Growth lies with finished products, not commodities

Canada’s once huge trade surplus in farm and food products has fallen into almost a deficit position

Canada suffers from “a commodity mentality” and needs to export more processed foods, says the chair of the Canadian Agri-Food Policy Institute.

The country is also missing the boat in servicing the fast-growing economies in Asia, Latin America and eastern Europe, says Ted Bilyea, a former executive vice-president of Maple Leaf Foods.

“Currently, half of our trade is with our NAFTA partners,” Bilyea said at a recent trade conference. “And we are losing ground in both food manufacturing and primary agriculture processing.”

What was once a huge trade surplus in farm and food products has fallen “almost into a deficit position” and that’s worrisome news for farmers, he said.

“If our processing sector suffers, it will affect primary agriculture,” he said.

Bilyea called on government to support research to help food processors develop new products that would interest foreign consumers.

That view was echoed by another expert, who noted the emerging economies are forecast to grow at double the rate of developed countries.

“The challenge for Canada is whether it can tap into these markets, especially India and China, which accounted for half the world’s economic growth since 2006,” said Colin Carter, a Canadian-born agriculture economics professor from the University of California.

Canada exports $12.4 billion worth of farm and food products, good for sixth place in world rankings but behind much smaller New Zealand, he said.

“Canada has 4.4 per cent of the trade in processed products and 30 times the arable land of New Zealand,” he noted. “That means Canada doesn’t have a high share of the world trade considering its resources and being next door to the United States.”

Carter urged the dairy and poultry sectors to consider whether supply management is worth being shut out of export markets.

“The demand for poultry products has risen by 30 per cent and it’s like that with dairy as well,” he said. “It’s projected that three-quarters of the growth in meat buying will be for poultry. It will be far more than for beef or pork.”

Diversification of exports has been a priority for the pork sector over the last two decades, said the executive director of the Canadian Pork Council.

“We now sell 30 per cent of our output to the U.S. where it used to be 65 per cent,” said Martin Rice. “Two-thirds of our production is destined for export.”

However, the number of farms producing pigs has dropped to 7,330 last July compared to 62,600 in 1976.

One of the big handicaps for the industry is high tariffs on Canadian pork in South Korea and limited access to the European market, which might be corrected under the free trade agreement currently being negotiated, Rice said.

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