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Innovation must continue to drive equipment manufacturing

Smarter government policy that reduces administrative costs and lowers trade barriers can play an important role

Farmer Types on tablet computer with combine in the background

Innovation, Science and Economic Development Minister Navdeep Bains says he wants to make innovation a core Canadian value because it’s “the path to growth, the path that leads to a stronger middle class and higher-quality jobs.” Canada’s agricultural equipment manufacturers have known this for years. In fact, innovation is at the heart of Canadian agriculture, shaping agricultural practices and creating opportunities since European settlement in the late 1800s.

The agricultural equipment-manufacturing industry has progressively developed as an entity separate from commercial or industrial manufacturing. Central to this evolution was the need to develop agricultural machinery capable of meeting the challenges of the Canadian climate. This drive for innovation was critical to farmers who struggled with foreign equipment designed for smaller farms and less arid conditions. These same challenges have enabled Canadian agriculture equipment manufacturers to be global leaders in the development and production of high-quality, durable and innovative machinery.

In 2015, agriculture equipment manufacturers exported $1.8 billion worth of products to 154 countries. The U.S. represented 82 per cent of this. Innovation is what drives the industry to develop some of the best agriculture equipment in the world. But we can’t rest on our laurels. Agricultural Manufacturers of Canada members help drive the Canadian economy and are global leaders in innovation. It’s why changes to the Industrial Research Assistance Program (IRAP) and the Scientific Research and Experimental Development (SR&ED) programs as well as opening up international markets are integral to Canada’s innovative future.

Innovation is crucial if we want to address global issues such as overpopulation, and increase food production by 60 per cent to feed more than two billion extra people on the planet by 2050. AMC members are entrepreneurs who are helping feed the world. The agriculture industry will need to produce more with less and Canadian farmers are at the forefront of meeting this challenge. AMC’s members continuously develop innovative technologies and manufacture products that enable us to be leaders throughout the world.

Small and medium-size enterprises benefit greatly from the IRAP program. Often, it is the difference between launching an innovation, leaving it on the research floor or launching without due testing, however, IRAP should be expanded to cover production and marketing costs of projects in order help grow the industry and contribute to an innovative economy.

When it comes to the SR&ED tax credit, administrative costs associated with it are increasingly burdensome, resulting in research and development becoming more challenging. The process to make a submission to the program needs to be streamlined if the objectives of the program remain to reward innovation.

Often, those applying for the SR&ED credit will pay anywhere from $30,000 to $100,000 to get the application done. If one assumes 10 applicants hire external consultants for their submission, the combined amount could be upwards of $1 million going into administration costs rather than innovation itself. Perhaps it is the cost of doing business but these are dollars AMC members would rather see invested into R&D.

In today’s globally connected world, international trade and opening of new markets is critical to Canada’s success. Minister Bains recently said in a speech that “as a country made up primarily of small businesses, (he’d) like to see more than 10 per cent of them exporting, and to places other than the U.S.” Our members agree. Ratifying the Trans-Pacific Partnership and making investments to promote international trade and to bring international buyers to Canada are essential to continued growth.

AMC members lead the world on intellectual property of agricultural equipment. Innovation happens every day because our members are talking directly to farmers and responding to their needs by further refining and enhancing their products. For Canadian agricultural equipment manufacturers, innovation is not just a way of being or something that happens in an isolated facility, it is in how we manufacture and manage day-to-day operations. It is what drives the industry to develop some of the best agricultural equipment in the world. As one of our members says so eloquently, “We’re not putting a man on the moon, but we are helping put breakfast on the table.”

The government must act now to ensure that the Canadian agricultural equipment-manufacturing industry remains innovative and strong.

Leah Olson is president of the Agricultural Manufacturers of Canada, a national industry association fostering and promoting the growth and development of the agricultural equipment-manufacturing industry in Canada.

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