Reports highlight strengths, weaknesses of Canadian ag exports

Commodity News Service Canada – There is room for improvement in the Canadian agricultural export market with competition from new markets globally, according to a pair of reports released by Farm Credit Canada.

The FCC Ag Economics, Trade Ranking Report: Agriculture and FCC Ag Economics, Trade Ranking Report: Manufactured Food give overviews of Canada’s global agricultural trade in 2016.

“(The reports are) really just saying, ‘Hey, this is where we are now and if we’re going to grow this is perhaps the most likely candidates (for growth),’ ” said J.P. Gervais, chief agricultural economist for FCC.

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Canada ranks as the world’s fifth-largest exporter of agricultural commodities, according to FCC. Canada exported US$24.6 billion worth of agricultural commodities in 2016, which accounted for 5.3 per cent of the world’s total agricultural commodity exports.

While Canada is sitting well overall, other nations are increasing their productivity which has boosted their exports. Canada fell from third place over the last few years as places as Brazil and China increased their productivity.

“If you look at the last 30 years or so our rate of growth and productivity is still positive. We’re being more and more productive every year but at a slower, or declining, rate,” Gervais said.

For exports of manufactured food products Canada sits at 11th globally, according to FCC. In 2016, Canadian businesses exported US$19.1 billion worth of manufactured food products, accounting for 3.2 per cent of the world’s total food exports.

Both reports highlighted canola as an important export for Canada. Canola oil was listed as one of Canada’s highest valued manufactured exports, while canola seed was one of Canada’s highest valued trade export products.

Canola oil was Canada’s second-highest-valued export in 2016, at US$2.3 billion, representing 37.1 per cent of the global canola oil market. As well Canada ranked in the top three globally for canola seed exports, exporting US$4.3 billion in 2016.

“No questions asked we’re competitive, we have competition there for sure. You have to look at canola as part of the entire oil seed complex but we’re competitive,” Gervais said.

Canola is a major crop in Canada with the country having produced 19.6 million tonnes of canola in 2016, according to Statistics Canada.

As well the trade report highlighted the growing interest in soybeans in Canada. Canada ranked fourth for soybean exports globally.

“You’re seeing soybeans more and more in the Prairies and that’s just a result of the technology and growing practices,” Gervais said.

Soybeans were Canada’s fifth highest-valued agricultural commodity export at US$1.9 billion. Canada produced 6.6 million tonnes of soybeans in 2016, according to Statistics Canada.

Despite its growing importance, Canadian soybean exports only represented 3.7 per cent of the total global market in 2016. This compares to global soybean exports which sit at 64 per cent of the total oilseeds trade at US$51.5 billion.

Manufactured food exports for Canada are at a disadvantage however, according to FCC. Canada doesn’t produce or export five of the top valued global exports  palm oil, cheese and curds, sweetened milk and cream, cane or beet sugar, and poultry.

According to Gervais though, Canada does have a large impact globally for manufactured foods with animal proteins.

“I think we were able to grow based on the demand for protein that continues to grow. 2016 was an amazing year for pork,” Gervais said.

Canada’s top grossing exports for animal protein included bovine meat at US$1.2 billion, pork at US$2.4 billion and edible offal at $380 million. Beef offal was listed as one of Canada’s highest-valued exports.

“Offal is one of the areas that have seen the most growth. Which is kind of interesting as well, because from a profitability standpoint it does help as well to see those tier products sort of grow,” Gervais said.

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Ashley Robinson - MarketsFarm

Ashley Robinson writes for MarketsFarm specializing in grain and commodity market reporting.

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