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What Is the Staple Thesis?

Understanding staple thesis, staple thesis example: brazil, critique: the staple thesis trap, frequently asked questions.

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Staple Thesis: Meaning, Example, Critique

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The staple thesis is a theory of economic growth that emphasizes the role of traditional commodities, or staple products, and their impact on shaping a resource-rich economy. It argues that national economies are linked to the production and export of staple goods.

Key Takeaways

The staple thesis is a theory of economic growth that emphasizes the role of traditional commodities, or staple products, and their impact on shaping a resource-rich economy.
The staple thesis argues that the degree to which economies rely on the export of staples for their development positively affects their economic, social, and political development.
The staple thesis is generally credited to Canadian economists Harold Innis, Mellville Watkins, and W. A. Mackintosh. The thesis claims to model Canada's economic history.

The staple thesis was developed by many economists and academics but is often credited to Canadian economist Harold Innis. The theory looks at how societies evolve in relation to economic production. The thesis was presented as an explanation for how the pattern of settlement and economic development of Canada was influenced by the exploitation and export of natural resources. Although its original purpose was to model Canada's historical economic evolution, the staple thesis can be applied to any country with an export-heavy economy.

Innis, and later Melville Watkins and W. A. Mackintosh, argued that different regions in Canada developed differently based on their primary exports . For example, they related Atlantic Canada to the fishing industry, particularly the harvest of cod. Central and northern parts of the country depended heavily upon the fur trade, while Western Canada’s primary export was wheat. The theory builds on these linkages to explain the different “personalities” of each region, for example, regarding their attitudes toward government authority.

The basic framework of the staple thesis is potentially applicable to any economy whose development is dependent on the export of raw materials. The theory argues that the degree to which economies rely upon the export of staples for their development affects their economic, social, and political development.

Staples are generally a commodity that a country produces in large quantities for domestic use or exporting.

Another contemporary application of the staple thesis could involve the influence of the petroleum industry on economic growth in a country that exports crude oil, such as Brazil. An increase in demand for oil exports yields profits for large oil producers.

In Brazil, the government holds over half the voting shares of Petrobras , the nation’s largest oil producer. Therefore, the income from oil influences the development of infrastructure, technological innovation, and human capital both inside and outside the petroleum industry as it helps to drive the nation’s economy.

The authors of the staple thesis held somewhat opposing views regarding the impact of dependence on staple commodities on economic development. In Mackintosh’s view, mature economies could successfully continue to rely upon staple production.

Innis took a more pessimistic view, believing that as countries develop, their economies typically need to transition from an over-dependence on the production of staples for export. Innis posited a core-periphery structure in which metropolitan areas with manufacturing capabilities exercise a certain amount of control over peripheral areas that provide raw materials .

The core-periphery structure suggests that the relative success of economies dependent on staples is contingent upon the development of economic activity linked to staple products themselves. Therefore, economies capable of developing related industries become more prosperous, according to the theory.

What Is Staples Approach?

The staples thesis argues that traditional commodities that people buy regardless of economic circumstances have a specific impact on an economy.

Who Created the Staples Thesis?

The staples thesis is often credited to Harold Innis, Melville Watkins, and W. A. Mackintosh. However, like many theses and ideas, it evolved from years of study and academic discourse involving many people.

What are Staples in an Economy?

Staples are commodities produced for sale or export. Staples are generally considered to be goods necessary for modern life, such as foods, beverages, and household products.

Cambridge University Press. " A Staple Theory of Economic Growth ."

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Commodity Export and the Staple Thesis: An Inseparable Bond

1. understanding the staple thesis, 2. the role of commodity exports in the staple thesis, 3. the development of the staple thesis, 4. the impact of commodity export on economic development, 5. a cautionary tale, 6. diversification and the challenge of moving away from commodity dependence, 7. case_studies__examining_the_relationship_between_commodity_exports_and_the_staple_thesis_in_different, 8. alternative views on economic development, 9. revisiting the importance of commodity exports in the staple thesis.

The staple thesis is a concept that was developed in the early 20th century by Canadian economic historians to explain the economic growth of Canada and other regions that were heavily dependent on primary commodity exports. The thesis argues that the economies of these regions are shaped by the production and export of a few key primary commodities, which are often referred to as "staples." These staples typically include resources such as timber, fish, minerals, and agricultural products. The staple thesis suggests that the production and export of these commodities play a critical role in shaping the economic, social, and political structures of the regions that rely on them.

1. The staple thesis has been a subject of considerable debate among scholars in recent years. Some argue that the thesis is too deterministic, in that it suggests that the economic development of a region is entirely determined by its natural resource endowments. Others suggest that the staple thesis overlooks the role of human agency and innovation in driving economic growth .

2. Despite these criticisms, the staple thesis remains a useful framework for understanding the economic development of commodity-exporting regions. For example, the thesis can help us understand why some regions are more successful than others in developing their natural resource endowments. By examining the ways in which different regions have managed their staple industries, we can identify best practices and strategies for promoting sustainable economic growth.

3. Finally, the staple thesis can also help us understand the social and political impacts of commodity exports. For example, the thesis highlights the potential for resource-dependent economies to experience boom-and-bust cycles , as well as the challenges of diversifying economies that are heavily reliant on a single commodity. Additionally, the thesis can help us understand the social and political tensions that can arise in regions where there is a significant gap between the resource owners and the workers who extract and process the commodities.

The staple thesis is a useful framework for understanding the economic, social, and political impacts of commodity exports in different regions of the world. While the thesis has been subject to criticism, it remains a valuable tool for policymakers, scholars, and others seeking to promote sustainable economic growth and development.

Understanding the Staple Thesis - Commodity Export and the Staple Thesis: An Inseparable Bond

The role of commodity exports in the staple thesis is a crucial aspect that cannot be ignored. The staple thesis, which is a theory of economic growth, argues that the development of a country is heavily dependent on the export of raw materials or staples. This theory is particularly relevant to countries that have a comparative advantage in producing primary commodities such as minerals, agricultural products, and energy resources. The role of commodity exports in the staple thesis has been a topic of much discussion and debate among economists, historians, and policymakers alike.

Here are some insights on the role of commodity exports in the staple thesis :

1. Commodity exports are the backbone of many developing economies. Countries such as Brazil, Russia, India, and China (BRICs) have experienced significant economic growth in recent years due to their abundant natural resources and commodity exports. For example, Brazil is one of the world's largest producers of coffee, soybeans, and sugar, while Russia is a major exporter of oil and gas.

2. Commodity exports can lead to the development of other industries. The staple thesis argues that the export of raw materials can lead to the development of other industries that are dependent on these commodities. For example, the export of iron ore from Australia has led to the development of a thriving steel industry.

3. Commodity exports can be volatile. The prices of commodities can be highly volatile, which can have significant impacts on the economies of countries that rely heavily on these exports. For example, the decline in oil prices in 2014 had a major impact on the economies of countries such as Russia and Venezuela.

4. Commodity exports can lead to the neglect of other sectors. The staple thesis argues that countries that rely heavily on commodity exports may neglect other sectors of their economies, such as manufacturing or services. This can lead to an over-reliance on a single industry and leave the country vulnerable to economic shocks.

The role of commodity exports in the staple thesis is a complex and multifaceted issue. While the export of raw materials can be a significant driver of economic growth in developing countries, it is important for policymakers to consider the potential risks and challenges associated with this strategy.

The Role of Commodity Exports in the Staple Thesis - Commodity Export and the Staple Thesis: An Inseparable Bond

The development of the staple thesis is a crucial aspect of examining commodity exports. The concept of the staple thesis was first introduced by Harold Innis, a Canadian economist, who argued that the export of staple commodities played a critical role in shaping the economic and social development of a country. The theory suggests that the export of raw materials, such as timber, fish, or minerals, creates a dependency on foreign markets, which can lead to economic instability.

1. The staple thesis is based on the idea that the economy of a country depends on the export of raw materials. This can be seen in the case of Canada, where the export of furs and timber helped to shape the country's economy and social development. The fur trade was a significant source of income for the early settlers and played a crucial role in the development of trade networks and relationships with Indigenous communities. Similarly, the export of timber helped to fuel the growth of the forest industry and played a critical role in shaping the country's infrastructure.

