According to the latest trade report from Farm Credit Canada (FCC), one of Canada’s greatest opportunities for growth in global trade is in the food and beverage processing industry.
“World population growth, higher purchasing power in emerging markets and new trade agreements are key factors in potentially creating more opportunities for Canada to increase exports,” says J.P. Gervais, FCC chief agricultural economist. “Combined with our competitive advantages in natural resources and innovation, and a stellar food safety reputation, Canada has an opportunity to improve its world standing as a major food exporter, as well as to diversify its export markets.”
Canada ranks fifth as a global agriculture commodity exporter and 12th as a processed and prepared food and beverage exporter as of 2019. Canada’s total food, beverage and commodity exports last year were worth roughly $67 billion, an increase of almost 10 per cent since 2015. Food exports increased by 27.8 per cent, while food and beverage exports represented less than half of the total value.
The agri-food industry has so far been able to adjust to the pandemic and meet export needs, but the disruption to global food supply chains and to trade has clarified the need for Canada to diversify its export markets and seize those related growth and diversification advantages.
“The potential to diversify our export landscape is a function of the size and growth of import markets where our export presence has historically lagged,” says the report. Import markets that show potential are: canola oil, pork, potato products, prepared crab, and prepared and preserved beef products.
Market diversification is desirable from a risk management perspective; however, Gervais notes that there are economic challenges that might thwart efforts to diversify. “Diversification almost always entails seeking markets that are further away and more expensive to develop,” says Gervais. “Plus, selling into one market — rather than multiple markets — might be less expensive due to economies of scale.”