Business

Study considers the financial impact of agriculture

The agriculture industry in the Okanagan has a far greater positive impact on the regional economy than anyone realizes, according to a professor with Okanagan College’s School of Business.

“The public only sees the primary products. What they don’t see is the value-added that contributes to the economy,” said Lee Cartier, who has just received a national grant to conduct further study on the issue.

“What we’re looking at here is the industry cluster of agricultural products. Wine, tree fruits, processing, manufacturers, stainless steel fabrication, equipment manufacturing, the service and support industries, the grower supply companies — all of this is the value chain.”

The grant extended to Cartier is for $25,000 from the Natural Sciences and Engineering Research Council of Canada (NSERC) to conduct his study, titled Rural Entrepreneurship and Industry Competitiveness: Value-Chain Innovation in the Agricultural Products Cluster since 2006.

His research will examine the region with a macro-economic focus, looking at local agriculture as an industry cluster — similar to other classic industry clusters like the Silicon Valley.

What’s curious, Cartier says, is that once agriculture is examined as a cluster, it becomes clear that it outpaces overall economic growth in the Okanagan — not by much, but enough to be significant at 3.6 per cent growth, versus three per cent growth.

“What this research hopes to answer is why this is happening,” Cartier said.

“I know I’m going to find innovation there, but what’s driving it?”

Cartier says not much is known in Canada about the role rural entrepreneurs play in regional economies.

By taking a closer look at what is occurring here, rural entrepreneurs, and others with economic interests, could literally capitalize on the findings.

The difference can be exponential, he said.

Case in point is the local wine industry, which Cartier researched in 2011 for the B.C. Wine Institute.

His findings showed that while the wine grape growers contribute $28 million to the region’s economy, once the entire value chain is factored in, that contribution is closer to $250 million, which represents two per cent of the regional GDP.

“This means the primary producers — the vineyards — only comprise 11 per cent of the industry’s total value-added contribution,” he said.

“There is a real benefit to the agriculture sector seeing itself as a cluster, rather than as a collection of small wineries (for instance) in competition with one another. When an industry can see the entire value chain, it’s easier to determine the challenges they have to deal with, and what they haven’t tackled.”

 

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