You’re hearing it here first. No one outside agriculture seems to know about it (at least, none of the journalists who write front-page stories or who lead off on CBC broadcasts).
Canada’s ag exports through the past year and a half have been blistering. New statistics from the red-hot 2007-08 trading year show exports shot up 21.1 per cent over year earlier.
“The largest single increase we’ve ever seen,” says an impressed Paul Murphy, executive director for global analysis and institutions for Agriculture and Agri-Food Canada.
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When all the sales were tallied, export shipments of primary, secondary and processed food products hit $42.8 billion.
And the good news just keeps rolling. On top of all the records for a score of commodities, Canada’s overall food and ag trade balance racked up a $12.9 billion trade surplus in the sector — the highest ever recorded.
Plus, while most Canadian ag and food shipments still jump straight south into the U. S., the European Union, Japan and Mexico are also growing in value as buyers of premium-priced products. And, adds Murphy, “China, India, South Korea, the Middle East and North Africa are all emerging markets as income levels increase and consumption patterns change.”
The Exporters Weigh In Canola
It’s a good time to be in the canola business. Domestic crush is at capacity, exports are running at an all-time high, and more crushing plants are going up as trade barriers fall.
In fact, the times are so good, it’s hard to find anything looming on the horizon to temper today’s optimism. There just isn’t much bad news around.
If you look hard, though, Canada’s reliance on the U. S. may be ominous.
“It’s been a good year,” Dave Hickling admits. “Both sale prices and sale volumes for canola oil, seed and meal hit records for 2008,” says the Canola Council of Canada’s vice-president of canola utilization. “2009 volumes are trending even higher than last year, albeit with lower prices per unit.”
At 12.6 million tonnes, canola production wasn’t just a record in 2008. It was a two-million tonne leapfrog over the previous year, and five million tonnes above the five-year average, with farm receipts approaching $5 billion.
That’s a whole lot of canola, and the world can’t seem to get enough.
“We’re at capacity with crush,” Hickling says. An extra 2.2 million tonnes of capacity is expected online by this summer, but even if those plants run flat out, Hickling is sure all the oil and meal will find buyers.
While optimistic, Hickling notes there are some challenges and risks to the canola market. “It really is amazing just how dependent on the U. S. we are for the oil and meal segment of our market,” Hickling says. The U. S. is still our biggest oil importer, followed by the EU. As for meal, again we depend on the U. S. to use up 75 per cent of the crushing byproduct.
“California alone imports 2.5 million tonnes of meal for its dairy industry,” Hickling says. “It’s expected that the meal from the extra crush capacity would also head to California.” This dependency on one market, however large, can add risk.
Hickling is also worried by trade barriers and by canola’s stiff competitors. China is a significant importer of canola seed (they have their own crush plants), but Canadian canola faces a nine per cent tariff upon entry. U. S. soybeans face only a three per cent tariff, something that’s worked into the selling price. “The tariff can equate to a $25 to $30 per tonne difference and given the amount of seed that China imports, that tariff affects world prices,” Hickling says. “We’re working hard to get rid of this trade differential. The government of Canada is on side and has been working with us, but the Chinese government is incredibly resistant.”
There are bright spots on the world trade stage too with the European Union extending its GM approval, meaning seed can now be shipped into the EU, says Hickling. “If destined for the food market, it will still have to be labeled as containing GM, but most of what we ship there is for biodiesel, so it’s less of an issue.”
The exporters weigh in Beef
Has the corner been turned? It’s been a tough road for the beef industry since the March 2003 announcement that BSE had been found in Canada. The 2002 trade year had set record sales. The following years were dismal, with closed borders and worthless cull animals.
But 2008 feels like that turning point, says Ted Haney, president of the Canadian Beef Export Federation. “Our export numbers are up for 2008, at approximately 393,000 tonnes.”
No, the volume isn’t anywhere close to the 521,000 tonnes of 2002. But it is an eight per cent increase over 2007, and it looks to Haney like momentum.
“Our currency now favours exports, we’ve made significant headway in non-traditional markets, such as Mexico, and our premium Asia markets seem to be holding steady,” Haney says.
Haney admits a major hurdle is Canada’s dependency on the U. S. to anchor its sales. The push for the past several years has been to tip the balance of exports to other markets, with a goal that by 2010, only half of our beef exports will go to the U. S., compared to 70 per cent last year.
