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2021 Trade Report: Using currency movements to monitor agriculture and food performance

Oct 26, 2021
11.5 min read


The Canadian dollar has gained 1.4% against the USD since the start of the year, the best performance among G10 currencies, helped by higher commodity prices. That usually bodes poorly for Canadian exports as currency values are an important determinant of Canada’s overall trade performance. It’s not the only determinant: geopolitical tensions, importers’ economic robustness, weather disruptions or other major disruptors to either supply or demand (e.g., China’s hog herd rebuilding) are also key. But given the major role they play, exchange rates should be measured as accurately as possible.

A simple look at the USD/CAD rate is often used as an indicator of Canadian competitiveness because, in part, most total Canadian exports, including several agriculture commodities and most food products, go to the U.S. But that fails to capture the influence of competing exporters’ currencies on importers’ decisions. We propose an effective exchange rate (EER) to assess the CAD relative to a basket of currencies from other large exporters to improve how we evaluate currency movements on our ag and food trade performance.

Agriculture’s trade landscape in 2020

COVID-19 produced a contraction in global ag exports1 in 2020, shrinking it 9%2 year-over-year (YoY). All HS codes shrunk except one, but the hardest hit were fish and crustaceans, which fell 25% and fruit and nuts, by 15.1%. The exception was oilseeds which grew 7.1% YoY. That was partly driven by growth in global canola exports, but primarily from an 11.4% gain in global soybean exports, which are roughly six times bigger than canola exports.

The pandemic tended to exacerbate the decline in the growth rate of global exports seen in 2019 for most commodities. That, and the decline in the 2015 overall trade values, have meant that 10-year annual average growth (AAG) trends for live animals, fish, live plants, and cereals are negligible. The category of vegetables has seen 1.5% AAG, fruits and nuts, 2.6%, and oilseeds, 2.7% since 2011.

It was, overall, a good year for Canadian ag exporters. We gained the most of all major exporters, with 13.9% YoY growth in total exports. China was the only country in the top five with a YoY shortfall. The U.S. continued as the world’s largest supplier of ag commodities, followed by the Netherlands, China and Brazil, each of whom has traded the second to fourth positions with each other over the last 10 years. With 5.5% of total agricultural exports in 2020, Canada was the world’s fifth-largest ag exporter, a position held since 2012. Since 2011, Brazil has made the most ground, growing their average annual ag exports 7%. Canada, with 2.3% AAG, outpaced both the Netherlands and the U.S.

As usual, our exporting success in 2020 came from cereals (28.0% of total Canadian ag exports) and oilseeds (32.2% of total Canadian ag exports). Of all cereals, wheat is our largest export. Over the last 10 years, Canada has maintained its top-tier positioning in wheat markets, moving among first, second and third positions. However, the big story in wheat has been the rise of the Black Sea region (Bulgaria, Georgia, Romania, Russia, Turkey, and Ukraine). In 2011, they accounted for 12.1% of total global wheat exports - in 2019, that grew to 30.5%.

1 Includes HS01 (Live animals), HS03 (Fish and crustaceans), HS06 (Live plants), HS07 (Edible vegetables), HS08 (Fruit and nuts), HS10 (Cereals), HS12 (Oilseeds)

2 Data used from UNComtrade extracted on 10/09/21.

Food’s trade landscape in 2020

Compared to ag’s overall contraction of 9%, total food exports3 weren’t as badly hit by COVID slowdowns, declining 3.7%. Nonetheless, growth in total food exports over the last 10 years has been sluggish, rising at less than 1% AAG. Meat is the largest category in food exports, accounting for 13.4% on average of total food exports between 2011 and 2020. It had 1.3% AAG, one of the highest growth rates across all sectors. Beverages, the second-largest category totalling 12.2%, recorded 1.1% AAG over the last 10 years.

Canadian meat exporters helped spur the growth of the meat sector. Together, pork and beef have comprised, on average, 36.4% of total global meat exports since 2011. In 2020, Canada was the world’s eighth-largest beef exporter, with 4.6% of total exports. Our ranking in beef markets has improved since 2011 with an impressive 7.8% AAG for fresh beef exports (and 8.3% AAG for the much smaller category of frozen beef exports).

A different pattern emerges for Canadian performance in pork markets. Canada was the fourth-largest exporter of pork in 2020 with 8.7% of total pork exports, having moved up from the fifth largest since 2011. But we’re growing our exports at the same rate as our competitors, and our market share hasn’t increased.

As of 2020, Canada has not yet cracked the Top 10 exporters of food products. But as the world’s eleventh-largest exporter, we’ve gained ground since 2011 when we were in 16th place. The U.S. has maintained its leading role since 2012, followed by Germany, the Netherlands, and France. Rounding out the Top 10 are Brazil, Italy, China, Belgium, Spain, and Indonesia.

3 Includes HS02 (Meat), HS04 (Dairy), HS09 (Coffee), HS11 (Products of milling), HS15 (Fats and oils), HS16 (Preparations of meat and fish), HS17 (Sugar and confectionery), HS18 (Cocoa), HS19 (Preparations of cereals, flours), HS20 (Preparations of vegetables, fruits, nuts), HS21 (Miscellaneous edible preparations), HS22 (Beverages), HS23 (Animal feed, residues, and waste), HS35 (Albuminoidal substances; modified starches; glues; enzymes)


The 2021 FCC Trade Report describes an effective exchange rate (EER) index for wheat, canola, beef and pork. Using average annual export (AAE) values from 2017 – 2019, we calculated market shares of Canada and competitors with at least 5% average market share for each commodity (Table 1). The four CAD indices are based on the currency values of each exporter relative to the CAD and weighted by each exporter’s market share.

The EER index is normalized at 100 as of January 2018. An EER value trending up indicates weaker Canadian competitiveness in global markets due to unfavourable movements in the loonie’s value against major competitors (and vice versa).

Table 1: Market share of selected exports: 2017-2019 average, 2020

Chart showing market share of selected exports: 2017-2019 average, 2020.

Source: UNComtrade.

The bottom line

The importance of Canada’s trade with the U.S. can barely be overstated, and the CAD-USD is a key driver of our global competitiveness. But it’s not the only driver. We’ve illustrated this by analyzing commodities important to Canadian trade performance, each of which has a different relevant basket of currencies.

The Canadian Effective Exchange Rate (CEER) index offers precise measurement, using 17 foreign currencies from countries accounting for at least 0.5% of our non-oil exports and imports. Capturing the influence of currencies from our largest ag and food importers would further extend this report’s EER analysis.

Looking ahead to 2022, we expect higher energy prices to support the Canadian dollar and keep it slightly above its current value of US$0.80 for the rest of 2021. If recent energy futures prices observed in Europe translate into significantly higher inflation rates across the European continent, the Canadian dollar should stay above €0.69 for the rest of the year and into 2022.

Martha Roberts

Economics Editor

Martha joined the Economics team in 2013, focusing on research insights about risk and success factors for agricultural producers and agri-businesses. She has 25 years’ experience conducting and communicating quantitative and qualitative research results to industry experts. Martha holds a Master of Sociology degree from Queen’s University in Kingston, Ontario and a Master of Fine Arts degree in non-fiction writing from the University of King’s College.