Overview

In 2021, Canada remained a top export market for U.S. agricultural exports, totaling US$25 billion, accounting for nearly 15% of total U.S. agricultural exports. Consumer-oriented agricultural exports account for the largest share, at US$18 billion and over 70 percent of total U.S. agricultural exports to Canada. Some of the top consumer-oriented export categories include prepared foods; baked goods; cereals and pasta; fresh and processed vegetables; fresh and processed fruit; meat and meat products; snack foods; non-alcoholic beverages; chocolate and cocoa products; condiments and sauces; coffee; wine; beer; and pet food. In 2021, the United States imported just over US$31 billion worth of agricultural products from Canada.

Canada is the largest destination for U.S. exports of high-value agricultural products, with a 23% market share in 2021 and a value of US$18 billion. Consumer-oriented agricultural products are foods typically sold directly in supermarkets and used in restaurants. These high-value exports support over 130,000 jobs in the United States, and many of the suppliers are small and medium-sized businesses.

Most U.S. agricultural products have entered Canada duty-free since 1989 under the USMCA (and the preceding NAFTA and U.S.-Canada Free Trade Agreement). Major exceptions are the supply managed sectors, including dairy, chicken, turkey, and eggs.

*Based on farm cash receipts for raw.

Bank of Canada annual average exchange rates for 2018-2021
 (total market size = (total local production + imports) - exports)

Leading Sub-Sectors

Consumer-Oriented Food Products in the Retail, Food Processing and Food Service Sectors

Trade with Canada is facilitated by geographic proximity, common culture, language, similar lifestyle pursuits, and the ease of travel for business and leisure. Canada’s wide ethnic diversity and high level of consumer disposable income coupled with a growing interest in premium, high-quality products and global cuisine provide broad food marketing opportunities. Familiarity with and confidence in Canadian-based U.S. chains (hotels, restaurants, and fast food) have helped increase the demand for high-value U.S. foods.

Despite a relatively strong U.S. dollar and a mature market, the opportunities for U.S. food and beverage food sales have remained strong in Canada – the largest overseas market for U.S. high-value, consumer-oriented products, with exports reaching US$18 billion in 2021 – representing 25% of the total value of U.S. consumer-oriented exports worldwide, more than double the value of the next largest market. Based on current market trends, the food retail and processing sectors are considered the best prospects for U.S. exports of food and agricultural products to Canada.

Canada’s retail food market is a significant channel for the import of U.S. consumer-oriented products. In 2021, Canada’s food and alcoholic beverage retail sales reached US$112 billion. Canada’s retail market is mature and largely consolidated, with five retailers comprising more than 75% of the total retail grocery market. The remainder of the market is represented by smaller regional retail chains that include 6,800 independents and 27,000 small and independent convenience stores.

Canada’s food and beverage processing sector is vital to its economy and ranks as the second-largest sector for Canada – with 7,800 establishments – accounting for 20% of its manufacturing. Despite the challenges COVID-19 posed to the Canadian food and beverage processing sector, it remained one of the largest manufacturing sectors, contributing US$100 billion in sales in 2021 – an increase of 14.8% % increase from the previous year. The leading food manufacturing sectors were meat products (US$28 billion), dairy products (US$13 billion), and bakery and tortilla products (US$11 billion).

The Canadian food and beverage processing sector is mature and stable, offering a steady source of demand for U.S. agricultural raw, semi-raw, and processed ingredients. In addition, imported ingredients are vital inputs to Canadian food and beverage manufacturers. Canada relies heavily on the two-way trade with the United States and depends on it for its raw, semi-processed, and processed ingredients. Sophisticated and extensive cross-border logistics between Canada and the United States help create trade opportunities for both countries.

Food service imports of consumer-oriented products, while traditionally a significant and growing distribution channel, have been impacted by the response measures to the COVID-19 pandemic that drastically reduced restaurant activity in Canada. Currently, the food service sector is expected to present only marginal opportunities for U.S. exporters. In 2021, commercial sales dropped to US$48.6 billion but as restrictions lift industry experts predict industry sales will be back at pre-COVID levels, an approximate US$60 billion.

