By Alice McFarlane

Strong Canadian agriculture and food exports in 2020

Oct 26, 2021 | 4:56 PM

MELFORT, Sask. – 2020 was a relatively good year for Canadian agriculture and food exporters, according to Farm Credit Canada’s (FCC) latest trade report.

FCC chief economist J.P. Gervais said what made the findings remarkable was that global agriculture exports decreased.

“Canada’s agriculture and food industry has shown resilience during these challenging times and has the potential to emerge from this pandemic even stronger, as our producers, agriculture manufacturers and food processors begin to recover from the disruption caused by the pandemic,” Gervais said.

The report shows Canada had the highest year-over-year increase for agriculture commodity exports at 13.8 per cent, while all agriculture exporting countries combined saw commodity exports decline by nine per cent, largely due to the impact of pandemic throughout most of 2020.

Canada provided 5.5 per cent of the world’s total commodity exports and is the world’s fifth-largest exporter. The United States continued as the world’s largest supplier of commodities, followed by Netherlands, China, and Brazil.

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Canada has gained ground in the export of processed food products but still has not cracked the top 10. Canada moved from 16th to the 11th place of food exporting countries. The United States has maintained its leading role since 2012, followed by Germany, Netherlands, France, Brazil, Italy, China, Belgium, Spain, and Indonesia.

Meat is the largest category of Canadian food exports, accounting for an average of 13.4 per cent of total food exports and one of the highest average annual growth rates across all sectors at 1.3 per cent between 2011 and 2020.

Beverages was the second-largest category, totaling 12.2 per cent of food exports over the same period at an average annual growth rate of 1.1 per cent.

Canada was able to grow its year-over-year share in global pork markets in 2020, thanks in part to a favourable exchange rate environment relative to our major competitors.

For agriculture commodities, Canada’s exporting success in 2020 came from oilseeds at 32.2 per cent of total Canadian ag exports, while cereals comprised 28 per cent. Of all cereals, wheat was Canada’s largest export, accounting for 80.9 per cent of total cereal exports last year. Canada is among the top three wheat exporters in the world over the last 10 years.

This year’s FCC trade report focuses on the extent to which a simple comparison of the loonie relative to the U.S. dollar is an accurate assessment of our global trade competitiveness.

Gervais said the Canadian dollar gained 1.4 per cent against the U.S. dollar since the start of 2021, which is the best performance among G10 currencies, helped by higher commodity prices.

“Currency values are an important determinant of Canada’s overall trade performance,” Gervais said. “But we can’t look at the value of the Canadian dollar in isolation since buyers look at the basket of exporters’ currencies in making import decisions.”

Gervais said beef and wheat Canadian exporters have seen a gain in the value of the loonie relative to other main exporting countries’ currency in the last two years, making Canadian exports less competitive.

Due to higher energy prices, the report projects the value of the Canadian dollar to stay slightly above its current value of $0.80 U.S. for the remainder of 2021 and early 2022.

Gervais said there are many factors that will determine Canada’s future export success, such as market access, economic health of key importers, weather disruptions or other challenges in global logistics or transportation. He said beyond currency values, world population growth, higher purchasing power in emerging markets and new trade agreements are also key factors in potentially creating more opportunities for Canada to increase exports.

“By tapping into our competitive advantages in natural resources, innovation and a stellar food safety reputation, Canada has an opportunity to fortify and strengthen its position as a major agriculture and food exporter,” he said.

There are still challenges on the road ahead, according to Gervais.

“The value of the Canadian dollar is always a big factor in determining our trade competitiveness and access to markets can sometimes be rocked by geopolitical tensions or supply chain disruptions, such as we’ve seen with the pandemic,” Gervais said.

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alice.mcfarlane@pattisonmedia.com

On Twitter: @farmnewsNOW