Farm Credit Canada Report Suggests Strategies To Diversify Cdn. Food Exports

REGINA — Canada has an opportunity to diversify $12 billion of food and beverage exports to non-U.S. markets to protect against trade disruption, enhance global competitiveness and build a more resilient agriculture and food system, according to Farm Credit Canada (FCC)’s new report, titled ‘The $12-billion trade shift: Canada’s opportunity to diversify food exports beyond the U.S.‘

According to FCC, Canada’s food and beverage sector is heavily reliant on the U.S. as over three-quarters of its exports were destined to the southern neighbour, compared with 31 per cent of primary agricultural products in 2023. In terms of imports, 65 per cent of food and beverage products came from the U.S., compared to 78 per cent for primary agriculture. FCC says that this reliance leaves Canadian ag and food producers vulnerable to unpredictable trade dynamics. The U.S. economy will always remain a key market for Canadian exports, but the evolving trade landscape underscores the need to diversify to non-U.S. markets, the organization says.

“Canadian agriculture and food producers rely on international trade to thrive, but ongoing trade disruptions have created uncertainty and barriers to growth. Diversifying food and beverage exports beyond the U.S. will not only strengthen producers’ resilience but also benefit Canadian consumers and the broader economy,” said Justine Hendricks, FCC president and CEO. “This report is FCC’s effort to focus Canadian dialogue on how diversification is important, viable and an opportunity we can’t miss out on.”

FCC’s recommended $12-billion diversification strategy reportedly focuses on three key areas:

• Strengthening inter-provincial trade, redirecting $2.6 billion in exports from the U.S. to meet domestic demand. They say that this approach reduces import reliance, supports Canadian producers and helps stabilize the food system nationally;
• Maximizing benefits from Canada’s 15 existing free trade agreements, which currently covers 51 countries and 66 per cent of global GDP, to expand Canadian food and beverage exports globally; and
• Forging new international partnerships to capture other opportunities in markets in Europe, Asia and Latin America, targeting $9.4 billion in growth beyond the U.S.

The report also reportedly identifies trade diversification opportunities across commodity groups, including prepared foods, vegetable oils and animal feed. Prepared foods represent the largest category according to FCC, making up 19 per cent of Canadian food and beverage exports, which totalled $8.6 billion in 2023, with 90 per cent currently destined for the U.S.

“Investing in infrastructure, innovation and expanding product offerings will be critical to supporting this transition. Shifting $12 billion in exports will reduce risk and secure stability for the Canadian agriculture and food sector,” said J.P. Gervais, FCC’s chief economist. “A balanced trade portfolio will make the ag and food industry more competitive, adaptable and prepared to succeed in a changing global economy.”