Processed Fruit and Vegetables

Processed fruits and vegetables are sold in a wide range of product formats such as mixed frozen vegetables, ready-to-heat, stir fry, and French fries. Canadian food manufacturers incorporate frozen fruits and vegetables in ready-to-serve meals, including TV dinners, pizza, and other entrées. Consumer demand is growing for convenient healthy products, and this factor will continue to drive the development of a wide range of ready-to-cook and frozen fruit and vegetable products that will benefit U.S. sales. Canadian manufacturers are highly dependent on fresh fruit and vegetable imports used in processing. The growth in market size the sector experienced in 2020 was not maintained in 2021. 

The demand for processed fruit and vegetables is expected to decline in 2022, as consumers are becoming increasingly mobile, post pandemic. They no long feel the need to accumulate inventory of shelf-stable produce, canned or otherwise preserved. On average, consumers have reverted to purchasing fresh produce as they no longer fear frequent visits to retailers and are more willing to patron food services. However, the overall trend towards plant-based protein still presents a strong opportunity for sales growth in processed fruit and vegetables.

*Based on Stats Can NAICS for fruit and vegetable preserving and specialty food manufacturing.

Bank of Canada annual average exchange rates for 2018-2021
 (Total market size = (total local production + imports) - exports)

Fresh Fruit

An estimated two-thirds of all produce consumed in Canada is imported. U.S. fresh fruit exports are projected to remain steady, accounting for approximately 37% of Canada’s fresh fruit imports in 2021. Limited domestic fresh fruit production and growing consumer demand are the factors driving demand for U.S. fresh fruits. There continues to be strong demand for table grapes, easy-peel citrus products, and mangoes. Canada’s top U.S. fresh fruit imports include strawberries, table grapes, apples, cherries, and raspberries.

According to Nielsen Research, Canadians spend 20% more than U.S. consumers on fruit. Although the United States continues to command a sizable share of the market (SOM), import competition has grown through Canadian trade agreements, a concerted effort to diversify import suppliers, and the growth of exportable fruit supplies from emerging export countries – Mexico along with the largest Central and South American countries are becoming serious competitors in matching the U.S. exports of fresh fruits and vegetables in Canada.

U.S. sales are expected to remain robust, especially for strawberries, other berries, grapes, oranges, and apples, with the organic market becoming increasingly popular among consumers. Canada is by far the most critical market for U.S. exports of fresh fruit, and Canada is heavily dependent on fresh fruit imports to meet total market demand due to the limited growing season in Canada. Major U.S. growers and shippers are members of the Canadian Produce Marketing Association, an influential advocate for the industry in Canada on food safety and trade issues and a key advocate for healthy nutrition and increased fresh fruit consumption among Canadians.

*Based on farm cash receipts for raw.

Bank of Canada annual average exchange rates for 2018-2021
(total market size = (total local production + imports) - exports)

Red Meats (including processed)

Canada is a major producer and exporter of red meat, but also an important destination for U.S. exports of fresh/chilled/frozen/processed red meat products. In 2021, U.S. exports of beef to Canada totaled US$740 million, or 67% of the import market, and U.S exports of pork to Canada were just over US$900 million, or 80% of the import market. The North American red meat market is heavily integrated, with trade flowing both ways between Canada and the United States. Typically, Canada exports large numbers of live animals and significant amounts of meat to the United States and imports a wide variety of meat products.

The red meat sector in Canada has been relatively stable over the past several years, with small but steady increases in beef and pork production. However, the COVID-19 pandemic caused disruptions in Canadian processing capacity and food service demand. While processing disruptions have largely been resolved, increased beef retail prices, strong export demand, and the ongoing pandemic impacts in food service have led to reduced domestic beef consumption. In the current market, with food inflation on the rise, it appears that consumer demand may be falling in favor of lower priced proteins.

*Based on Stats Can NAICS for meat (except poultry) product manufacturing.

