Canada still has room to expand and diversify beyond its largest traditional markets for its top four agriculture exports, according to Farm Credit Canada’s (FCC) trade report released on November 26, 2019. Examining wheat, canola, soy and pulses, the report identifies growing protectionism, distance and price sensitivity as hurdles Canadian exporters must overcome to diversify markets. These trends are familiar to those exporting horticultural commodities.
"Canada has done extremely well in establishing strong trade relations in a number of key markets thanks to a long-held focus on getting trade agreements in place,” said J.P. Gervais, FCC's chief agricultural economist.
“While we believe there is still room for growth in diversifying our agriculture export markets, it won’t be easy," he said. "The long-term success of Canadian agriculture relies on our ability to provide a greater diversity in commodities and food products for new and existing export markets.”
In 2018, Canada was the world’s fifth largest exporter of agriculture commodities, worth almost $34 billion, behind the United States, Brazil, the Netherlands and China. That same year, the United States accounted for just over 35.6 per cent of Canada’s total agriculture exports, while China – the world’s most populous country – accounted for 22.9 per cent.
The report indicates Canada’s diversification of its export markets can help reduce financial risks for Canadian producers by lessening dependency on dominant importers. When borders close for any number of reasons – due to trade tensions or shock caused by disease or weather – having a broader range of export markets allows Canadian exports to be re-allocated, rather than simply reduced.
Canada faces obstacles in diversifying its export markets. It’s often less costly for importers to source products from established suppliers; and China’s growing dominance as an agriculture importer serves to concentrate, not diversify, trade flows.
“Many of these challenges are beyond Canada’s control. But our reputation as a reliable producer of safe, high-quality commodities, combined with growing world demand and our competitive advantage on so many key exports, reduce some of the challenges facing Canadian agriculture,” Gervais said.
Source: Farm Credit Canada November 26, 2019 news release