2. The staple thesis has been critiqued by many scholars who argue that it oversimplifies the complex relationship between commodity exports and economic development. For example, some scholars argue that the thesis ignores the role of technological innovation and entrepreneurship in shaping economic development. Others argue that the thesis fails to account for the impact of political and social factors, such as colonialism or imperialism, on the development of commodity exports.

3. Despite these critiques, the staple thesis remains a valuable framework for understanding the role of commodity exports in shaping economic and social development. For example, the thesis can help us to understand the impact of global commodity markets on local communities and industries. It can also help us to understand the ways in which commodity exports can create dependency and vulnerability, particularly in developing countries.

The development of the staple thesis provides valuable insights into the complex relationship between commodity exports and economic development. While the thesis has been subject to critique, it remains a useful framework for understanding the historical and contemporary dynamics of commodity exports.

The Development of the Staple Thesis - Commodity Export and the Staple Thesis: An Inseparable Bond

Commodity export is often seen as a critical driver of economic development. In many countries, commodities such as oil, gas, minerals, and agricultural products are the primary source of revenue. However, the relationship between commodity export and economic development is complex and often controversial. While some argue that commodity exports can provide a path to prosperity, others believe that it can lead to a cycle of poverty and economic dependence.

Here are some insights and in-depth information about the impact of commodity export on economic development:

1. Dependence on commodity exports can lead to economic volatility: Countries that rely heavily on commodity exports are vulnerable to fluctuations in global commodity prices. When prices are high, these countries can experience an economic boom. However, when prices fall, they can experience a sudden economic downturn. This volatility can make it difficult for these countries to plan for the long-term and to invest in other sectors of the economy.

2. Commodity exports can lead to a "resource curse": The resource curse is a phenomenon where countries with abundant natural resources experience slower economic growth and higher levels of corruption compared to countries without these resources. This is because the wealth generated by these resources can be easily monopolized by a small group of people, leading to inequality and lack of investment in other sectors of the economy.

3. Commodity exports can lead to environmental degradation: The extraction and export of commodities can have a significant impact on the environment. For example, oil and gas extraction can lead to air and water pollution, while mining can lead to deforestation and soil erosion. This can have long-term negative effects on the environment and the people who rely on it.

4. Commodity exports can provide a path to economic development: Despite the potential challenges of commodity exports, some countries have successfully used these resources to fuel economic growth . For example, norway has used its oil wealth to invest in education, infrastructure, and other sectors of the economy, leading to a high standard of living for its citizens.

The impact of commodity export on economic development is complex and multifaceted. While commodity exports can provide a path to prosperity, they can also lead to economic volatility, environmental degradation, and the resource curse. To maximize the benefits of commodity exports, countries must carefully manage these resources and invest in other sectors of the economy.

The Impact of Commodity Export on Economic Development - Commodity Export and the Staple Thesis: An Inseparable Bond

The resource curse is a phenomenon that occurs when countries with an abundance of natural resources, such as oil, gas, and minerals, experience economic and social difficulties. Instead of benefiting from their resources, these countries often face corruption, political instability, and a lack of diversification in their economies. The resource curse is a cautionary tale for commodity-exporting countries, as it highlights the potential risks and challenges associated with over-reliance on natural resources.

1. One of the main drivers of the resource curse is the Dutch disease. This occurs when a country's currency appreciates due to an increase in export revenues, making other sectors of the economy less competitive. For example, the discovery of oil in Nigeria led to a surge in exports, causing the value of the Nigerian currency to appreciate. This made it harder for other sectors, such as agriculture and manufacturing, to compete in the global market . As a result, Nigeria became overly reliant on oil exports, which led to economic stagnation and political instability.

2. Another factor that contributes to the resource curse is corruption. When a country has an abundance of natural resources, there is often a high demand for control over these resources. This can lead to corrupt practices, such as embezzlement and bribery, which can undermine the country's economic and political stability. For example, in Venezuela, the government's control over the oil industry has led to widespread corruption, which has contributed to the country's economic crisis and political unrest.

3. The lack of diversification in the economy is also a significant factor in the resource curse. When a country relies heavily on one or two commodities, it is vulnerable to fluctuations in the global market. For example, when the price of oil drops, countries that rely heavily on oil exports experience a sharp decline in revenue. This can lead to economic hardship and social unrest. Countries that have successfully avoided the resource curse, such as Norway and Canada, have diversified their economies, investing in other sectors such as technology, finance, and tourism.

The resource curse is a cautionary tale for commodity-exporting countries. While natural resources can provide significant economic benefits, over-reliance on these resources can lead to economic and social difficulties. By diversifying their economies, investing in other sectors, and promoting transparency and good governance, commodity-exporting countries can avoid the pitfalls of the resource curse and achieve long-term economic and social stability.

A Cautionary Tale - Commodity Export and the Staple Thesis: An Inseparable Bond

Diversification is a crucial factor in countries' economic development and sustainability. Yet, it's a challenging task that requires a series of structural changes and long-term planning . Many developing countries heavily rely on commodity exports as a primary source of income, which makes them vulnerable to external shocks and fluctuating prices. Thus, there is a growing awareness of the need to move away from commodity dependence and diversify their economies. However, it's easier said than done. In this section, we will delve into the challenges of diversification and why it's crucial for countries to undertake such a task.

1. Structural barriers: One of the most significant challenges of diversification is overcoming structural barriers in the economy. In many developing countries, the commodity sector dominates the economy and provides the majority of jobs and income. Thus, shifting to other sectors requires breaking down these structural barriers and creating an enabling environment for new industries to flourish. This includes investing in infrastructure, human capital, and research and development.

2. Lack of expertise and technology: Diversification requires a country to have the expertise and technology to develop new industries. However, many developing countries lack the necessary skills and knowledge to venture into new sectors. For example, moving from agriculture to manufacturing requires a different set of skills and technology. Thus, countries need to invest in education and training to develop a skilled workforce and acquire new technology.

3. Political and social factors: Diversification is not just an economic issue; it's also a political and social issue. Many countries are resistant to change due to political instability or social factors. For example, a country that heavily relies on oil exports may be resistant to change due to the political power of the oil industry. Thus, diversification requires strong political will and social acceptance.

4. Market access: Diversifying into new sectors requires access to markets. Developing countries often face barriers to market access due to protectionist policies, trade agreements, and other factors. For example, a country that wants to export textiles may face tariffs and other barriers in developed countries. Thus, diversification requires not only investment in new industries but also improving access to markets.

5. Examples: Despite the challenges, some countries have successfully diversified their economies. For example, Malaysia, which was heavily dependent on rubber and tin exports, successfully diversified into electronics and other industries. Similarly, Botswana, which was heavily dependent on diamond exports, diversified into tourism and other sectors. These countries provide valuable lessons on how to diversify and overcome the challenges.

Diversification is a challenging task that requires a long-term and multi-faceted approach. It's crucial for countries to move away from commodity dependence to ensure sustainable economic development . However, overcoming the structural barriers, acquiring the necessary skills and technology, and improving market access require strong political will and social acceptance.

Diversification and the Challenge of Moving Away from Commodity Dependence - Commodity Export and the Staple Thesis: An Inseparable Bond

Case studies are an important tool to examine the relationship between commodity exports and the staple thesis in different countries. They allow us to understand how different economies have been affected by this relationship, and how it has influenced their development over time. From Canada to Australia, many countries have been shaped by the dependence on exporting commodities, and the staple thesis has been central to understanding their economic history. By examining case studies , we can gain insight into the impact of commodity exports on different countries, and the role that the staple thesis has played in shaping their economic trajectory.

Here are some key insights that can be gained from examining case studies of the relationship between commodity exports and the staple thesis:

1. The staple thesis has been a useful framework for understanding the economic development of many countries that have relied on commodity exports. For example, Canada's reliance on exporting staples like wheat and lumber has shaped its economic history, and the staple thesis has been central to understanding this relationship.