Bank of Canada annual average exchange rates for 2018-2021

(total market size = (total local production + imports) - exports)

Fresh Vegetables

Canada is the largest export market for U.S. fresh vegetables, absorbing more than 70% of U.S. exports in this product category. More than 75% of Canada’s fresh vegetable market is supplied through imports – US$3 billion of imported vegetables globally in 2021 – of which the United States supplied more than 58 percent in 2021 (US$1.7 billion). Canada’s top U.S. imports in the vegetable category include lettuce, onions, shallots, spinach, and potatoes.

Per capita, Canada has one of the world’s highest consumption rates of fresh vegetables. Canadians spend close to 22% more than their U.S. counterparts. Demand for U.S. vegetables is supported by the short Canadian domestic growing season, relatively short supply chains, and similar food safety systems between the United States and Canada. Despite the difficult climatic conditions, local growers supply about half of the market demand through extensive greenhouse production of peppers, tomatoes, lettuce, and cucumbers. Sophisticated, modern logistics, and a large wholesale dealer network provide Canadian buyers with prompt delivery and relatively low spoilage.

*Based on farm cash receipts for raw.

Bank of Canada annual average exchange rates for 2018-2021
(total market size = (total local production + imports) - exports)

Opportunities

Canada is heavily dependent on a wide range of consumer-oriented imports of U.S. agricultural products. Even as the Canadian food service sector continues to recover, total food service sales will take time to recover. Accordingly, the best opportunities for export growth of U.S. agricultural products are expected to be found in the retail sector – grocery stores/supermarkets.

Following consumer stockpiling of essential and bulk commodities early in the pandemic, the number of meals prepared at home remained high throughout the 2021 year as food service outlets continued to be reduced to take out or limited dining operations at times during the year.

Additionally, demand for consumer-packaged goods recognized as organic, natural, and with clean ingredients continues to rise. As the pandemic evolved, consumer shopping behaviors adapted. With COVID-19 related financial insecurity in the country, typically price-conscious Canadian consumers are expected to remain cautious in the near term, driving sales of private label products and tempering the pace of “premium-ization” (i.e., consumers upgrading to more premium products). Essential items, including rice, pasta, and bread as well as snack-based products, will continue to perform well.

Resources

Major Events and Trade Shows in Canada

Due to COVID-19, a wide range of Canadian food and natural products tradeshows, missions, and showcases are canceled in 2021. Show organizers are still planning to hold in-person events in 2022.

• Canadian Health Food Association (CHFA) East, Toronto, Ontario, September 17-18, 2022/September 21 -24, 2023
• Canadian Health Food Association (CHFA) West, Vancouver, British Columbia, April 1-2, 2023
• Restaurants Canada, Toronto, Ontario, April 10-12, 2023
• Canadian Produce Marketing Association and Convention Show, Toronto, Ontario, April 25-27, 2023
• Grocery and Specialty Food West Trade, Vancouver, British Columbia, April 24-25, 2022
• SIAL Canada, Toronto, Ontario, May 9-11, 2023

FAS works closely with the State Trade Regional Groups in the U.S. that administer the USDA’s Market Access Program. U.S. firms qualifying for the programs can get financial assistance in covering some exhibit costs in Canada.

Canadian Government

• Canadian Food Inspection Agency (CFIA)
• CFIA Acts and Regulations
• Safe Food for Canadians Regulations
• Food Labelling and Advertising Industry Labelling Tool
• Health Canada
• Changes to Food Labelling
• Nutrition Labelling
• Food Allergen Labelling
• Novel Foods / Bio-Engineered Foods
• Canadian Importers Database
• Trade Data Online
• Food and Drugs Act
• Food and Drug Regulations
• Natural Health Products

Foreign Agricultural Service

For further information and for assistance in marketing U.S. agricultural and food products in Canada, U.S. exporters should contact:

Office of Agricultural Affairs

U.S. Embassy, Canada

P.O. Box 5000, Ogdensburg, NY 13669-0430

Telephone: (613) 688-5267; E-mail: agottawa@usda.gov