Regina (Rural Roots Canada) – Canadian farmers have a $12-billion opportunity to diversify exports beyond the U.S., according to a new Farm Credit Canada report.
The food and beverage sector is particularly dependent on one market- the U.S. With over 75 percent of exports going across the border. Meanwhile, Canadian farmers are already exporting their raw products to many other countries around the world, with only 31 percent going to the U.S. in 2023. For imports, Canada buys 65 per cent of food and beverage products and 78 percent of primary agriculture products from the U.S.
The U.S economy will always be a main market for Canadian exports- after all they are our neighbours. However, heavy dependence on the U.S. market creates vulnerability when trade conditions shift unexpectedly. Making it important to diversify to non-U.S. markets.
The findings come from a report released Monday by FCC, a federal Crown corporation that provides financing to agricultural producers.
FCC president and CEO Justine Hendricks says diversification will benefit not just producers, but all Canadians. “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,” she said.
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FCC breaks down the $12 billion opportunity into three key strategies:
- Interprovincial Trade
- Trade Agreements
- New Markets in Europe, Asia and Latin America
The first strategy focuses on interprovincial trade. Currently, provinces often import products from the U.S. instead of buying from other provinces. Selling to other provinces rather than spending $2.6 billion in exports helps to support Canadian producers, keeps money within Canada and reduces the risk of food shortages.
The second approach is to utilize Canada’s existing 15 trade agreements more effectively for food exports. Together, these agreements represent 51 countries and 66 percent of global GDP. We have trade deals with other countries, but are still mainly selling to just one.
The third strategy involves actively pursuing new markets in Europe, Asia and Latin America that we don’t currently sell much food to. This could create $9.4 billion in new business.
The report identifies opportunities across several food categories: prepared foods, vegetable oils and animal feed. Prepared food represents the biggest opportunity with $8.6 billion in exports in 2023, with 90 percent going to the U.S. Increasing interprovincial trade can replace about 10 percent of these exports, while the remaining 90 percent will have to go to Europe and expanding markets in Asia.
The transition won’t be easy, said J.P. Gervais, FCC’s chief economist. Canada needs to invest in better infrastructure and innovation to make this work. “A balanced trade portfolio will make the ag and food industry more competitive, adaptable and prepared to succeed in a changing global economy,” he said.
The report also recommends promoting “Buy Canadian” campaigns, enhancing Canada’s global food brand to focus on quality and safety. Other strategies include expanding food processing within Canada and developing alternative protein sources to take advantage of emerging opportunities both domestically and internationally.
