Trade Disruptions Slow Growth For Cdn. Food And Beverage Manufacturers: FCC Report

REGINA — The Canadian food and beverage manufacturing sector has faced slower-than-expected growth in the first half of 2025, with sales and margins experiencing pressure given the challenging trade and economic environment, says Farm Credit Canada in a press release. According to Farm Credit Canada’s (FCC) Food and Beverage Report mid-year update, the sector saw a modest sales increase of 0.8 per cent in the first half of the year, but this momentum is not expected to hold, with a projected 0.3 per cent decline in the second half.

After a promising start to 2025, food and beverage manufacturers are reportedly feeling the pinch of trade disruptions. FCC Economics now forecasts overall sales growth for 2025 to be restricted to just 0.2 per cent, down from the April projection of 0.6 per cent.

While the vast majority of Canadian food and beverage products continue to enter the U.S. market tariff-free, it’s far from business as usual for Canadian exporters, says the FCC. Canadian businesses must reportedly ensure thorough documentation to demonstrate compliance with CUSMA regulations, adding complexity to the trade landscape. As a result, overall food exports to the U.S. are down in 2025 and uncertainty is hurting businesses investments.

Much of the sales growth seen so far is price-driven: FCC data shows that sales are slowly trending up because of price increases, while the volume of goods sold is declining. Sectors with higher reliance on export markets faced more headwinds than those selling primarily into the domestic market. For example, FCC data shows that dairy products and meat product manufacturing showed positive sales early in the year while grain and oilseed milling faced significant challenges early on due to tariffs and biofuel policy uncertainty.

“The first half of 2025 has been a test of resilience for our industry,” said Amanda Norris, FCC senior economist. “Despite the challenges, we have seen some sectors show remarkable strength, driven by sales diversification.”

According to FCC, the job vacancy rate in food and beverage manufacturing fell to 2.8 per cent in the second quarter of 2025, the lowest for the same period since 2015, indicating a larger pool of available workers.

“Looking ahead to 2026, we are optimistic about the potential for recovery,” said Norris. “A modest rebound in sales, paired with stabilizing or even falling input prices are positive signs that we can build on to drive growth and profitability.”