FCC Releases its 2020 Trade Rankings Report
While many businesses have suffered during the pandemic, the agri-food sector has seen incredible growth. This growth continues Canada’s strength as a major exporter of both agricultural commodities and food.
FCC recently released its 2020 Trade Rankings Report , outlining export diversification potential for a number of products including, canola oil, prepared or preserved pork, potato products, prepared crab, and prepared or preserved beef.
According to the report, in 2019, Canada globally ranked 5th among commodity exporters and 12th in the food and beverage sector. Canada’s food exports in 2019 had increased by 27.9% since 2015, bringing in a total of C$29.0 billion, which represents 43.2% of total agriculture and food exports.
Canada certainly has competitive advantages in agriculture and food production with its bountiful natural resources, productivity, innovative entrepreneurs and exceptional food safety reputation.
Market Diversification Mitigates Risk
The FCC report places importance on trade diversification.
Canada's agri-food exports are increasing, contributing to the overall growth and health of the sector. The U.S. will remain Canada's largest export market and we cannot overestimate its importance; however, export diversification is essential to the long-term growth and protection against future trade challenges. Canada is well positioned as a world food leader to take advantage of current and emerging global opportunities.
EDC’s economics research team has confirmed that businesses that export to multiple markets, export more products or directly invest in more foreign markets are more profitable and better protected against risk than those less engaged in these activities. In addition, trade diversification benefits not only the companies involved, but it can also benefits Canada’s economic growth and create more jobs.
The COVID-19 pandemic has had a massive impact on the global economy and strained on supply chains, including those in the agri-food sector. Lockdown protocols and social distancing resulted in the closure of bars, restaurants and shops. All of this influenced consumer behaviours and spending patterns, resulting in a significant increase in grocery purchases.
Although there were short-term challenges faced by the agriculture sector, the long-term outlook is positive. With the world’s population continuing to grow and an increase in household incomes, the demand for food is on the rise, creating opportunities for Canada to increase exports.
Canada has an extensive trade network, giving Canadians access to over 50 foreign markets, and creating new opportunities for investment.
As we’ve seen with the current pandemic, borders can close in an instant, immediately affecting supply chains. Market diversification protects businesses against this risk, allowing them to continue exporting when a particular trading partner might become unavailable.
Trade diversification can also maximize the value of goods. The FCC Trade Report points to the beef and pork subsectors. For example, there are select European markets that prefer offal, cuts and byproducts that are not popular in North America. Choosing to export to these European markets not only maximizes the value of the meat product, but it also limits waste.
How EDC Can Help
FCC and EDC have mandates that are linked to the importance of diversifying and a commitment to helping exporters in the agriculture and agri-food sector. In response to the COVID-19 pandemic, EDC has an expanded mandate to help even more Canadian companies access the support they need to overcome financial challenges during these unprecedented times. Whether it’s through our insurance solutions or our export advisory services, we are here to help Canadian businesses navigate the path towards exporting internationally.