturing

Canada is known throughout the world for its natural resources and for the great amount of grain its farms produce, but more people are employed in manufacturing in Canada than in agriculture, mining, forestry, and fishing combined. Canadian manufactured goods as well as raw materials and agricultural products are sold all over the world. In 1992 Canada exported goods worth almost 15 billion dollars more than those it imported.

The lowlands of Ontario and Quebec are the most important of Canada's industrial regions. There the concentration of population and the nearness of resources, water, electricity, transportation, and food supplies have made it possible for Canadians to build a huge integrated industrial complex in the middle of the continent.

The cities of Toronto and Montreal together account for more than a third of all of the nation's manufacturing. Although they both are locations for an immense variety of industrial applications, including cereal processing, breweries, and electrical appliance production, they have some specialties. Montreal is the focus of Canadian clothing manufacture and Toronto of publishing and aircraft production.

Oshawa, Oakville, Brampton, and Windsor in Ontario and Ste-Therese in Quebec are automobile and truck centers; Hamilton is known as "Steel City," Contrecoeur, Que., is an iron and steel town; and Sarnia, Ont., is a petrochemical and salt processing city. Leamington, Ont., is noted for vegetable canneries and the Niagara peninsula for wineries. Timmins and Sudbury in Ontario and Sept-Iles in Quebec are major ore processing centers. The almost limitless hydroelectric resources of the Shield in Quebec and the easy access to oceangoing ships have made the Lac St-Jean area a major aluminum smelting center. Smelters at Arvida, Alma, and Grande Baie produce a half million tons of aluminum annually. The materials from these primary industries support the tremendous output of the secondary manufacturing of the central region.

Nothing is of greater significance to the economy of British Columbia than the forest industry. Pulp and paper, lumber, plywood, and particle board manufacture account for 40 percent of the province's industrial output. Smelting of lead and zinc at Trail, the huge aluminum smelter at Kitimat on the northern coast, and the Vancouver refineries for Peace River oil are the principal mineral resource processing industries. Food and fish processing in Vancouver meets much of the province's requirements.

Petroleum refining, meat-packing, flour milling, and dairy products manufacture are the principal activities in the Prairie provinces. Petrochemical production is of growing importance in Alberta, and most of the major cities have numerous light-manufacturing plants to meet the demands of local markets.

In the Atlantic region fish processing, pulp and paper, lumber, and iron and steel production are the major activities. Lucrative inducements offered by the federal and provincial governments have caused foreign firms to establish car assembly and tire manufacturing plants in the region, but there is not a sufficient market to support other kinds of secondary manufacture. The Atlantic provinces together form a region of continuously high unemployment.

A key part of the whole Canadian economy is the financial community. Canadians per person save more money and have more life insurance than any other people in the world. Banking and insurance firms, therefore, have massive amounts of capital for investment in Canadian and foreign industries. Head offices of financial institutions and of petroleum and other multinational manufacturing corporations located in Montreal, Toronto, Edmonton, Calgary, and Vancouver employ thousands of workers. Federal, provincial, and municipal governments also employ great numbers of Canadians.

Cheaper labor in parts of Europe and Asia has led the federal government to create tariffs, or extra charges on foreign products, to protect Canadian manufacturers. Telecommunications, microprocessor development, and short-take-off-and-landing aircraft and space equipment are some of the newer technological growth areas in Canada.

In 1989 a free-trade agreement went into effect between Canada and the United States that began a ten-year period of phasing out protectionist trade and investment barriers. This pact was superseded in 1992 by the signing of the North American Free Trade Agreement (NAFTA) by Canada, the United States, and Mexico. The agreement eliminated all tariffs and nontrade barriers between the three countries. Proponents of the pact believed it would expand the trading relationship between the three nations and create new prosperity for Canada. Opponents argued that weak Canadian businesses would be destroyed by stronger competitors in the United States and the supply of cheaper labor in Mexico.

Transportation

Fear of United States expansionism, real or imagined, was one of the driving forces in the development of Canada's railway system in the 19th century. In 1885 the Canadian Pacific Railway spanned Canada by railroad from the Atlantic to the Pacific. When the railway company sold or granted lands along its right-of-way to the immigrants pouring into the country, the nation's future was assured. In the 20th century the development of the Trans-Canada Highway and related road networks caused a retrenchment of both the privately owned Canadian Pacific and the publicly owned Canadian National railway systems. Most passenger service and many infrequently used subsidiary lines were abandoned in favor of more economical mainline service. Even so, railway lines in Canada continue to lose money and require subsidies from tax dollars. Most passenger travel between cities is by air on public or privately owned air systems, by bus, or by private car. A great deal of freight moves on truck or in containers through a truck-rail system. The St. Lawrence Seaway has particular economic significance both to Canada and to the Great Lakes states of the United States. The seaway itself through the upper part of the St. Lawrence River; the Welland Canal, which takes traffic around Niagara Falls; and the lock system at Sault Ste. Marie, Ont., allow oceangoing vessels to sail to Chicago, Duluth, Minn., and Thunder Bay, Ont., in the heart of the continent--more than 1,900 miles (3,000 kilometers) from the Atlantic.

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