Canada - Commercial Guide
Agricultural Sector

This is a best prospect industry sector for this country. Includes a market overview and trade data.

Last published date: 2020-08-03

Overview

In 2019, Canada was the largest export market for U.S. agricultural exports, totaling US$20.9 billion, accounting for 15% of total U.S. agricultural exports. Consumer-oriented agricultural exports account for the largest share, at US$16.3 billion and nearly 80% of total U.S. agricultural exports to Canada. Some of the top consumer-oriented export categories include prepared foods; 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 2019, the United States imported US$23.6 billion worth of agricultural products from Canada.

Canada is the largest destination for U.S. exports of high-value agricultural products, with a 24% market share in 2019 and a value of US$16.3 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 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.

Canada: Total Agricultural Sector Production Data

 

2016

2017

2018

2019

Local Production*

46,374

47,587

47,815

50,530

Imports

32,493

33,604

34,568

34,884

Exports

42,283

44,558

45,872

44,902

Total Market Size

36,584

36,633

36,511

40,512

US$ millions

*Based on farm cash receipts for raw. BoC annual exchange rate for 2017-2019

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

Leading Sub-Sectors

Consumer-oriented food products in Retail and Food Service

Trade with Canada is facilitated by proximity, common culture, language, similar lifestyle pursuits, and the ease of travel for business and pleasure. Canada's wide ethnic diversity and high level of consumer disposable income provide broad food marketing opportunities. Familiarity with and confidence in Canadian-based U.S. chains (hotels, restaurants, and fast food) have helped to increase the demand for high-value U.S. foods. Significant gains continue in the Canadian market for U.S. consumer-ready foods and food service foods.

Based on current market trends, the sectors below are considered the best prospects for U.S. exports of food and agricultural products to Canada. Although the strong U.S. dollar vis-à-vis the Canadian dollar will likely hinder growth to some extent, consumer-oriented product imports in the retail food and food service industries are projected to remain strong in 2020 despite the impacts of COVID-19 on total economic activity, as the food and agricultural trade has continued uninterrupted due to its designation as “essential.”

Retail food markets are a significant channel for the import of U.S. consumer-oriented products. The total Canadian retail market amounts to US$97 billion, including alcoholic beverages sales. Grocery stores and supermarkets, mass merchandisers, and warehouse clubs are the primary recipients of these products.

Food service imports of consumer-oriented products are also an important channel. This sector falls into three categories: Hotels and Resorts, Restaurants, and Institutional. Restaurants are the most significant of the three, generating 80 percent of food service sales and 4 percent of Canada’s GDP. Restaurants Canada, an association representing the restaurant and food service industry, reported the industry grew by nearly 4% in 2019 with total sales for the year of US$71 billion in food sales and an additional $18 billion in alcohol sales, a total of $89 billion. Prior to COVID-19, Canadian food service sales were forecast to grow 1.8%. However, the response to the COVID-19 pandemic has hit food service operators particularly hard, with an estimated 10% of operators expected to go out of business. There were approximately 97,500 restaurants across Canada before COIVD-19, with more than half located in Ontario and Quebec. As shown in the tables below, fresh fruit, processed fruit and vegetables, red meats (including processed meats), and fresh vegetables are key sectors for the Canadian food landscape, and more than half are imported from the United States.

Processed fruit and vegetables

Processed fruit 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 products, and this factor will continue to drive the development of a wide range of ready-to-cook and -eat fruit and vegetable products that benefit U.S. sales. Canadian manufacturers are also highly dependent on fresh fruit and vegetable imports used in processing; growth in manufacturing will increase demand for these products as well. In 2018, the total market size increased by 4% compared to 2018, which is attributed to the increasing shift away from more heavily processed towards products with little processing. The demand for processed fruit and vegetables is expected to remain strong in 2020, as the impact of increased at-home consumption drives demand for longer shelf-life products.

 

2016

2017

2018

2019

Local Production*

5,410

5,451

5,966

6,177

Imports

3,503

3,461

3,504

3,690

Exports

2,450

2,551

2,791

2,948

Total Market Size

6,463

6,361

6,679

6,919

US$ millions

*Based on Stats Can NAICS for fruit and vegetable preserving and specialty food manufacturing. BoC annual exchange rate for 2017-2019
(total market size = (total local production + imports) - exports)

Fresh Fruit

U.S. exports are projected to remain steady because of growing demand and limited Canadian domestic fresh fruit production. More than 80% of the Canadian fresh fruit market is supplied through imports, of which the United States typically supplied more than 80% in 2019. According to Nielsen Research, Canadians spend 20% more than Americans 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. U.S. sales are expected to remain robust, especially for strawberries, other berries, grapes, oranges, and apples, with the organic market continuing to be increasingly popular among consumers. Canada is by far the most important market for U.S. exports of fresh fruit, and Canada is heavily dependent on imports of fresh fruit to meet total market demand due to the Canadian climate’s limited growing season and limited variety of fruits. An aging Canadian population with health concerns, in combination with a general increased interest in healthy eating, has contributed to a growing demand for perceived healthy products. Major U.S. growers and shippers are members of the Canadian Produce Marketing Association, an important advocate for the industry in Canada on food safety and trade issues and a key promoter of increased fresh fruit consumption among Canadians.

