Between trade tensions, global conflict, and compounding supply shocks, 2026 has been a turbulent year for Canadian businesses and consumers alike. Yet, few sectors have had to navigate sustained uncertainty quite like agriculture. Today we take a closer look at some of the key trends defining Canadian agriculture as it contends with both long-standing pressures and fresh macro disruptions.

Trend 1: Mounting cost pressures, exacerbated by geopolitical turbulence

Agricultural producers have been squeezed by major increases in costs over the past several years. Prices of critical farm inputs like machinery, diesel, and fertilizers have been steadily rising since the shock of the Russia-Ukraine war. Then a second shock hit: the Iran war. Roughly a third of the world’s seaborne fertilizer trade came under threat. Five months later, the shock has largely unwound—but not fully. Farm input prices in Q1 2026 were up 9.5% from last year and at the highest level since Q4 2022.

Trend 2: Tariff troubles

The tariff squeeze was a dominating trend throughout the back half of 2025 and into 2026. However, 2026 has brought some relief. Chinese tariffs on canola essentially gutted exports through 2025—cutting Chinese shipments to effectively zero last fall—but a January trade thaw reversed this trend sharply. As of March 2026, China cut its combined tariffs on Canadian canola seed from 84% to roughly 15%, and suspended separate tariffs on canola meal, peas, lobsters and crab through the end of the year, in exchange for rolling back the 100% tariff on Chinese EVs and agreeing instead to permit an initial quota of 49,000 Chinese EVs at a much lower 6.1% tariff rate. 

While Canadian agriculture is largely exempt from U.S. tariffs under CUSMA compliance, trade barriers aren’t entirely in the rearview mirror. Tomorrow, President Trump’s Section 338 tariffs take effect if no deal is reached. The Section 338 tariffs target specific Canadian dairy products as well as products like raw honey, tied to the U.S.' qualms with Canada’s supply management system and the resulting import controls.

Trend 3: A two-speed agriculture sector

There are two different supply stories in the Canadian agricultural sector. Last year’s saw record wheat production and canola output up 13%. Farmers are responding by planting a record 23.4 million acres of canola this year, but the harvest will ultimately depend on factors like yields and weather.

On the livestock side, supply remains much tighter. Canada’s cattle herd hit its smallest size since the 1980s in 2025 on the back of drought conditions, high feed costs, and poor pasture conditions. Herd inventories finally rose 2.5% at the start of 2026, but rebuilding takes approximately 36 months and holding cattle back for breeding can actually restrict beef supply in the short run. 

While Canada is a net exporter of beef, with exports to the end of May up 15.4% year to date, imports are rising as tight cattle supplies constrain domestic production. From January to June 2026, the value of Canada’s beef imports were up 21% over the same six-month period in 2025, while the value of beef imports from Australia surged 87% – a sign that foreign supply is being used to ease pressure on domestic beef prices.

Trend 4: A looser labour market, but agriculture still has a structural labour challenge

Canada’s overall labour market has cooled from the post-pandemic period. National job vacancies have fallen and there were three job seekers for every vacancy in May 2026. That should, in theory, make hiring easier. But agriculture faces more structural challenges: seasonal work, rural locations and an aging and retiring workforce mean available workers elsewhere in the economy don’t always match where and when farms need them.

Temporary foreign workers (TFWs) therefore remain an important part of the sector's labour supply. While Ottawa has tightened the broader TFW program, qualifying primary-agriculture jobs are largely insulated from the new caps through dedicated agricultural streams. However, the pressure may be greater further down the supply chain, including rural food processors, where the 20% cap on low-wage TFWs is still in place.

Trend 5: Can agriculture keep its productivity edge?

Canadian agriculture has historically been a productivity outperformer, with productivity growth outpacing other G7 agricultural sectors for more than three decades. But that momentum seems to be slowing according to a recent Farm Credit Canada report. Total factor productivity growth peaked in the 1990s and 2000s, slipped in the 2010s, and could continue to slip if current trends continue.

The concern isn’t a lack of innovation so much as whether Canada is investing enough to commercialize and adopt it. Agricultural R&D spending has fallen relative to sector revenues and just 1.8% of agricultural businesses reported using AI in the second quarter of 2025, compared with 12.2% across other industries.

There are reasons for optimism. OECD research finds that Canadian firms developing Fourth Industrial Revolution (4IR) technologies tend to become more productive. Canada has developed a notable specialization in 4IR technologies applied to agriculture, with firms under five years old becoming relatively prominent in the space.

In short, despite navigating rising input costs, shifting global tariffs, and a split supply picture between record crop yields and tight livestock herds, Canadian agriculture remains a vital economic anchor in 2026. Long-term competitiveness will depend on reversing slowing productivity growth through the accelerated adoption and commercialization of next-generation technologies.

Answer to the previous trivia question: The Bank of Canada abandoned CPI-common as one of its preferred gauges of core inflation in 2022.

Today’s trivia question: Among the country's traditional major field crops, which crop generally claims the highest total production volume and acreage, and which is the least-grown major field crop?