Without question the U. S. is a volume market, but it’s not necessarily high value. For the real value per kilo, you have to look east. “Canadian beef sells for an average of $5.80 per kg in Japan, $4.15 per kg in Hong Kong and $3.81 per kg in Mexico,” Haney says.
“The product mix to Asia and Mexico is not what people might expect. We’ve come a long way from the mentality of ‘shipping what we wouldn’t eat at home’,” he says. Prime cuts from the shoulder, hip and rib, as well as the sirloin and tenderloin are finding their way into premium, but small, markets.
The BSE fight isn’t over, however. Haney figures the Canadian industry could be earning an extra $85 per head if fair access was granted and age-of-cow restrictions and limits on certain cuts were taken down.
“We still can’t access the over-30-months market in Mexico, which would add another 20 to 25 per cent more sales,” Haney says. “Korea and mainland China are closed to us. We can’t ship anything over 21 months of age to Japan — an age-verification logistical nightmare.”
There have been small victories, and Ottawa is working on more. To show why that thrust must continue, Haney points to Hong Kong, which imported $9 million worth of beef in 2000. Then, when preferred access was granted in 2005 and Canadian beef could be advertized in meat cases, sales surged to $60 million in ’06, and $74 million in ’07.
“We’re very happy with the outcome,” Haney says. “But what it shows us is what we’re missing out on in markets we still can’t access.”
The exporters weigh in PULSES
If any industry in Canadian agriculture can say it’s an export industry, this has got to be it. As a country, we hardly eat the stuff. In fact, domestic consumption is so low, the industry barely existed here just two decades ago. Yet today, we’re a key pulse supplier to countries where chickpeas, lentils and peas are staples.
Ironically, perhaps, this is also an export industry that is doing its best to build domestic sales.
“We ship pulses to 150 countries around the world,” says Jackie Tenuta, director of market development for Pulse Canada.
In some ways, that diversification is shrewd market strategy, freeing the Canadian industry from being at the mercy of individual markets. On the downside, though, pulses are typically sold simply as whole or split, so there’s a worrying inability to differentiate Canada’s crops in some highly competitive markets.
While sale values were up last year, volumes have suffered, and pulses have been facing a declining per capita consumption in some traditional markets. There’s another problem too.
“Seventy-five per cent of the world’s food value is in processed foods,” Tenuta says, “but pulses are usually eaten whole.”
So while exports are the bread and butter of the pulse industry, Tenuta and Pulse Canada have moved the focus somewhat from shipping overseas to developing markets at home.
It’s a tough sell. Canadians and Americans aren’t about to start soaking beans overnight to stew up a nice lentil dal for dinner. “Changing how we eat is a huge task,” Tenuta says. So she says Pulse Canada has diversified its domestic strategy. “We’re working to incorporate pulse products, such as protein, into as many existing products as possible.”
That initiative is getting a push from health labs as more and more health and nutritional benefits of incorporating pulses into our North American diets are being found all the time. The recent Pulse Innovation Project looked at the benefits of incorporating even a small amount of pulses into our daily intake, and found positive effects on insulin levels and reduced cholesterol.
Convincing Canadian to eat what grows in their own back yard is still a challenge.
“We need to incorporate pea flour into things people already eat, for example, or we need to produce semi-processed pulse-containing foods that people could prepare at home,” Tenuta says. “We’d like to see pulse products in everything from muffins and cookies to beverages.”
The exporters weigh in QUEBEC
If ever you needed proof there is strength in numbers, Quebec’s 400-member agrifood export association may be it.
“Twenty years ago a group of business people got together to start an export network,” says Andre Coutu, CEO of Groupe Export. “We’re now the largest food exporter association in the world.”
Of its 400 members, 350 are food manufacturers, from the very small to the very large, Coutu explains. “Our members are value-added companies only; there are no commodities being sold through our group.”
The added value isn’t always an overly processed final product, however. The group’s number one export is antibiotic-free, specialty pork cuts.
The group’s third leading export is something that doesn’t even grow in Quebec — chocolate. “Cocoa beans are brought in and turned into much higher-value chocolate that is shipped all over the world,” Coutu says.
Groupe Export plays multiple roles. “We participate in 20 to 25 international trade missions a year, and we usually take up 50 per cent of the Canadian pavillion at international food shows,” Coutu says. “We’re the face of Quebec food exporters.”
The group also provides labelling services, and has nutritionists on staff to help. The group acts as an information source on issues ranging from labelling requirements to shipping and export rules. “We’ll also provide information on market evaluations,” Coutu says.