2. The relationship between commodity exports and the staple thesis is not always straightforward. In some cases, commodity exports have led to economic growth and development , while in others, they have contributed to economic instability and underdevelopment. For example, while Australia's export of minerals like iron ore and coal has contributed to its economic growth, it has also made it vulnerable to global commodity price fluctuations.

3. The impact of commodity exports on a country's economy is often dependent on factors like geography, politics, and global market conditions. For example, the development of transportation infrastructure can play a key role in facilitating the export of commodities, while political instability can disrupt the flow of exports and lead to economic instability.

4. Case studies can provide valuable insights into the challenges and opportunities associated with commodity exports and the staple thesis. For example, examining the experiences of countries like Norway and the Netherlands, which have successfully managed their reliance on commodity exports, can provide valuable lessons for other countries looking to do the same.

Case studies are an important tool for understanding the relationship between commodity exports and the staple thesis in different countries. They provide valuable insights into the impact of this relationship on economic development, and can help inform policy decisions aimed at managing the challenges and opportunities associated with commodity exports.

Case_Studies__Examining_the_Relationship_between_Commodity_Exports_and_the_Staple_Thesis_in_Different - Commodity Export and the Staple Thesis: An Inseparable Bond

The Staple Thesis has been one of the most influential economic theories in Canadian history. It suggests that Canada's economic development from the earliest days of European colonization to the present day can be explained by the production and export of staple commodities. However, this theory has been subjected to criticism from a wide range of alternative viewpoints.

1. The first criticism of the Staple Thesis is that it is too deterministic. In other words, it assumes that Canada's economic development was preordained by its natural resource endowment. However, this view ignores the role of human agency in shaping economic outcomes. For example, the development of the fur trade in Canada was not simply a result of the abundance of beavers in the country, but rather the result of the social and cultural practices of Indigenous peoples and European fur traders.

2. Another criticism of the Staple Thesis is that it ignores the role of international economic forces in shaping Canada's economic development. For example, the decline in the global demand for beaver pelts in the mid-19th century was a major factor in the decline of the fur trade in Canada. Similarly, the shift towards industrialization in Europe in the late 19th century had a profound impact on the nature of Canadian economic development.

3. A third criticism of the Staple Thesis is that it fails to account for the diversity of economic experiences within Canada. For example, the economic development of Newfoundland and Labrador was shaped by the fishing industry rather than the production of staple commodities like wheat or timber. Similarly, the economic development of Quebec was heavily influenced by the fur trade and the transportation sector, rather than the production of staple commodities.

The Staple Thesis has been an important tool for understanding the economic history of Canada, but it is not without its flaws. While it provides a useful framework for understanding the role of staple commodities in Canada's economic development, it ignores the role of human agency, international economic forces, and the diversity of economic experiences within Canada.

Alternative Views on Economic Development - Commodity Export and the Staple Thesis: An Inseparable Bond

When analyzing the relationship between commodity exports and economic development, the staple thesis provides a useful framework for understanding the role of raw materials in shaping the economies of countries. The staple thesis suggests that the export of raw materials, or staples, can serve as a catalyst for economic growth and development, but it can also lead to a dependence on external demand and a lack of diversification.

From a historical perspective, the staple thesis has been used to explain the economic development of Canada, Australia, and other countries that have relied on the export of commodities such as wheat, timber, and minerals. In recent years, scholars have revisited the staple thesis to examine its relevance to developing countries that are currently experiencing resource-based development.

Here are some insights to consider:

1. While the staple thesis has been criticized for its Eurocentric perspective and its focus on exports rather than domestic production, it still provides a valuable framework for understanding the development of resource-based economies.

2. The staple thesis emphasizes the importance of diversification, as countries that rely solely on commodity exports are vulnerable to fluctuations in global demand and prices. For example, the recent decline in oil prices has had a significant impact on the economies of countries such as Venezuela and Nigeria.

3. The staple thesis also highlights the importance of investing in infrastructure and human capital to support economic development . This includes developing transportation networks, investing in education and healthcare, and promoting innovation and entrepreneurship.

4. In conclusion, the staple thesis provides a useful framework for understanding the relationship between commodity exports and economic development. While it has its limitations, it emphasizes the need for diversification, investment in infrastructure and human capital, and careful management of natural resources. By taking these factors into account, countries can harness the potential of their commodity exports while avoiding the pitfalls of dependence and volatility.

Revisiting the Importance of Commodity Exports in the Staple Thesis - Commodity Export and the Staple Thesis: An Inseparable Bond

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Staple Thesis: Definition, Examples, and Insights

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Introduction to staple thesis

Origins of the staple thesis, economic evolution and regional development, contemporary applications, key concepts of the staple thesis, dependency on staple exports, core-periphery structure, pros and cons of staple thesis.

Provides insights into the economic development of resource-rich nations.
Offers a framework for understanding regional disparities within countries.
Highlights the role of staple exports in shaping economic policies and strategies.
May oversimplify the relationship between staple production and economic development.
Overlooks the complexities of modern global economies.
Fails to account for the diversification of economies beyond staple exports.

Examples of staple thesis in practice

1. australia’s mining industry, 2. norway’s oil and gas sector, challenges and limitations of the staple thesis, 1. economic diversification, 2. globalization and technological change, frequently asked questions, what are the key concepts of the staple thesis, how does the staple thesis explain regional economic disparities, can the staple thesis be applied to countries beyond canada, what are some contemporary examples of the staple thesis in practice, what are the criticisms of the staple thesis, how does the staple thesis influence economic policy, is the staple thesis still relevant in today’s global economy, key takeaways.

The staple thesis emphasizes the role of traditional commodities in shaping resource-rich economies.
Economies reliant on staple exports undergo distinctive patterns of economic, social, and political development.
The staple thesis offers insights into regional disparities and the hierarchical nature of economic relationships within countries.

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Vision of Canada

Harold Innis’s fur trade research in the summer of 1924 launched a celebrated academic career

When Harold Innis set off to explore the history of the fur trade in Alberta’s Peace River basin, he was limping from a shrapnel wound that had ripped open his leg at Vimy Ridge. But by the time the junior assistant professor returned to U of T, he was able to throw away his cane.

A summer in the northern hinterland did more than restore Innis’s health. It prompted the political economist to give Canadians a new vision of their country. Then, our jagged landscape was seen as an obstacle to overcome. Innis countered that Canada developed because of its geography, not in spite of it.

In his “staples thesis,” he argued that Canada’s exports of fur, timber, fish, fossil fuels and other commodities shaped its cultural and political development. Innis was the first to point out that Canada’s economic reliance on producing raw materials made it vulnerable to the whims of Britain, the U.S. and other manufacturing nations.

In his long career, Innis also wrote seminal books on communication, inspiring Marshall McLuhan to the point that McLuhan became his intellectual disciple.

This year, Innis College, U of T’s only college to be named after a scholar, is celebrating its 50th anniversary by honouring its namesake. One event planned for November will feature communication theorists who, as Innis did, have a vision to share. Janet Paterson, the college’s principal, points out that many of Innis’s programs continue to further the scholar’s legacy. “The college reflects some of Harold Innis’s far-reaching ideas on communication with its vibrant programs in film, writing and rhetoric, and urban studies.”

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About The Author

Susan Pedwell

Edited by: Gerald Hallowell

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staples thesis .

The staples thesis is a theory of unbalanced, export-led growth: it sees development as a process led by a strategic, export-oriented sector that drives the entire economy. In Canada, such sectors are understood to have been based on natural resources for which there was demand from metropolitan markets in Europe and, from the mid-19th century, the United States. This approach was pioneered by ... ...

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Network in Canadian History & Environment | Nouvelle initiative Canadienne en histoire de l'environnement

Telling the Stories Staples Tell: Visualizing Data and a Call for Contributors

Timber raft below Parliament buildings, Ottawa River, 1882 https://en.wikipedia.org/wiki/Ottawa_River_timber_trade#/media/File:Timber_raft_parliament_buildings_1882.jpg

Andrew Watson and Jim Clifford

Are there still stories that Canadian staple histories can tell us? This was the theme of a panel called “The Stories Staples Tell” organized by Colin Coates at the 2016 Canadian Historical Association annual meeting in Calgary. In addition to excellent papers presented by Coates on the use of text mining to explore the importance of staples in Canadian history, and Anne Dance on the ways that abandoned mine sites and wastes have become a toxic legacy and a new Canadian staple in the twenty-first century, we presented our first version of a website devoted to the environmental history(ies) of Canadian staples commodities in the nineteenth century.

