Re-writing the Future of Canada’s Share of Global Trade: Part 2

The success of Canadian agriculture and agri-food depends on trade. And successful trade depends on developing a mix of different trade relationships (both local and global) and a deep understanding of diverse global markets. This was one focus of discussion at the recent Conference Board of Canada’s Food and Drink Summit 2015.

RELATED: Re-writing the future of Canada’s share of global trade: Part 1

Can Canada keep up with a global demand that is growing – and changing?

Global trends show that, throughout the world, household consumption is growing. This results in growing agricultural production in emerging markets with traditionally weak demand for inputs such as potash. We expect input exports from Canada will also grow.

Similarly, the big markets for staple foods are emerging market economies (like China and India), but Canada will find it a challenge to sustain these exports given the changing (i.e., increasing) food production in those same markets.

What did the experts say?

Murad Al-Katib of Saskatchewan’s Alliance Grain Traders noted the largest new market for Canadian peas is China’s vermicelli production. New markets are developing all the time, with needs for imports that haven’t existed before. At the same time, the competitive landscape is also changing. The prominence of China and other emerging markets as producers of agriculture commodities and food products is only expected to grow.

Al-Katib argues innovation is the key to Canadian success, because in the global race to supply and consume protein, Canada simply can’t compete on cost. Danielle Goldfarb of the Conference Board of Canada echoed the need for new and innovative systems, products and processes. She cautioned that producers have enjoyed rapid growth rates in Pan Asian demand for Canada’s commodities over the last 20 years, but that growth will slow going forward. Providing a unique product to match a market’s unique needs will help keep Canadian exports top-of-mind.

The upshot? Carefully pick your markets and focus export offerings. Understand where Asian needs will exist as wallets expand. Goldfarb urges Canadian businesses to identify niche markets, develop expertise in small areas, deepen networks and strengthen relationships.

Ted Bilyea of Canadian Agri-food Policy Institute (CAPI) suggested that Japan, a lucrative market similar to the U.S. – and one of Canada’s top three markets for a number of commodities – is likely to change the nature of its demands as it liberalizes its trade borders. To remain competitive in Japan, Canada will need to substantially increase current commodity exports, or add value to exports.

Canadian innovation is the key

The world is changing, and so is the Canadian response to new demand. The share of Saskatchewan farm receipts recently showed specialty crops have overtaken cereals. Canola and pulse crops, with their renowned sustainable environmental footprint, stand as testament to Canadian innovation.

Continuing that tradition will ensure we’re a big player in an expanding game.

Martha Roberts, Economic Research Specialist

For more on Canada’s competitive position in global trade, read our latest report FCC Ag Economics: A 2015 Look at Global Trade, released on Monday, November 16.