Canada’s role in global food security

Global food security has been a crucial issue in recent years amid world conflicts, climate change, supply chain disruptions and economic shocks which have all contributed to high food inflation. The latter, while coming down in recent months, remains elevated due to very low global food stocks relative to usage. Canada has the capabilities to further enhance global food security via technical assistance to food insecure countries and more directly by increasing its own food production available to world markets. We estimate that returning the currently depressed global grains stock-to-use ratio to the 2016-17 peak is consistent with a 6% increase in global production, which Canada could be a major contributor towards by rekindling productivity growth in agriculture.  

How do we define food security? 

Food security refers to adequate physical and economic access to quality, safe and nutritious food. Food security has been declining since 2018 due to multiple factors: growing economic inequalities, extreme weather conditions, and the COVID-19 pandemic. Russia’s war against Ukraine has turned a problem into a crisis as it has escalated food, fertilizer, and energy prices. The FAO food price index (FPI) was stable between 2015 and 2020, spiking to record levels in 2022, before moderating in 2023, albeit at a higher level than was observed historically (Figure 1). The inflation led to unprecedented levels of severely food insecure people in the world: it is estimated that nearly one billion people are severely food insecure, corresponding to about 11% of the world population.  

Figure 1: FAO food price index and food insecure world population 

Source: FAO Stats, FCC calculations

*Number of severely food insecure people in 2023 is an estimate

Grain stocks-to-use ratios continue to decline 

Rising global food insecurity has coincided with declining stocks-to-use ratios of major agricultural staples. A stocks-to-use ratio illustrates the balance between supply and demand of a given commodity. Stocks remain a very important buffer in global markets, cushioning the impacts on market prices caused by production shocks. In the event of production shortfalls, available stocks can help mitigate price hikes and moderate adverse impacts on food security. 

Despite a 2% projected increase in annual production of total grains (wheat and coarse grains) to 2.3 billion tonnes in 2023/24 (a record level), the global stock-to-use ratio is expected to decline to about 13 weeks of food supply, the lowest in a decade (Figure 2). Production potential is curbed by unfavourable weather conditions in some major grain producing countries and Russia’s war in Ukraine. Global demand is still robust and China’s increased purchases of wheat and corn contribute a major way to the tightening stocks. As a measure to promote its domestic food security buffer, China’s stocks are largely under government control and isolated from global markets. Excluding stocks held in China, the global stocks-to-use-ratio is even tighter at just 8 weeks of supply, the lowest in more than 10 years. 

Figure 2: Global grain stocks tighten 

Source: International Grain Council (IGC) and FCC calculations

Canada’s contribution to global food security 

The relative tightness of global grain stocks, coupled with possible future disruptions in supply suggests that food prices are likely to remain volatile. Hence, the need to boost agricultural productivity to increase supplies, lower food prices and improve global food security.  

To quantify the effects of a declining stocks-to-use ratio (SU), we examine its relationship with the food price index (FPI). Not surprisingly, low stocks are associated with high prices. We use this relationship to estimate the impact of Canada’s production on global stocks-to-use and food price index.  

At the current level of the world’s annual grain consumption (2.3 billion tonnes) and SU of 13 weeks, global crop production would need to increase by 130 million tonnes to attain the SU of 16 weeks achieved in 2016/17. This calls for an increase in global production to replenish stocks and higher exports to meet the robust food demand. A collective effort from all the major grain producing countries by way of increased productivity and technical assistance to food insecure countries will support the attainment of this goal, which could take years of productivity gains. 

To achieve this goal, global production would have to increase roughly 6%. Canada’s share of the additional global production would be 18 million tonnes or 28% growth over the next decade. This is a tall task and would require major productivity gains in the agricultural industry. Canada’s share of global crop exports would then rise from 8% to over 11%. As a result, global food prices would be around 7% lower, everything else being equal. This would also potentially reduce the number of food insecure people by nearly 350 million (36% below current levels). 

Canada is a key player in world fertilizer market 

One major area where Canada can support productivity gains in the agricultural sector worldwide is by leveraging its status as a fertilizer producing powerhouse. Fertilizer can play a crucial role in addressing global food security concerns because it plays an essential role in replenishing soil nutrients to increase crop yields.  

Potash is a crucial crop nutrient, a source of potassium that helps crops such as corn and soybean increase their yields. Alongside phosphate and nitrogen, they are the foundation of modern fertilizers. Canada is the world's largest producer and exporter of potash, accounting for about 45 per cent of global reserves estimated to be over a billion tonnes. Russia’s war against Ukraine has provided Canadian potash producers a unique opportunity to increase their market share. Canada became the world’s second-largest exporter of fertilizer in 2022, more than doubling export value from a year prior (Figure 3).  

Figure 3: Canada’s fertilizer exports 

Source: ITC trade map, Trade Data Online and FCC calculations

Canada can take a leadership role in addressing food security 

Canada’s endowment of arable land and water, combined with advanced production technology and knowledge position the country to be an even more prominent leader and supplier of reliable, safe and sustainably produced food. Ongoing threats to global food security present Canada with an opportunity to strengthen its food superpower status by boosting productivity while supporting the world food program.

Isaac Kwarteng

Senior Economist

Isaac Kwarteng is a Senior Economist at FCC, focusing on long-term economic research and forecasting to support strategy and risk. He also supports the CEO’s office with information and data requests.

Isaac joined FCC in 2023 from the Government of Saskatchewan, where he worked for a decade in economic, research and statistical roles.

Isaac received his master’s degree in economics from the University of East Anglia in the UK. He also has a master’s degree in statistics from the University of Regina and is currently enrolled in the Ph.D. program.