The Staples Thesis, which posits a particular path of economic and national development based on the export of certain staples commodities that Canada possessed in abundance (fur, cod, timber, wheat, etc), has been debated since 1930s when Harold Innis took up the idea from W.A. Mackintosh who introduced the theory in the 1920s. Canadian historians have reached some general consensus that the staples economy, while influential from a macroeconomic perspective, fails to nuance the patterns of regional economic growth and capital accumulation that unfolded in particular parts of the country. In addition to this synthesis of staples thesis criticism and revision, the rise of world, global, and transnational history has provided the context for a new approach to the stories staples tell. Rather than explaining the history of the entire country and its development, staples commodities serve as a vehicle for exploring the relationship between, on the one hand, industrialization, urbanization, and economic growth in places of major commodity imports, and on the other hand the particular social and environmental consequences of resource extraction in places of commodity exports.

During the late nineteenth century, even as the new Dominion joined the list of quickly industrializing countries around the world, Canada continued to participate in an increasingly globalized world economy as a major exporter of raw materials. Yet, Canada’s emerging industrial base meant exports also included a growing share of value-added manufactured products. With the help of versatile visualization tools developed by Quadrigram and Esri , we have begun to explore a number of environmental histories of Canadian exports during the nineteenth century.

You can explore the Quadrigram visualizations here and here .

Developed by the Spanish data visualization tech firm Bestiario_ , Quadrigram makes it possible to quickly develop online data visualizations. Once you have a standardized dataset uploaded to Google Docs as a spreadsheet, you can use their web interface to create graphs, charts, and maps to illustrate the relationships contained in your data. Here are a few examples of how we’ve used a database* created using export statistics from the Tables of Trade and Navigation for the Dominion of Canada (available in the Canadian Sessional Papers) to populate Quadrigram visualizations.

Planks, boards, and deals:

Planks and boards exported from Canada, 1871

One way to explore the Canadian exports data is by narrowing in on one commodity to explore staples thesis-related patterns over time. For example, identified by Innis as one of Canada’s defining staples, timber remained one of Canada’s largest exports, nearly all of which went to Britain. A more interesting story emerges when we examine the export of boards and planks. As the amount of timber sent to Britain diminished over the late nineteenth century, the amount of planks and boards exported to the U.S. increased. A shift toward more value-added wood products fed urbanization in cities around the Great Lakes. Visualizing the data not only illustrates the dominant position of Britain and the U.S. vis-à-vis Canadian exports, but more subtle trade connections as well. Whereas timber exports were sent overwhelmingly to Britain and smaller amounts to a handful of western European countries, planks and boards were exported to over a dozen Caribbean and South American destinations. Visualizing the data related to a specific commodity also allows us to track shifting patterns in the origins of these commodities. During the late nineteenth century, the Tables of Trade and Navigation recorded the province from which commodities were exported. In the case of planks and boards, this allows us to track the shift the centre of sawmilling operations from Quebec to Ontario between 1871 and 1881.

Nova Scotia:

Rather than focus on a particular commodity, however, staples-related research might instead be informed by an interest in how staples shaped a particular region or province in Canada. Quite predictably, throughout the nineteenth century, the vast majority of exports originating from Quebec and Ontario went to Britain and the U.S. In the case of Nova Scotia, however, the share of exports to Britain and the U.S. barely approached 50 percent. Rather, destinations such as the British West Indies, the Spanish West Indies, the French West Indies, and British Guiana all account for significant shares of Canadian exports. Nova Scotia exports to the Caribbean were mainly fish and lumber to support sugar plantations, the products of which were in turn exported to Britain.

Absent from the Canadian trade tables, however (and mostly overlooked by Innis himself despite his attention to furs and Newfoundland), is any detail about the exports from Newfoundland, which sent hundreds of thousands of seal skins to London’s industrial leather tanneries during the nineteenth century. For this, we had to use the data from Newfoundland’s own trade tables.

Exports of seal skins from Newfoundland, 1836-1897

The Global Context:

Exports from Argentina, Canada, Australia, and South Africa, 1891

The connections between Nova Scotia, the West Indies, and Britain are the kinds of relationships that quickly emerge with the help of tools that visualize large amounts of data. And once this type of relationship is identified, big data can help us answer questions at nested scales of analysis. How did staples exports shape Maritime history? What is the relationship between Maritimes staples exports and the trans-Atlantic sugar trade? How does Canada fit into the wider flow of global commodities during the nineteenth century? Although the Canadian trade tables helped us get to this last question, they could not help us answer it. It just so happens that our work exploring Canadian export data fits into our wider project, London’s Ghost Acres, which uses Britain’s trade tables to explore the environmental consequences of the global flow of commodities that fed London’s industrialization. Using the database assembled from this project, we place Canada in the global staples story. When compared with the other major settler lands of the late nineteenth century (Argentina, Australia, and South Africa), Canada’s contribution to industrialization came less from the raw materials that actually fed London’s industrialization, and more from the large amounts of agricultural products that fed the city’s population during that period.

As we assembled the data and generated these visualizations, it became apparent there are countless Canadian staples stories nested within many layers of social, economic, and environmental history. The literature is rich with debates about the role of staples in regional and national development. The stories that haven’t been told very well yet are those that explore the relationship between particular Canadian commodity exports and their global context. Attempting to identify and understand the stories that staples tell means working with other scholars who can help us piece together the history of particular Canadian commodities and their relationship with, for example, London’s industrialization or West Indies sugar plantation agriculture.

Below you will find our preliminary attempt to bring these compartmentalized commodity stories into a interactive map. We welcome any contributions to this project in the form of 500-word descriptions of a particular project and the places where its story unfolded. Ideally, these write-ups would be accompanied by an image or collections of images, but we would also welcome any graphs, charts, and other media, which we will use to populate the map. It is our hope that this website can become a starting place for researchers and a resource for educators on the story staples tell us about Canadian history.

The London’s Ghost Acres Project is SSHRC-funded by an Insight Development Grant, and is housed in the Historical GIS Laboratory at the University of Saskatchewan. We would also like to acknowledge and thank the work of Jon Bath at the Digital Research Centre at the U of S, as well as our team of undergraduate students, Danika Bonham, Steven Langlois, Elise Lehmann, and Kevin Winterhalt, who have helped the project by building and refining our database and wiki documents.

Andrew Watson

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Great idea folks! I’d be happy to contribute some BC stuff in the future. For the moment, however, you may want to correct the details on lumber in BC. There were not any logging firms operating on Vancouver Island in the 1820s. The first sawmill was set up by the HBC in the 1840s. Before that the occasional ship would stop to cut spars, but no formal logging operations (distanced from the HBC) until the 1860s. Sorry I missed the great panel at CHA 16!

Great stuff! I have a couple of maps I made for my dissertation showing the spread of cheese factories throughout southern Ontario between 1871 and 1891. The vast majority of the cheese they produced was exported to the UK. I have a busy few weeks ahead of me but I’ll try to get in touch!

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This looks very interesting. I am seeking information about Canadian importers of household goods in the 19th century and deals made with UK manufacturers. Are there any archives for this information?

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HIS 221: Canadian History, Pre-Confederation (to 1867): Does the Staples Thesis explain the economic development of Quebec/Lower Canada up to 1840?

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Staple Thesis - Explained

What is a staple thesis.

The staple thesis was developed because of the noticeable economic development in Canada, but the thesis can also be applied in different countries. The thesis follows that traditional commodities or staple products contribute immensely to the actualization of a wealthy economy. In other words, the thesis is a theory that aids substantial economic growth.

How did the Staple Thesis Originate?

Brazil as an example of staple thesis, the staple thesis trap.

