Farm Credit Canada (FCC) has released a new report urging Canada’s agriculture and food sector to diversify its export markets to reduce our reliance on the United States.
The report “The $12-billion trade shift: Canada’s opportunity to diversify food exports beyond the U.S.”, outlines strategies to redirect food and beverage exports to new and existing international markets, while also boosting domestic trade.
The United States is Canada’s largest trading partner for food and beverage exports, accounting for over 75% of exports in 2023, up from 67% in 2018. In contrast, only 31% of primary agricultural exports went to the U.S. that same year. On the import side, 65% of food and beverage products and 78% of primary agriculture imports came from the U.S.
This heavy reliance leaves Canadian producers vulnerable to trade disruptions and shifting U.S. economic conditions.
FCC President and CEO Justine Hendricks 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."
Craig Klemmer, FCC’s Manager of Thought Leadership outlines the reports Three-Pronged Diversification Strategy:
- Interprovincial Trade: Redirecting $2.6 billion in exports to meet domestic demand by removing internal trade barriers and improving infrastructure.
- Existing Trade Agreements: Leveraging Canada’s 15 free trade agreements, which span 51 countries and 66 per cent of global GDP, to expand exports.
- New Global Partnerships: Targeting $9.4 billion in growth by entering high-value markets in Europe, Asia, and Latin America.
Prepared foods represent the largest export category, totaling $8.6 billion in 2023, with 90 per cent of that currently destined for the U.S. He notes 10 per cent of these exports could be redirected domestically, while the remaining 90 per cent should be targeted toward high-growth international markets.
Klemmer says other promising commodities include vegetable oils and animal feed, which also show strong potential for diversification.
The report also looked at strategies to support the transition:
- Buy Canadian Promotion: Raising awareness of Canadian food quality to boost domestic demand.
- Infrastructure Investment: Enhancing transportation and logistics to support interprovincial trade.
- Brand Enhancement: Positioning Canadian food globally as premium, safe, and versatile.
- Value-Added Processing: Expanding domestic processing to capture more of the food dollar.
- Innovation in Protein and Sustainability: Exploring new protein sources and sustainable food products to meet evolving global demand.
Klemmer points out for this to work it’s going to take the entire value chain working together.
FCC’s report serves as both a warning and a roadmap—highlighting the risks of overdependence on a single market and the opportunities that lie in a more diversified, resilient trade strategy.
To hear Glenda-Lee's conversation with Craig Klemmer click on the link below.