Canada - Country Commercial Guide
Agricultural Sector

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

Last published date: 2021-08-20

Overview

In 2020, Canada was the second largest export market for U.S. agricultural exports, totaling over US$22 billion, accounting for nearly 15% of total U.S. agricultural exports. Consumer-oriented agricultural exports account for the largest share, at US$17 billion and over three quarters 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 2020, the United States imported US$25.3 billion worth of agricultural products from Canada.

Canada is the largest destination for U.S. exports of high-value agricultural products, with a 25% market share in 2020 and a value of US$17 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 (US$ millions)

 

2017

2018

2019

2020

Local Production*

47,941

48,379

50,218

53,801

Imports

35,288

36,341

36,645

37,595

Exports

45,400

46,743

45,863

51,352

Total Market Size

37,829

37,976

41,000

40,044

*Based on farm cash receipts for raw.

Bank of Canada annual average exchange rates for 2017-2020
 (total market size = (total local production + imports) - exports)

Leading Sub-Sectors

Consumer-Oriented Food Products in the Retail and the Food Processing Sector

Trade with Canada is facilitated by geographic 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 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 $17 billion in 2020 – 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 2020, Canada’s food and alcoholic beverage retail sales reached $109 billion – a record 10% increase from the previous year. 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 more than $91 billion in sales in 2020 – a 4% increase from the previous year. The leading food manufacturing sectors were meat products ($23 billion), dairy products ($13 billion), and bakery and tortilla products ($9.3 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.

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 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 also highly dependent on fresh fruit and vegetable imports used in processing; growth in manufacturing will increase demand for these products as well.

The demand for processed fruit and vegetables is expected to remain strong in 2021, as the impact of increased at-home consumption will drive demand for longer shelf-life products. Additionally, the overall trend towards plant-based protein presents strong opportunities for sales growth in processed fruit and vegetables.

US$ millions

2017

2018

2019

2020

Local Production*

5,392

6,022

6,061

6,604

Imports

2,804

2,889

2,970

2,992

Exports

2,154

2,355

2,443

2,538

Total Market Size

6,042

6,556

6,588

7,058

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

Bank of Canada annual average exchange rates for 2017-2020
 (Total market size = (total local production + imports) - exports)

Fresh Fruit

U.S. exports are projected to remain steady supported by 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 supplied almost 40% in 2020. According to Nielsen Research, Canadians spend over 15% more than Americans on fruit. Although the United States continues to command a sizable share of the market, 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 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.

US$ millions

2017

2018

2019

2020

Local Production*

838

901

963

904

Imports

3,585

3,624

3,652

3,769

                     Exports

365

400

356

338

Total Market Size

4,058

4,125

4,259

4,335

*Based on farm cash receipts for raw.

Bank of Canada annual average exchange rates for 2017-2020
(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 2020, U.S. exports of beef to Canada totaled $695 million, or 63% of the import market, and U.S exports of pork to Canada were just over $800 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. However, the COVID-19 pandemic caused disruptions in Canadian processing capacity and food service demand. While processing disruptions have largely resolved, increased beef retail prices, strong export demand, and ongoing pandemic impacts in food service have led to reduced domestic beef consumption. Beef demand in Canada has been particularly strong despite higher prices, recent years indicating that Canadian consumer purchasing trends may be less strongly correlated to pricing in the current market, although now it appears that consumer demand may be falling in favor of lower priced proteins.

US$ millions

2017

2018

2019

2020

Local Production*

15,083

16,382

16,591

16,907

Imports

2,352

2,335

2,273

2,548

Exports

5,000

5,145

5,682

6,242

Total Market Size

12,435

13,573

13,181

13,213

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

Bank of Canada annual average exchange rates for 2017-2020

(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 75% of U.S. exports in this product category. Per capita, Canada has one of the highest consumption rates of fresh vegetables in the world, and 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, cucumbers, and lettuce. 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.

US$ millions

2017

2018

2019

2020

Local Production*

3,391

3,544

3,617

3,740

Imports

2,609

2,647

2,806

2,748

Exports

1,662

1,816

1,882

2,145

Total Market Size

4,338

4,375

4,541

4,343

*Based on farm cash receipts for raw.

Bank of Canada annual average exchange rates for 2017-2020
(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 are expected to remain lower until mass COVID-19 vaccination 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 the retail sector – grocery stores/supermarkets.

In 2020, Canada’s food and beverage retail sales surged by a record 10% from the previous year – reaching $109 billion, including alcohol sales of $20 billion – while COVID-19 response measures drove double-digit losses in food service. Following consumer stockpiling of essential and bulk commodities early in the pandemic, the number of meals prepared at home remained high throughout the year as food service outlets were reduced to take out or limited dining operations.

Additionally, demand for consumer-packaged goods recognized as organic, natural, and with clean ingredients continues to rise. As the pandemic continues to evolve, consumer shopping behaviors will continue to adapt to it. 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

· Canadian Health Food Association (CHFA) West, Vancouver, British Columbia, April 23-24, 2022              

· Canadian Produce Marketing Association and Convention Show, Montreal, Québec, April 5-7, 2022

· SIAL Canada, Montreal, Québec, April 20-22, 2022

· Restaurants Canada, Toronto, Ontario, February 27- March 1, 2022

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