Canada’s agri-food trade profile continues to be in deficit. As the demand for specific items heats up around the globe, it’s apparent that a rethinking of our processing, value adding and export aggression is long overdue. Considering the low value of the Canadian currency, this is an opportune time to push our products onto the world stage.
Why is this important?
A nation dependent on the sale of commodities rather than consumer products is a nation of farmers mining for those that realize large margins by processing and further value adding. There is a huge difference between the price of a bushel of wheat and a loaf of bread or between the price of ground beef and a high-end burger offering at a bistro.
There are many fantastic global examples of value adding, and I often think of the Netherlands, which is one of the world’s largest exporters of roasted coffee. The nation doesn’t grow coffee but it imports the commodity and adds value. Canada does this with chocolate. Just as Brazil’s coffee is value added outside of the country, Canada’s commodities are often sent somewhere else for processing and value adding.
Canada is the world’s 11th-largest exporter of all goods, bringing the value per person to nearly $14,000. We are an agri-food trade-dependent nation yet the degree at which we add value to commodities across Canada varies by region. In Ontario and Quebec, more than 65 per cent of agricultural production is processed and sold as a value-added product, while the West struggles at 40 per cent or less. Quebec bakeries are using Quebec flour while Alberta wheat goes to China, Japan, Iran, South Korea and the U.S.
As for beef, having a market for live animals to the U.S. restricts the desire to value add in country. The safety valve of live exports may seem appropriate but any interruption in trade becomes absolutely devastating when added value is absent.
The food-processing industry, led by Ontario and Quebec, has a strong domestic presence when it comes to GDP. Food processing is the No. 1 manufacturing employer in Canada and the greatest manufacturing contributor to GDP. Getting there is one thing but staying there is another.
- More with Brenda Schoepp on the Alberta Farmer: Lessons to learn from Quebec’s agriculture and agri-food industry
The agri-food trade deficit is a big concern because it indicates that we import more food products than we export. Canada is one of the top 10 importers of food in the world. As a nation that has almost everything, we have to ask ourselves why we continue to lean on imports rather than value add to the export profile and eliminate that deficit (now estimated to be near $9 billion per year).
Small and medium enterprises provide 84 per cent of food manufacturing in Canada. Their challenge is to remain viable with a rather restrictive regulatory environment, restrained access to domestic product for processing, especially those that are supply managed, and to grow on to the global stage. When it comes to value adding, we need visionary leaders and a distinct point of differentiation. I have toured many food-processing and value-added facilities, and the one that remains clear in my mind was a gourmet cake bakery in Alberta. The pallets of ingredients for baking did not include one Canadian ingredient, because they either could not access it domestically or it was cheaper to import.
Other countries also struggle. Italy focuses on domestic consumption and is regionally divided when it comes to food. The country is failing on the global stage when it comes to exports and because of the regional protectionism and lack of production for global players, domestic food manufacturers are prone to suffer along with the economy. The exceptions lie in the companies such as Corsini that have adapted to their international customers’ needs, such as bigger biscotti for big cups of coffee and different recipes that clients can brand as their own. In a recent article, the Economist noted ready-made pasta dishes from Barilla changed the outlook for that company by meeting the needs of the consumer of the day, particularly in China.
Getting global exposure also means reaching out to those on the outside and taking the time to talk trade. In Canada, the age of trade liberalization sets the stage for these dialogues. Processing is a great economic generator for communities and rural communities often host these businesses. Ensuring they have visionary leadership, an ability to differentiate, and the supportive infrastructure they need in terms of transportation, regulation, access to domestic supply and domestic and foreign labour is fundamental to their success.
We have what it takes for a balanced trade profile. How we get there is up to us.