Trade between the NAFTA nations has become mainstream news on a daily basis. Trade relations between Canada and the United States seems to be getting cooler as the battle over lumber, energy, and dairy heats up.
The Canadian and American agriculture economies are very linked and, as highlighted by Kevin Grier in his March edition of the Grocery Trade Review, the benefit goes both ways. Canada ended 2016 with a small processed food trade surplus with the United States. Even though the surplus exists in Canada’s favour, Canada was the largest importer of U.S. high-value agricultural goods, according to the USDA. In fact, Canada actually imported double the value of high value agricultural goods of the second place Mexico and equals the imports of the entire list of Asian countries.
This is the first year that Canada has had a processed food trade surplus with the United States since 2008. From 2009 to 2015 Canada has averaged a processed food trade deficit of $900 million Canadian per year. One of the reasons for the turnaround in 2016 is the drop in Canadian currency relative to the American dollar.
On a more domestic note, food sales at food stores (traditional grocery stores) are still not growing as fast as the food sales at the general merchandisers (Walmart/Costco) but that may not be the case forever. According to Grier, traditional food stores have stabilized their market share at 79% but that was 84% a year ago. One of the factors is that traditional food stores are beginning to figure out how to compete versus the general merchandisers like Costco and Walmart.
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