The progenitors of this theory hold a contrasting view on the degree to which economies should rely on the export of staples for their development. But, the core principles of the theory still remain the same, this is the fact that the success of an economy is primarily dependent on staples. The point of the authors controversy is dependent on these staples. Ma Mackintosh holds the view that a developed economy could successfully continue to rely on staple production since that is its means of attaining high economic growth while Innis affirms that as countries develop, their economies should move from being overdependent on the production of staples for export. He offers that manufacturing countries can typically control resources-giving countries.

Problems of staple production in Canada

Published 1933
Agricultural and Food Sciences, Economics

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Harold Innis

Article by William Christian

Published Online March 29, 2009

Last Edited June 5, 2015

Innis, Harold Adams

Harold Adams Innis, political economist and pioneer in communication studies (b at Otterville, Ont 5 Nov 1894; d at Toronto 8 Nov 1952). Innis's earlier writings in economics and economic history gave rise to a distinctively Canadian approach to these subjects, and his later attempts to analyse the crisis in Western civilization led the way to a new emphasis on the importance of different modes of COMMUNICATIONS for understanding the nature and development of a society.

A veteran of the First World War , Innis studied at McMaster and the University of Chicago. His choice of a Canadian thesis topic, a history of the CANADIAN PACIFIC RAILWAY , was his first step towards a reorientation of many fields of study relating to Canada, especially in the social sciences. In 1920 Innis joined the University of Toronto's political economy department, where he remained until his death.

During the 1920s he became increasingly dissatisfied because he believed that the American- and British-trained scholars who predominated in Canadian universities were applying inappropriate models to their analysis of Canada's economy. Innis's first major work, The Fur Trade in Canada (1930), established his reputation and introduced the STAPLE THESIS of economic development. Innis also opposed the continentalist school and argued that Canada's political boundaries were the logical outcome of Canada's economic history - contrary to the tenets of CONTINENTALISM .

Appointed head of U of T's political economy department in 1937, Innis continued to work on his second major study, The Cod Fisheries (1940). Although he had trouble finding a suitable publisher because of his cumbersome writing style, this work established him in the forefront of the world's economic historians. Whereas The Fur Trade had set Canada off from the US, The Cod Fisheries underscored Canada's European roots.

During the 1930s and the Second World War, Innis rose to the challenge of defending the integrity of the universities and of scholarship, which he saw as imperiled by the general atmosphere of crisis. He was active in establishing societies, such as the Canadian Political Science Association and the American Economic History Association, and he used his connections and prestige to secure funding for Canadian research.

More controversially, he vigorously opposed the efforts of fellow academics such as F.W. UNDERHILL who were involved in the LEAGUE FOR SOCIAL RECONSTRUCTION . To a considerable extent, the detachment of our contemporary Canadian academic community from political involvement derives from his attitudes and efforts.

Innis's scholarly reputation led to an invitation to visit the Soviet Union in 1945. His posthumously published Russian Diary shows his deep concern with the problems of Western civilization. In drawing attention to the impact of the media of communications on the extent and duration of a civilization, Innis's communications researches culminated his lifelong attempt to explain the interpenetration between Canada and Western civilization.

Innis expressed these concerns in his 1947 presidential address to the Royal Society of Canada, titled "Minerva's Owl," although his arguments were little understood at the time. He contended that western Europe and North America were in a state of profound crisis. This crisis was rendered more severe because the dominant media of communication fostered an obsessive preoccupation with the present, with the consequence that politicians and scholars were neither able to understand their circumstances nor able to devise an appropriate remedy for their problems.

Innis continued his researches amidst increasingly heavy administrative responsibilities. In 1947 he became dean of U of T's graduate school, and in 1948 he visited England to deliver the Beit lectures, material which he later included in Empire and Communications (1950). This synoptic study of ancient Egypt to the present explores the theme of the interconnection between the vitality and durability of countries and empires and the modes of communication that dominated in them. Innis was still working on these ideas at the time of his death.

Innis had few followers during his life, though since his death he has secured admirers from several different academic disciplines, ranging from Marshall MCLUHAN in communications to Canadian Marxists interested in his study of the interrelations between economics, politics and society. However, few of Innis's disciples have had the courage and the genius to follow him in the breadth of his reading and theorizing.

External Links

Harold Innis A profile of Harold Innis from Library and Archives Canada.

Staples, Political Economy and Trade Flows - A New Interpretation and Quantitative Evidence

2013, McMaster PhD Thesis

The first section of this thesis identifies two schools of economic thought that were prominent between 1923 and the 1960s. Both employed a staples approach to organize, explain and interpret Canada’s history but used different scopes of inquiry, methodologies and time horizons. I call these two schools Innis’ staples thesis and Macintosh’s staple economics. No sooner were these two schools firmly established than the economics profession underwent a fundamental shift. Economic historians abandoned the old Canadian political economy in the 1960s and followed international trends toward increased specialization. Academic economists concentrated on theoretical and deductive methods with little concern for historical time. During this period of rapid transition, Mel Watkins developed a third approach known as the staple theory. If contemporary economists are cognizant of a staples approach, they most likely think about Watkins’ theory which was written during the ascendancy of the ‘new’ economic history in the United States. One of the legacies of the old political economy was the construction of historical data sets, but they are rarely used in contemporary studies. The collection of historical data related to staples activity waned as the focus shifted to the construction of national accounts. The reconstruction of Canada’s trade flows was abandoned. The last five chapters of this thesis remedy this neglect with a new series of trade flows for all British North America from 1829 to 1960. Economic historians will now have a continuous series of meaningful trade statistics to facilitate future research on the role of staples in international economy of British North America. With this information, research can begin to evaluate the long-run evolution of the structure, behaviour and performance of Canada’s external economy from a simple colonial society to a modern industrial nation.

Related Papers

Socialist Studies / Études socialistes 4 (2), Fall: 67-92

Paul Kellogg

Selon un point de vue hégémonique en économie politique au Canada, l’exportation de produits bruts dominerait le profil commercial du Canada, au détriment des produits manufacturés. La montée en flèche de la valeur des exportations d’énergie canadiennes et une forte tradition d’importation de produits finis manufacturés semble donner raison aux économistes politiques nationalistes de gauche qui brossent le portrait d’une économie où le secteur manufacturier serait sous-développé. Or, grâce à un examen empirique, le présent article remet en question certaines présuppositions répandues sur ce qui constitue une exportation de produits « manufacturés » et avance que le profil commercial du Canada concorde parfaitement avec celui d’une économie capitaliste avancée. Le nationalisme de gauche s’appuie à tort sur des catégories appropriées pour une économie dépendante, inappropriées pour le Canada. Une approche marxiste montre une économie avec un marché intérieur relativement développé, où la « création de plus-value » vise la classe capitaliste canadienne, au lieu d’en faire fi comme ce serait le cas dans une économie dépendante. The hegemonic view in Canadian political economy is that Canada’s trade profile is weighted towards the export of unprocessed products, and away from manufactured products. With the soaring value of Canadian energy exports, combined with an import history weighted towards the import of finished manufactured goods, left nationalist political economy seems to be on strong footing painting a picture of an economy with an underdeveloped manufacturing sector. This article will empirically re-examine Canada’s trade profile, question some common assumptions about what constitutes ‘manufactured’ exports, and argue that Canada’s trade profile is perfectly compatible with that of an advanced capitalist economy. Left nationalism has mistakenly relied on categories appropriate to dependent economies, categories inappropriate for Canada. A Marxist approach reveals an economy with a more or less developed ‘home market’ economy, where the ‘self-expansion of value’ is directed towards the Canadian capitalist class, not away from it, as would be expected in a dependent economy.

Kevin Hempstead

Charles McMillan

Canada: theoretical discourse

Robert Sweeny

For almost a century the staple theory of Harold Innis has been the most influential historical approach in Canada. This article reviews the major 18th and 19th trades and establishes that the assumption these "losing" trades were the motor of the economy is wrong on both fronts. It then explains the popularity of this historically inaccurate theory in terms of pragmatic empiricism, the advanced capitalist historical theory and method most favoured in the Anglo-American academy.

