‘A wake-up call’: Report urges agri-food export diversification amid tariff threat

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This article was published 25/02/2025 (589 days ago), so information in it may no longer be current.

TORONTO – The Canadian agriculture industry needs to expand its international exports to hold its own against U.S. tariffs and global competitors, according to a new report from RBC.

Amid the looming tariff threat, the report says Canada’s agriculture and agri-food sector is vulnerable as more than 60 per cent of its exports go to the U.S.

It argues Canada has become too reliant on the U.S. for those exports, and over the years has become a dominant supplier for American grocery stores.

For instance, about 96 per cent of Canada’s canola oil went to the U.S. in 2024, while Canada also supplies the vast majority of potash for American farmers.

As a result of the growing relationship, Canada’s agri-food manufacturing sector quietly became the country’s largest source of manufacturing, the report said. Both countries have benefitted from their strong trading relationship.

But these advantages are now in jeopardy.

Tariffs on agriculture and agri-food products will make Canada a less desirable trading partner to the U.S. relative to other low-cost producers such as China and the Netherlands, the report said.

“Food and beverage manufacturing may also struggle to maintain investment levels, as one of its biggest selling features has been its preferential access to the world’s largest market.”

On the global stage, Canada is falling behind, with rivals like Brazil and Australia gaining market share in key markets, the report said. That means there are opportunities for diversification.

The report argues that Canada should start by taking advantage of its existing free-trade agreements, which provide access to more than two-thirds of the global economy. The next step is taking advantage of new growth markets, including in Southeast and South Asia.

India is another clear opportunity, the report said, in particular for plant-based proteins, where Canada can excel with its production of peas, lentils and soybeans.

But with the right measures, the report says Canada can increase its global share of agri-food exports, adding $44 billion in export value for the sector by 2035.

“To regain market share, Canada needs to focus on innovation, investment, export-oriented infrastructure, digital infrastructure, and overseas agri-food promotion,” the report said.

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The report recommends that Canada invest in innovation in the agri-food sector, as well as fix internet and cellphone access in rural areas so farmers are able to adopt the latest generation of technology.

It also recommends investing in Canada’s export infrastructure to improve turnaround times at ports, as well as marketing Canadian products more effectively on the world stage.

The report envisions Canada making big strides in growing key industries such as the greenhouse sector, aquaculture and beef.

“Moving from short-term reactionary tactics to strategic growth, Canada can use the U.S. tariff threats as a wake-up call to leverage agriculture and agri-food as a driving force for trade diversification while building Canadian self-sufficiency.”

This report by The Canadian Press was first published Feb. 25, 2025.