Importance of Agri-Food to Canada-Asia Trade
Updated: Jan 20, 2022
A recent trip to my local grocery store here in Ho Chi Minh City revealed a surprise - real Canadian Maple syrup. Branded with a red Canadian maple, the syrup quickly made its way into my basket and onto the Christmas morning breakfast table.
For those of us living overseas often the most tangible connection back to Canada is through the Canadian food products that we can find such as Canola, Maple Syrup, Lobster, and Beef or food brands such as Tim Hortons or Dan D Pak. And these agricultural and agri-food products play a key role in both Canada's overseas exports and its international reputation in Asia.
With more than 70% of Canada’s international trade being with the United States, it is natural that the energy and automobile industry that dominate public policy makers and the media’s attention due the overall value of these exports but when one looks at Canada’s exports to Asia a different picture emerges.
It is agri-food products that dominate.
Importance of Canadian Agricultural Products
According to the Canada Agri-Food Trade Alliance, Canada is the fifth largest exporter of agricultural and agri-food products in the world after the EU, U.S., Brazil, and China. Canadian agri-food exports total $56 billion per year. Overall, agriculture and agri-food products account for 11% of Canada’s goods GDP and almost 10% of Canada’s total merchandise trade.
From an employment point of view, about 1 in 8 jobs in Canada are connected to the Canadian agriculture and agri-food industry which employs 2.3 million people. The food processing sector alone supports over 250,000 jobs across the country making it the largest manufacturing sector in Canada.
Canada’s abundance of agricultural products, its reputation of food quality and safety, and advanced trade infrastructure (such as ports, rails, trade agreements to Trade Commissioners dedicated to Agri-Food promotions around the world) means that Canada is well placed to continue to export its agri-food products to existing and new markets. Over the last 10 years global exports of Canadian agriculture and agri-food products have grown by 103%.
Looking at the most recent trade data between Canada and Asia, it is agricultural products such as Cereals, Meats, Seeds and Fruits, and Fertilizers are all found in the top ten largest exports to each Asian country and often they are the highest value export from Canada to a specific nation.
Opportunities for Canada Agri-Food Exports
The incredible part of Canadian agri-food exports to Asia is not how much they have grown over the last ten years but how much these exports will grow over the next 30 years as demand in Asia for agricultural products will continues to grow.
There are numerous factors that will drive demand for Canadian agricultural products in Asia over, but I want to highlight five of them:
1. Growing population – Asia population is projected to grow from 4.6 billion people today to almost 5.3 billion people in 2050. This growing population will need more food leading to increased demand for Canadian agri-food products.
2. Loss of Arable Land - Due to increased urbanization, deforestation and climate change the amount of arable land in Asia is decreasing at the very time that local demand is increasing. This means that Asian countries are less able to support their own populations internally and are forced to import additional agri-food products.
3. Increase in wages - As people in Asia are earning higher salaries, we are seeing changes in their purchases especially for food products. Whether it is people wanting to eat more beef or seafood or more wheat-based products such as bread, changing food consumption patterns can benefit Canadian producers.
4. Food Safety - Canadian food products have an excellent reputation for food safety which local consumers are increasingly seeking out to make sure their families and themselves are getting healthy and safe products.
5. Complementary Products - With a huge portion of Asia employment still focused on traditional agricultural products, there is still a strong urge for leaders in the region to protect these traditional industries. Canada agri-food exports are complimentary to the existing food production in Asia thus limiting competition with local producers. This means that Canadian exports are less likely to be caught up in politically motivated trade disputes as countries look to protect their own farmers, fishers, and local support industries.
With a huge demand for Canadian agri-food products in Asia, what are the challenges that we face in taking advantage of this opportunity?
The first challenge is competition. Countries such as Australia, the United States, France, and the Netherlands are all eager to fill the required demand with their own products and are using their various advantages such as proximity, branding or requiring countries to purchase a set number of agricultural products to drive their own exports.
Canada’s distance to Asia means that our trade infrastructure must continue to improve so we can deliver our exports quickly and safely. The recent flooding in BC which forced the shutting down of roads and railroads had an impact on Canadian agri-food exports. This impact of this shutdown was felt in Japan where McDonalds faced a French fry shortage due to the lack of supply through the Vancouver port. Canada needs to continue its ongoing investment in our trade infrastructure to Asia if it wants to continue to export to the region.
A final challenge to agri-food exports is the lack of attention it receives by senior policy makers and elected officials. When listening to officials talk about Canadian foreign policy and trade, the focus is inevitably on automobiles, energy, technology, and green products but not as often agri-food. This means that there is a fundamental disconnect between what Canadian officials want to export to Asia and what is in demand in the region. This disconnect can lead to missed opportunities.
As a world leader in agri-food exports, existing trading relationships in Asia, and with a formidable reputation for food safety, Canada is well positioned to take advantage of Asia increasing demand for agricultural and agri-food products. Canadian leaders need support Canada’s agri-food brand by highlighting the quality, safety, reliability, and affordability of Canadian food products in the Asia region, to continue to invest in Canada’s trade infrastructure, and prioritize Canadian agricultural exports.