Marilyn Gerriets

Canadian Review of Sociology/Revue canadienne de sociologie

Jack Richardson

History of Political Economy

Robert Pahre

S IXTY YEARS AGO Harold Innis presented the staple theory as a singularly powerful and evocative explanation of Canada's economic history and, more particularly, of the crucial role of resource extraction in the development of the nat ion and its constituent regions. A recurrent feature of Canadian economic deve lopmen t over several cen tur ies was the ex t rac t ion and transportation of staples from hinterland regions to distant markets. As Innis observed, the "result was that the Canadian economic structure had the peculiar characteristics of areas dependent on staples — especially weakness in other lines of development, dependence on highly industr ial ized areas for markets and for supplies of manufactured goods, and the dangers of fluctuations in the staple commodity" (Innis 1933, 6). The dominant staple within the Canadian economy has followed a progression — from fish, to furs, to minerals, to forest products , to grains, and so on — and t ransporta t ion tech...

Gordon Laxer

Socialist Studies/Études Socialistes

James Lawson

This response is based on a presentation as part of a panel on Paul Kellogg's Escape from the Staples Trap at the annual meeting of the Society for Socialist Studies. The responder welcomes Kellogg's diligent use of statistics and argumentation in critiquing the left-nationalist tradition, including its emphasis on staples (raw-material exports) as central to Canada as a "rich dependency" and false comparisons with countries of the Global South. It also suggests a possible one-sided over-emphasis on Canada's membership in top-tier advanced industrialized societies, and questions the general emphasis on categorization at the expense of a more humanistic multi-sidedness, or of an acceptance of ironic or paradoxical categorizations. Some features of Kellogg's positive case about Canada, including "extractivism", need to be more clearly distinguished from the approaches he rejects. Finally, the categorical rejection of the possibility of a sound lef...

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> Journals
> The Journal of Economic History
> Volume 18 Issue 4
> The Role of Staple Industries in Canada's Economic...

Article contents

The role of staple industries in canada's economic development *.

Published online by Cambridge University Press: 03 February 2011

Applications of the staple approach by the late Harold Innis d by others influenced by Innis have produced many studies which, taken together, provide a remarkably coherent, plausible, and apparently consistent account of Canada's economic growth and history. In this paper I distinguish between the staple theory as a theory of economic development and as an economic interpretation of history and argue that the staple theory of Canada's economic development breaks down after 1820. In the conclusion I suggest an alternative, complementary approach to the study of the country's economic growth.

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1 Mackintosh , W. A. , “ Economic Factors in Canadian History ,” The Canadian Historical Review , IV ( 03. , 1923 ), 12 – 25 CrossRef Google Scholar .

2 Reprinted in Innis , Harold A. , Essays in Canadian Economic History ( Toronto : University of Toronto Press , 1956 ), pp. 3 – 16 Google Scholar .

3 See particularly The Fur Trade in Canada ; An Introduction to Canadian Economic History , rev. ed. ( Toronto : University of Toronto Press , 1956 ) Google Scholar ; The Cod Fisheries: The History of an International Economy , rev. ed. ( Toronto : University of Toronto Press , 1954 ) Google Scholar ; Problems of Staple Production in Canada ( Toronto : University of Toronto Press , 1933 ) Google Scholar ; Lower , A. R. M. and Innis , H. A. , Settlement and the Forest and Mining Frontiers ( Toronto : Macmillan Co. , 1936 ); and Essays in Canadian Economic History (referred to in n. 2) Google Scholar .

4 On the concept of direction of growth see Simon Kuznets, “Toward a Theory of Economic Growth,” reproduction, Feb. 1956, of an article of the same title from the volume National Policy for Economic Welfare at Home and Abroad ( New York : Doubleday , 1955 ), pp. 44 – 45 Google Scholar .

5 , Innis , Essays in Canadian Economic History , pp. 200 –10 Google Scholar .

6 Ibid. , p. 203.

7 Ibid. , pp. 11, 39.

8 In a review Innis also criticized Chester Wright's Economic History of the United States for “an over-emphasis on self-sufficiency and on nationalism” and commented: “A Canadian is more sensitive to the importance of regionalism and to the essential problem of North America in the development of a continent with maritime institutions. The problem is more acute in Canada but it is not absent in the United States.” Canadian Journal of Economic and Political Science , VIII ( 05 1942 ), 307 Google Scholar .

9 Easterbroolc , W. T. , “ Innis and Economics ,” Canadian Journal of Economics and Political Science , XIX ( 08 . 1953 ), 296 Google Scholar .

10 The regional character of the staple approach when it is applied to national economic development is apparent in Mackintosh , W. A. , The Economic Background of Dominion Provincial Relations ( Ottawa : Kings' Printer , 1939 ) and in many studies strongly influenced Google Scholar by Mackintosh, particularly Fowke's , V. C. treatment of agricultural areas as investment frontiers in Canadian Agricultural Policy: The Historical Pattern ( Toronto : University of Toronto Press , 1946 ), my study, Google Scholar Capital Formation in Canada, 1896 to 1930 ( Toronto : University of Toronto Press , 1955 ), and Google Scholar Currie , A. W. , Canadian Economic Development ( Toronto : Thomas Nelson and Sons , 1951 ). In a recent article, Google Scholar “ Locational Theory and Regional Economic Growth ,” Journal of Political Economy , LXIII ( 06 1955 ), 243 –58. Douglass North urges the adaptation of the staple approach to the study of regional economic growth in the United States. His point of departure is that existing “theory of regional economic growth has little relevance for the development of regions in America.” Google Scholar

11 (Toronto: The Macmillan Co., 1956).

12 See n. 10.

13 (Boston: Houghton Mifflin, 1930).

14 Short descriptions of. this work and the regional concept employed appear in Annual Reports, National Bureau of Economic Research, Inc., New York, 1957 and 1958. I am indebted to the National Bureau for die opportunity as a research associate in 1956-57 to undertake the studies referred to in the text.

15 It is not possible here to document fully this observation, but a fair and quick test of its accuracy is to check every reference to Canada East, Lower Canada, and Quebec appearing in Easterbrook and Aitken, Canadian Economic History , the most reliable and comprehensive study of its kind published so far.

16 Henripin , Jacques , “ From Acceptance of Nature to Control ,” Canadian Journal of Economics and Political Science , XXIII ( 03 . 1957 ), 10 – 19 CrossRef Google Scholar .

17 Ibid. , p. 13.

This article has been cited by the following publications. This list is generated based on data provided by Crossref .

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Volume 18, Issue 4
Kenneth Buckley (a1)
DOI: https://doi.org/10.1017/S0022050700107648

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3 Defense Stocks to Consider for June

Here are your options when it comes to U.S. defence contractors, along with my ETF recommendation

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Image source: Getty Images

If you have ethical reservations about investing in the defence sector, this article may not be for you. However, if you’re open to exploring this area, defence stocks are particularly noteworthy this year.

Given the ongoing geopolitical tensions – over two years of war in Ukraine, the persistent conflict between Israel and Gaza, and substantial U.S. military funding – it’s no surprise that defence is a robust sector.

The performance of defence stocks during times of global unrest is well-documented. Here are a few studies that illustrate this point:

“The Budgets of Wars: Analysis of the U.S. Defense Stocks in the Post-Cold War Era”
“The 11/13 Paris Terrorist Attacks and Stock Prices: The Case of the International Defense Industry”
“Does Geopolitical Risk Predict Stock Returns and Volatility of Leading Defense Companies? Evidence from a Nonparametric Approach”

For those new to this sector, the following overview will introduce you to the three biggest U.S. defence contractors, including what weaponry they produce that is being used in conflicts today.

Additionally, I will highlight an exchange-traded fund ( ETF) pick that provides exposure to the entire industry, offering a comprehensive way to invest in defence with a single purchase.

RTX Corporation ( NYSE:RTX ), formerly known as Raytheon Technologies, is a major defence contractor known for its extensive range of military technology and equipment.

Among its well-known products are the Patriot air defence system and Tomahawk cruise missile, both of which are staples in modern military arsenals.

