Despite recent trade challenges facing Canada’s agriculture sector, there are a number of factors that can be cause for optimism going forward.
Recognized as the world’s fifth largest exporter of agricultural products[i], Canada’s agriculture sector is a major contender in the international arena. The country exported $57.7 billion in agriculture and agri-food in 2017, with almost 80 per cent of these commodities and products shipped to the United States, China, Japan, the European Union and Mexico.[ii]
Navigating the sometimes-turbulent waters of international trade is no easy task, even for businesses with a long history of buying or selling in foreign markets.
“The global environment for trade is constantly shifting, with trade tensions, political uncertainty and the application of tariffs or import restrictions in flux,” says Charles Gazarek, Director, Corporate Banking at HSBC Bank Canada. “These continual shifts make it important for Canadian companies to diversify and plan for the future to allow them to react quickly as markets change.”
According to Brookings Institution research, among the drivers influencing global trade patterns is the persistent rise of the middle class in emerging markets – an economically significant demographic group projected to grow to about four billion people, or more than half of the world’s population, by the end of 2020 and 5.3 billion by 2030.[iii]
Further research conducted by HSBC Bank Canada shows that for Canadian farmers, this upward trend means greater demand for agricultural products as newcomers to the middle class seek higher-value food products and proteins.[iv]
Technological advances, such as the advent of drought and disease resistant crops and other machinery and productivity innovations, are helping Canadian agriculture producers compete globally and in the face of environmental challenges, says Gazarek.
The Canadian government’s efforts to expand international trade are also enhancing market access for Canadian businesses, says Gazarek. Even as the U.S. moves towards a more protectionist approach to trade, Canada has forged ahead with new accords such as the Comprehensive Economic and Trade Agreement (CETA) with the European Union, and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which includes 10 Pacific-Basin countries and present tremendous opportunity for those looking to diversify to different international markets.
A recent Trade Confidence Forecast study conducted by Economic Development Canada (EDC) indicate that these new trade deals are catching exporters attention, with more than 20% paying closer attention to these markets. The top destinations for those Canadian companies already exporting include Mexico (12%), U.K. (11%) and Germany (11%); and of those not currently exporting, the U.S. places high at 73%, followed by the U.K. at 10% and France at 10%.
“Having a team of people who can help support you through these changing times is critical,” he says. “With our dedicated agriculture specialists across Canada that have an in-depth knowledge of the agriculture sector, along with a global network that spans 90% of worldwide trade flows, we’re well positioned to help Canadian agribusinesses navigate the challenges and take advantage of opportunities to achieve your goals.”
As a business-to-business trade show bringing together Canadian exhibitors, progressive farmers and international visitors, Canada’s Outdoor Farm Show brings to the forefront the evolving technology and products to help farmers find the best purchases for their operations. HSBC Bank Canada is pleased to be a sponsor at the 2019 Canada’s Outdoor Farm Show, helping facilitate and support this connectivity, to help Canadian business thrive.
If you would like to connect with one of our agriculture specialists to learn more, stop by booth # AB-34.
[i] Canadian trade: The quest for diversification, February 28 2019, Douglas Lippoldt, Shanella Rajanayagam
[ii] Canadian Agri-Food Trade Alliance website, Canada’s Agri-Food Exports 2017 http://cafta.org/agri-food-exports/canadas-agri-food-exports-2014/
[iii] The Brookings Institution, A global tipping point: Half of the world is now middle class or wealthier, September 27 2018, Homi Kharas, Kristofer Hamel
[iv] HSBC Bank Canada, Technology, new crops and growing optimism: The future of Canadian agriculture, 2018