 

2016

2017

2018

2019

Local Production*

821

832

895

907

Imports

3,426

3,585

3,624

3,653

Exports

283

286

316

267

Total Market Size

3,965

4,132

4,204

4,294

US$ millions

*Based on farm cash receipts for raw. BoC annual exchange rate for 2017-2019
(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 red meat. In 2018, U.S. exports of beef to Canada declined slightly to nearly $750 million, or 70% of the import market, and U.S exports of pork to Canada also declined slightly to $765 million, or 85% 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. Meat demand is gradually picking up, resulting in increased wholesale and retail prices that translate into improved export opportunities for the American red meat industry. In particular, beef demand in Canada continues to remain strong even as prices have increased in recent years indicating that Canadian consumer purchasing trends may be less strongly correlated to pricing in the current market.

 

2016

2017

2018

2019

Local Production

20,452

21,120

22,322

22,956

Imports

3,016

3,007

2,945

2,932

Exports

5,610

5,843

5,965

6,640

Total Market Size

17,858

18,284

19,302

19,249

US$ millions

*Based on Stats Can NAICS for meat product manufacturing. BoC annual exchange rate for 2017-2019

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

Fresh Vegetables

Canada is by far the largest export market for U.S. fresh vegetables, absorbing more than 70% of U.S. exports in this product category. Per capita, Canada has one of the highest consumption rates of fresh vegetables in the world. 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 in the country’s northern climate. Despite the difficult climatic conditions, local growers supply about half of the market demand through extensive greenhouse production of peppers, tomatoes, lettuce, and cucumbers. U.S. exports of fresh vegetables are nonetheless increasing despite a reduction in market share as Canadian demand remains strong. Sophisticated, modern logistics and wholesale dealer networks provide Canadian buyers with prompt delivery and relatively low spoilage.

 

 

2016

2017

2018

2019

Local Production*

2,312

2,427

2,534

2,636

Imports

2,545

2,609

2,647

2,794

Exports

1,559

1,662

1,816

1,882

Total Market Size

3,298

3,374

3,365

3,547

US$ millions

*Based on farm cash receipts for raw. BoC annual exchange rate for 2016-2018
(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. The climate in Canada limits expansion of fruit and vegetable production, although greenhouse area cultivated has grown and has potential to expand into idle greenhouse facilities erected for cannabis demand that never materialized. Even as the Canadian food service sector continues to recover, total food service sales are expected to remain lower until a COVID-19 vaccine permits indoor dining to return to pre-COVID levels. Accordingly, the best opportunities for export growth of U.S. agricultural products are expected to be found in grocery stores/supermarkets. Though consumers focused retail grocery purchases on fewer SKUs during the early days of the COVID-19 pandemic, industry expects retailers to resume acquisition of new products as consumers acclimate to COVID-19 shopping conditions. Efforts to cultivate relationships with smaller, regional grocery outlets continue to hold promise for new-to-market exporters. 

Resources

Major Events and Trade Shows in Canada

Due Resources to COVID-19, a wide range of Canadian food and natural products tradeshows, missions, and showcases have been cancelled in 2020.  Show organizers are still planning to hold in-person events in 2021.

· Canadian Health Food Association (CHFA) East, Toronto, Ontario, September 10-13, 2020

· Canadian Health Food Association (CHFA) West, Vancouver, British Columbia, February 18-21, 2021

· Canadian Health Food Association (CHFA) Quebec, Montreal Quebec, May 2021

· Canadian Produce Marketing Association and Convention Show, Vancouver, British Columbia, March 2-4, 2021

· SIAL Canada, Montreal, Quebec, September 29 – October 1, 2020

· Restaurants Canada, Toronto, Ontario, February 28 – March 2, 2021

 

Canadian Government

· Canada 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 Drug Act

· Food and Drug Regulations 

· Natural Health Products  

 

 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
      Fax: (613) 688-3124
      E-mail: agottawa@fas.usda.gov