Trade tensions threaten Canada’s F&B processing industry in 2025: FCC
After a year of roughly flat sales, food and beverage processors are facing the prospect of another difficult year in 2025 due to a potential trade war with the U.S., per a latest report from Farm Credit Canada (FCC).
The United States is the largest single market for exported food from Canada, accounting for 30 per cent of food processing and 10 per cent of beverage processing sales.
“Its economic size, proximity, and cultural similarities make it hard to overlook as an ideal destination for Canadian businesses. However, low diversification puts the sector at risk. Tariffs proposed by incoming President Trump would increase the prices of Canadian products compared to U.S. and put financial pressure on sectors highly reliant on exports to the U.S.,” explained the report.
According to FCC, the sugar and confectionery sector is very vulnerable as more than 80 per cent of its sales come from exports to the U.S.
FCC warned that businesses selling primarily to the domestic market will also be affected by tariffs because of imported ingredients and a depreciating Canadian dollar.
FCC also forecasts slow economic growth on the whole for 2025.
“After a rough couple of years, when real GDP growth averaged a meagre 1.5 per cent, Canada’s economy is unlikely to get much better this year. Reduced immigration levels are expected to slow population growth, significantly reducing potential GDP growth – the economy’s speed limit, which is estimated as the sum of available labour (i.e. population) growth and productivity growth. The Bank of Canada currently estimates potential growth to be just 1.7 per cent in 2025, but even that seems optimistic given the central bank’s expectation of productivity bouncing back significantly this year. It’s unclear what will rekindle productivity, more so considering business investment has been treading water. With such a low speed limit, don’t count on Canada’s real GDP growth to bounce back significantly in 2025,” said the report.
Source: www.foodincanada.com