Canada’s processed food trade balance worsening

Ottawa, Ont. – A report by the Canadian Agri-Food Policy Institute (CAPI) says that Canada’s trade balance in processed food is deteriorating, having reached a deficit of $6.3 billion in 2011.

The State of Canada’s Processed Food Sector: Trade Balance, which does not focus on primary processing, notes that Canada has recorded trade deficits in value-added processed food and beverages. But since 2004 the deficit has gone from less than $1 billion to $6.3 billion, as exports of processed foods have stalled and imports continue to grow.

“Undoubtedly, there are companies that are growing and investing, but we need to better understand the implications of sustained and deepening trade deficits for the future competitiveness of the processed food sector and the agri-food sector as a whole,” says David McInnes, president and CEO of CAPI, an independent policy forum dedicated to the success of Canada’s agriculture and agri-food sector.

For example, Canada’s processed food trade with the U.S. and Mexico has moved from a surplus of $2.2 billion in 2004 to a deficit of $1.3 billion in 2011. For all other countries, the trade balance has deteriorated from negative $3.2 billion to negative $5 billion during the same time period.

Conversely, exports of primary processed agricultural products such as commodities continue to show a positive trade balance.

CAPI says that more work is needed to understand the causes of the change in trade performance. Some contributing factors acknowledged in the report that it says require further investigation include:

• The fact that the Canada-U.S. exchange rate pattern somewhat mirrors the timing of changes in the processed food trade balance;
• The importance of foreign market access; and
• That more analysis is required to better understand investment trends and regulatory impacts.