RTX also produces the Advanced Medium-Range Air-to-Air Missile (AMRAAM), Paveway laser-guided bombs, and a variety of radar systems for surveillance and missile defence.

Lockheed Martin

Lockheed Martin ( NYSE:LMT ) produces the F-35 Lightning II, the most sophisticated stealth fighter jet currently in use, capable of multiple combat roles.

Lockheed Martin also manufactures the C-130 Hercules, a versatile military transport aircraft, and the PAC-3 Missile, essential for modern missile defence systems.

Additionally, Lockheed produces the AGM-114 Hellfire, a precision-guided missile used by a variety of ground and air platforms for anti-armour and precision strike missions.

General Dynamics

General Dynamics ( NYSE:GD ) is known for the Virginia-class submarines, which are highly advanced nuclear-powered submarines designed for deep-sea and anti-submarine warfare.

General Dynamics also produces the M1 Abrams tank, the main battle tank used by the United States military, renowned for its powerful armament, mobility, and heavy armour.

Additionally, the company manufactures the Stryker, a family of armoured fighting vehicles that offer significant versatility and mobility for infantry troops in various combat scenarios

The ETF I would buy

Investing directly in U.S. defence companies involves dealing with USD transactions, which can lead to costly currency conversion fees.

Additionally, investing in just these three stocks does not provide broad diversification, which is crucial for managing investment risk.

My recommendation for those looking to invest in this sector would be the iShares U.S. Aerospace & Defense Index ET F ( TSX:XAD ), which charges a 0.44% management expense ratio.

This ETF not only includes RTX, Lockheed Martin, and General Dynamics, but it also comprises 31 other companies within the aerospace and defence sector by tracking the Dow Jones U.S. Select Aerospace & Defense Index .

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General Mills: Do Not Always Seek Alpha

General Mills is one of those companies to be invested in because of another Greek letter than Alpha.
Beta is the name of the game, which, being close to zero, pictures GIS as independent of the overall market.
With chances for real long-term growth beyond inflation being limited, GIS’ 3.6% dividend could be interpreted as inflation-protected income.

photokitchen/iStock via Getty Images

General Mills ( NYSE: GIS ) is a company investors buy stakes in not because of the need for outperformance, but because of its reliable dividend, standing at 35 years without a reduction, and its solid business model. Even more so, I argue that General Mills comes close to representing an “equity bond” – a term I recently came across in another article and would like to adopt for stocks like General Mills. Now, one step at a time, I would like to guide you through why I like stocks like General Mills, by

firstly, focusing on its dividend yield, comparable real interest rates, inflation, and valuation ,
then discussing how the operating business is doing,
before also going into company- and industry-specific risks .

Inflation Protected Income

GIS currently yields a dividend of 3.6%, comfortably above its five- and ten-year averages of 3.2% and 3.3%, respectively. This does not necessarily indicate an undervaluation, though because we are comparing with averages from times dominated by low interest rates. It does, however, indicate an attractive yield at first glance. Now come the usual objections that one can lock in a better return of 4.4% for 30 years with low-risk government bonds. In response, the usual argument is that stock yields have to be interpreted including growth on top, which is exactly right but doesn’t help to argue in favor of GIS, obviously not known as a growth company.

GIS historical dividend yields (blue line), 5- and 10-year corridors & averages. (Aktienfinder.net)

However, I argue that General Mills’ dividend is at least inflation-protected. While I have not researched this myself, I have read in several papers that earnings and dividend yields are essentially to be interpreted as inflation-protected in nature. I took this as an occasion to conduct a quick and simplified analysis regarding GIS.

To begin with and just to recap, see below the yields on 30-year treasury bonds , which are nominal yields and therefore include an expected compensation for inflation.

But, when comparing the arguably inflation-protected dividend of a consumer staple, I feel the comparison is more logical with the real yields on inflation-protected bonds, the so-called TIPS. Here, we stand at 2.2% versus a 3.6% dividend yield on GIS. For some, this 1.4% premium might still be a small risk reward for equity, but there are two further aspects I would like to consider.

First, we are assuming absolutely no growth beyond inflation in this comparison, which is somewhat conservative, although there is not much real growth in sight for GIS. Secondly, GIS – at least statistically – is as decoupled from the overall market as it gets, resulting in almost no Beta at all, according to Seeking Alpha 60- and 24-month regressions standing at 0.11 and 0.03, respectively. Even when applying the Blume adjustment formula to the higher Beta of 0.11, landing at a Beta of 0.4, I calculate a Cost of Equity of only 6.4%. Comparing this to the 3.6% dividend yield, GIS would need 2.8% nominal annual growth as of today – not much higher than long-term inflation expectations. All this makes me feel confident about GIS’s current valuation. My observation of GIS being decoupled from overall markets is backed by an BofA analysis , that identified some of the most idiosyncratic stocks. This means stocks are influenced more by company-specific factors rather than general market trends.

Seeking Alpha

As indicated earlier, besides Beta, the name of this consumer staples’ game is keeping up with inflation. With 58% of revenues being generated in the US, 5% in Canada, 23% in the rest of North America and the remaining portion internationally, I deem the US inflation rate an appropriate proxy for my analysis.

Please find below a compact dashboard summarizing the YoY growth rates for GIS’ adjusted EPS, revenue per share and dividends per share. For the sake of simplicity, I have not considered dilution or M&A effects, implicitly assuming that GIS' core business is the primary long-term driver of these figures. But, for example, this year's expected per-share revenue growth can be solely attributed to share repurchases, given stagnant company revenue. Since General Mills' fiscal year runs from June to May, I have compared these YoY growth rates to inflation rates as of the beginning of June each year to ensure a consistent annual cycle. While there appears to be no correlation between dividends and inflation or between earnings and inflation, there is a weak correlation between revenue growth and inflation in the same year, and a very strong correlation with a one-year lag , suggesting a delay until price increases are fully realized.

General Mills YoY growth rates and inflation dashboard

Author | Data: Aktienfinder.net, multpl.com

The lack of correlation between dividends and inflation should not be overstated due to the short observation period lacking statistical significance. Additionally, dividend increases have sometimes been significantly higher than revenue growth, or in the opposite were stagnant, particularly during the pandemic period. The absence of a correlation between earnings and inflation is likely due to the fact that earnings have generally outperformed inflation-dependent revenue. This can be attributed to over-inflationary profit growth driven by efficiency gains and cost management.

In conclusion, despite the limitations of this analysis, particularly the lack of a strong correlation on the earnings side due to the discussed effects, there seems to be some evidence of inflation protection on the top line , which in the long run should also lead to inflation protection of earnings and dividends. This underscores that using real yields of 2.2% would be a more appropriate number to compare to General Mills' dividend yield at 3.6%.

I Like This Boring Business

Now that we've explored some technical aspects, let's delve deeper into General Mills' operating business. We'll begin by examining the most recent developments and gradually broaden our scope .

Firstly , it is important to note that General Mills is scheduled to release its fourth-quarter earnings report on June 26, 2024 .
In the most recent quarter having ended in February, GIS posted -1% organic net sales, driven by -2% in volume that could not fully be offset by +2% in pricing / mix . Over the course of nine months , organic net sales grew +1%, implying +4% in pricing / mix, given -3% in volume . So it shows that moderating inflation is impacting pricing power , yet even more problematically, price elasticities start to wipe out price increases through volume shrinkage. Noteworthy, however, is that adjusted operating profits and EPS could grow high single digits to low double digits in the quarter as well as over nine months.
General Mills is stepping up its Pet Food game. Recent acquisition news include those of Fera Pets in the market of evidence-based premium pet food and European premium natural pet food brand Edgard & Cooper . Given an increasing humanization of Pet Food and demographic and societal shifts towards pets winning importance in people’s lives, I deem this a promising strategy.
On the divesture side, GIS is looking to sell its yoghurt business , currently attributing USD 250 million EBITDA to the company.
Over 5 years , GIS looks back at an average mid-single digit growth across organic net sales, adjusted operating profit and EPS.
Over the very long term , I would like to let the charts below speak, indicating extremely stable operating margins, an upward trend of net margins and all of that despite pressure on gross margins over time. What I also like seeing is Free Cashflow conversions around 100% on average. Dividend is somewhat of a priority, evidenced by fluctuating payout ratios, after all mostly amounting to healthy ratios roughly within the 50% to 70% range. This is also an explanation why the dividend does not necessarily correlate with inflation because it follows a prioritized growth pattern, which is cushioned by the payout ratio compared to operational fluctuations.

