Pandemic disrupted exports to European and Pacific trading partners.
Ottawa-Figuring out a strategy for Canadian agrifood exports is no simple task, a Farm Credit Canada analysis of trade patterns in recent years shows.
While diversifying away from the U.S., our biggest customer, is a good risk management move, it’s been a steady customer for Canadian farm and products since 2013 and shipments have risen during the last three years, FCC says.
The U.S. was Canada’s largest and most important agrifood export market during the last decade. The average annual growth in exports was 2.7 per cent in 2018 and 2019 and 14.5 per cent in 2021 and 2022.
The European and Pacific trade agreements have been a rollercoaster ride for agrifood exporters during the last few years. Trade with Pacific countries other than China peaked in 2017 and then fell off in 2018 as the trade deal came into effect, FCC said. Sales improved somewhat going into 2020 then fell off in 2021 and 2022. It is not clear yet how 2023 will turn out.
Agrifood trade with Europe was healthy in 2017 then plummeted in 2018 as that trade deal was implemented. It improved somewhat in 2020 followed by a big drop in 2021 and some improvement last year.
As for China, there was a big drop in sales in 2019 with ups and down ever since.
The same pattern can be seen in trade with the U.K., which currently will not accept Canadian beef or pork shipments.
FCC says exports to major trading blocks were disrupted by the Covid-19 pandemic. Non U.S. markets show “a great deal more volatility in their imports of Canadian goods both before the agreements came into effect and after. We have yet to determine if that’s a feature of 2023 markets or when it may end.”
Canada’s support for the U.K. joining the Pacific trade deal has created a political storm because of its treatment of Canadian products. The Pacific deal also includes Australia, Brunei, Chile, Japan, Malaysia, Mexico, Peru, New Zealand, Singapore, and Vietnam. Japan, Mexico and Vietnam are the largest markets for Canadian food products.
Of the 27 individual countries signed to the European trade deal, 17 have ratified the agreement. However, that has not made much difference to the pace of growth of exports to Europe. The countries that have not ratified the deal have posted higher average increases in imports of Canadian products than the ratified counties.
The Russia-Ukraine war caused upheaval in commodity markets and supply chains and has helped to realign trade partners along emerging or strengthened geopolitical lines.
Exports to China between 2013 and 2018 climbed at an average annual gain of 17.1 per cent. In 2018, diplomatic tensions led to a Chinese boycott of some of Canada’s exports, a trend that was then reversed in 2019 only to be cut short by the pandemic.
The U.K. also shows volatility in the average annual gain and the same dampening effect of the pandemic. The growth in imports of Canadian agricultural commodities and food products continues to be positive.