Coutu has a positive outlook for the year ahead, regardless of the economy. “Up until December it was business as usual for us,” he says. But he admits that, beginning this past January, there have been a few hiccups in the export business. “Sales are still good, and our members are getting paid, although some of our U. S. customers are struggling with credit terms. We used to collect in 30 days, now it can be 90, 100 or 110 days. So there is some change,” Coutu says
“The food business may have less glamour than say Bombardier or other big companies, but in Quebec our group contributes to 400,000 direct jobs due to food manufacturing,” Coutu says. Quebec alone exports $5 billion in food products a year, Coutu says. “It’s like a blue chip stock — no matter what, people have to eat.” CG
The exporters weigh in PULSES
If any industry in Canadian agriculture can say it’s an export industry, this has got to be it. As a country, we hardly eat the stuff. In fact, domestic consumption is so low, the industry barely existed here just two decades ago. Yet today, we’re a key pulse supplier to countries where chickpeas, lentils and peas are staples.
Ironically, perhaps, this is also an export industry that is doing its best to build domestic sales.
“We ship pulses to 150 countries around the world,” says Jackie Tenuta, director of market development for Pulse Canada.
In some ways, that diversification is shrewd market strategy, freeing the Canadian industry from being at the mercy of individual markets. On the downside, though, pulses are typically sold simply as whole or split, so there’s a worrying inability to differentiate Canada’s crops in some highly competitive markets.
While sale values were up last year, volumes have suffered, and pulses have been facing a declining per capita consumption in some traditional markets. There’s another problem too.
“Seventy-five per cent of the world’s food value is in processed foods,” Tenuta says, “but pulses are usually eaten whole.”
So while exports are the bread and butter of the pulse industry, Tenuta and Pulse Canada have moved the focus somewhat from shipping overseas to developing markets at home.
It’s a tough sell. Canadians and Americans aren’t about to start soaking beans overnight to stew up a nice lentil dal for dinner. “Changing how we eat is a huge task,” Tenuta says. So she says Pulse Canada has diversified its domestic strategy. “We’re working to incorporate pulse products, such as protein, into as many existing products as possible.”
That initiative is getting a push from health labs as more and more health and nutritional benefits of incorporating pulses into our North American diets are being found all the time. The recent Pulse Innovation Project looked at the benefits of incorporating even a small amount of pulses into our daily intake, and found positive effects on insulin levels and reduced cholesterol.
Convincing Canadian to eat what grows in their own back yard is still a challenge.
“We need to incorporate pea flour into things people already eat, for example, or we need to produce semi-processed pulse-containing foods that people could prepare at home,” Tenuta says. “We’d like to see pulse products in everything from muffins and cookies to beverages.”
The exporters weigh in QUEBEC
If ever you needed proof there is strength in numbers, Quebec’s 400-member agrifood export association may be it.
“Twenty years ago a group of business people got together to start an export network,” says Andre Coutu, CEO of Groupe Export. “We’re now the largest food exporter association in the world.”
Of its 400 members, 350 are food manufacturers, from the very small to the very large, Coutu explains. “Our members are value-added companies only; there are no commodities being sold through our group.”
The added value isn’t always an overly processed final product, however. The group’s number one export is antibiotic-free, specialty pork cuts.
The group’s third leading export is something that doesn’t even grow in Quebec — chocolate. “Cocoa beans are brought in and turned into much higher-value chocolate that is shipped all over the world,” Coutu says.
Groupe Export plays multiple roles. “We participate in 20 to 25 international trade missions a year, and we usually take up 50 per cent of the Canadian pavillion at international food shows,” Coutu says. “We’re the face of Quebec food exporters.”
The group also provides labelling services, and has nutritionists on staff to help. The group acts as an information source on issues ranging from labelling requirements to shipping and export rules. “We’ll also provide information on market evaluations,” Coutu says.
Coutu has a positive outlook for the year ahead, regardless of the economy. “Up until December it was business as usual for us,” he says. But he admits that, beginning this past January, there have been a few hiccups in the export business. “Sales are still good, and our members are getting paid, although some of our U. S. customers are struggling with credit terms. We used to collect in 30 days, now it can be 90, 100 or 110 days. So there is some change,” Coutu says
“The food business may have less glamour than say Bombardier or other big companies, but in Quebec our group contributes to 400,000 direct jobs due to food manufacturing,” Coutu says. Quebec alone exports $5 billion in food products a year, Coutu says. “It’s like a blue chip stock — no matter what, people have to eat.” CG