Green line – net margin, red line – operating margin, blue line – gross margin, percentages depicted on the right axis. (Aktienfinder.net)

Orange – adjusted EPS, brown – Fee Cashflow per share, blue – Dividends per share, USD per share on the left axis, black line – payout ratios – percentages depicted on the right axis. (Aktienfinder.net)

Talking long-term orientation, I would like to depict GIS’s diversified product segments below, just to bring it to mind.

General Mills

Looking ahead , GIS has had to lower its current fiscal year guidance from mid-single digit revenue growth to -1% or flat development during the year. Profit guidance, on the other hand, has remained largely unchanged, only narrowing the corridor around the mid-single digit YoY range . Mid-single digit is also the magic word for the group’s long-term guidance on earnings. In terms of sales , GIS is almost precisely targeting long-term inflation expectations of 2-3% annually.

Lastly, let’s summarize key risks for GIS in the continued bullet-point-manner:

Input cost inflation is often cited as a significant risk. While on the one hand this is of course relevant and has put gross margins under a bit of pressure, on the other hand, in the long term, none of this has had a particularly serious impact on the group - and this is despite unprecedented times of inflation within in the recent past.
A high level of goodwill is noticeable in the balance sheet, which at USD 14.4 billion exceeds the balance sheet equity of USD 9.7 billion.
One author correctly claims : "General Mills is facing challenges in sales due to increased competition from store brands and changing consumer spending habits."
General Mills’ share price may also have suffered from news about the feared effects of appetite-suppressing drugs . The concern was that such drugs could change consumer behavior to the detriment of corporations. However, CEOs of consumer staples giants themselves hardly share this fear. I have also come to the conclusion that, on the one hand, I do not believe that medication will disrupt demand at an alarmingly rapid pace, and, on the other hand, I trust in the companies' ability to adapt to the health needs of consumers. See an excerpt of this news article for example: “Food manufacturers (…) have been confident this year that they can adjust to the weight-loss drug disruption that is forecast to continue to grow. Notably, the industry has pointed to data that showed consumption of better-for-you frozen meals increased by a notable amount in people taking weight-loss drugs, even as consumption in some snacking and dessert categories has fallen off.”
Finally, be aware of Q4 earnings ahead on June 26, 2024.

I Am Loading Up On This Income Play

General Mills, with its current portfolio, is well positioned in boring yet appealingly stable consumer sectors, offering little operating upside. However, the strategic expansion in the Pet Food segment meets the spirit of current times, which is why I assess these moves positively. General Mills’ virtually inflation-protected dividend offers a slight risk-premium over inflation protected bond yields. Although real growth is limited, I am content with this small premium, as the company appears widely decoupled from the overall stock market. Therefore, GIS can be viewed as a stabilizing and passive inflation-protected income investment within a diversified portfolio, while offering little perspective for outperformance. Risks include the company’s high goodwill, struggling customers in the short- to medium-term and medium- to long-term changes in consumer behavior.

This article was written by

Analyst’s Disclosure: I/we have a beneficial long position in the shares of GIS either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Staple Thesis. The staple thesis is a concept that was developed in the early 20th century by Canadian economic historians to explain the economic growth of Canada and other regions that were heavily dependent on primary commodity exports. The thesis argues that the economies of these regions are shaped by the production and export of a few key ...
Staple Thesis: Definition, Examples, and Insights
The staple thesis, although attributed to various economists, is often associated with the work of Canadian scholar Harold Innis. Developed as an explanation for Canada's economic history, the theory gained prominence through Innis's analysis of the country's reliance on staple exports for economic growth. Later, economists like Melville Watkins and W. A. Mackintosh expanded upon Innis ...
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The specific terminology—staple or staples approach, or theory, or thesis—is Canadian, and the persistence with which the theory has been applied by Canadian social scientists and historians is unique. ... 5 Kenneth Buckley makes this point strongly; see his " The Role of Staple Industries in Canada's Economic Development," Journal of ...
Staple Thesis
The staple thesis was developed because of the noticeable economic development in Canada, but the thesis can also be applied in different countries. The thesis follows that traditional commodities or staple products contribute immensely to the actualization of a wealthy economy. In other words, the thesis is a theory that aids substantial ...
The Staples Thesis, local models and competitiveness: the Western
Grounded in the history and geography of a colonial nation, the Staples Thesis constitutes Canada's most distinctive contribution to political economy (Drache, 1995; Watkins, 1963). At the core ... The Staples Thesis, local models and competitiveness: the Western Australian economy over the 2001-2011 resource boom: Area Development and ...
W. A. Mackintosh
Staple thesis. William Archibald Mackintosh, CC, CMG, FRSC (May 21, 1895 - December 29, 1970) was a Canadian economist and political scientist, and was the twelfth principal of Queen's University from 1951 until 1961. He is best known for developing the staple thesis that explains Canadian economic history in terms of a series of exports of ...
PDF The Staples Thesis, Common Property, and Homesteading
Shorter articles and comments /547. The staples thesis, common property, and homesteading. CLIVE SOUTHEY / University of Guelph. I N T R O D U C T I O N. The essence of the staples thesis is that the development of many nations or geographic areas has been led by the expansion of export sectors, and in par- ticular the export of natural resources.
Problems of staple production in Canada
Semantic Scholar extracted view of "Problems of staple production in Canada" by H. Innis. ... The purpose of this dissertation is to use the theoretical foundations of the 'staples thesis' to analyse and explain how the institutional environment inherited from resource dependence influences … Expand. 4.
PDF Staples, Imperial Political Economy and Trade Flows
The first section of my paper focuses on Harold Innis and his continental staples thesis. By the late 1920s, he emerged as a well-rounded social scientist that reflected the intellectual currents of thought in his era. His thesis created a coherent account of Canada's origins and the evolution of key staple activities in mid-Canada.
Harold Innis
Innis's first major work, The Fur Trade in Canada (1930), established his reputation and introduced the STAPLE THESIS of economic development. Innis also opposed the continentalist school and argued that Canada's political boundaries were the logical outcome of Canada's economic history - contrary to the tenets of CONTINENTALISM.
(PDF) The Staples as the Significant Past: A case study in historical
I call these two schools Innis' staples thesis and Macintosh's staple economics. No sooner were these two schools firmly established than the economics profession underwent a fundamental shift. Economic historians abandoned the old Canadian political economy in the 1960s and followed international trends toward increased specialization.
Economics and Political Science
innovation; indeed, it is Canada's most distinctive contribution to political economy. It is undeveloped in any explicit form in most countries where the export sector of the economy is or was dominant.' The specific terminology-staple or staples approach, or theory, or thesis-is Canadian, and the persistence
Staples, Political Economy and Trade Flows
The first section of this thesis identifies two schools of economic thought that were prominent between 1923 and the 1960s. Both employed a staples approach to organize, explain and interpret Canada's history but used different scopes of inquiry, methodologies and time horizons.
The Canadian 'staples trap' and its regional development ...
As part of his staples thesis, Innis argued that the history of Canada was "dominated by the discrepancy between the centre and the margin of western civilization" (1956, p. 385).
The Role of Staple Industries in Canada's Economic Development
In this paper I distinguish between the staple theory as a theory of economic development and as an economic interpretation of history and argue that the staple theory of Canada's economic development breaks down after 1820. In the conclusion I suggest an alternative, complementary approach to the study of the country's economic growth.
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General Mills: Do Not Always Seek Alpha (NYSE:GIS)
GIS currently yields a dividend of 3.6%, comfortably above its five- and ten-year averages of 3.2% and 3.3%, respectively. This does not necessarily indicate an undervaluation, though because we ...