The Canadian food and agriculture sector is for the most part competitive and export-oriented. Although the challenges and opportunities faced by the Canadian agriculture sector can vary significantly between regions, primary agriculture benefits from an abundance of natural resources and faces limited environmental constraints. Canada differs from many other agricultural net exporting countries in that agriculture accounts for a much smaller share of land and water use, reflecting its climate and geography. The negative environmental impacts of agriculture relate mainly to local water pollution by agricultural nutrients. Productivity growth, resulting from innovation and structural change, has driven production and income growth without significantly increasing pressure on resource use. The capacity to innovate is crucial for the export-oriented Canadian sector to take advantage of the growing and changing demand for food and agricultural products at the global level.