In 2015, Canada was the world’s fifth largest exporter of agriculture commodities. Being a leader in world markets gives Canada bragging rights, but that leadership is also important to the long-term health of the industry.
1. Canada Remains Competitive with Trade Status: Being a major trader gives us a competitive boost when disruptions occur in global trade (for instance, when trade disputes arise or when one supplier’s commodities become relatively more expensive for countries to import). This happened last year when U.S. wheat exports declined and Canada was able to pick up the slack.
Canada’s competitive advantages:
A diversity of commodities available for export and the well-developed infrastructure to store and deliver it
- Well-developed trade relations with some of the world’s largest importers (e.g., the U.S., China and Japan)
- Political and economic stability and high-quality commodities and products
2. Canadian reliance on the United States: All of those things matter, but our ranking as the world’s fifth-largest exporter is in large part due to our proximity to the U.S., the world’s largest single-country market, and the integration of the two economies.
Diversifying Canada’s exports will mitigate the risk of disruptions in global markets, and take advantage of possible trade opportunities in non-traditional markets. China is a good example of a growing market, and individual European countries may provide another growing opportunity as the new political landscape unfolds.
3. Growing demand for food important for Canada: World economic growth has slowed, as has export growth of many commodities. However, while the shape and sources of new demand may shift in the new economic climate, export leadership will become increasingly concentrated. The OECD projects that the Top 5 exporters of each agriculture commodity will account for at least 70 per cent of total exports in 2025. Canada should be one of those Top 5 for a number of commodities.
For more on Canadian agriculture trade, check out FCC Ag Economics’ annual report on trade at fcc.ca/AgEconomist.