Meeting the growing demand for food through trade

Posted by: Kaitlyn Mason on June 26, 2017

What kinds of new market opportunities are rising for Alberta agriculture? Read this blog from the Chamber's Economic Policy Analyst, Franco Terrazzano, to find out.

Generating over $100 billion to the Canadian economy and employing over 2 million people, the agriculture and agri-food sector is a key economic driver for both Alberta and Canada. And with the world’s population expected to reach nine billion people by 2050, it appears our agriculture industry has both a tremendous opportunity, and a global responsibility.

With a relatively small provincial, and domestic market, agriculture in Canada largely depends on global demand. 90% of Canada’s agri-food farmers and food processors rely on foreign markets, with over 300,000 jobs being directly and indirectly supported by these exports. In fact, 1 in 2 jobs in crop production, and 1 in 4 in food manufacturing depend on exports.  

Let’s take a look at some of the new market opportunities that will help Alberta agriculture reach new consumers, increase production, and meet the rising global demand for food.

Canada 

While attention is often focused on international trade, there are large benefits that can be made from addressing the regulatory barriers that impede trade (“internal trade barriers”) within Canada. Estimates suggest that removing internal trade barriers could inject up to $130 billion each year into Canada’s economy. Barriers affecting Canadian agriculture include: provincial packaging and labelling requirements, rebate and grant programs, and different regulations for trucking and meat processing.  

Fortunately, the Canadian Free Trade Agreement (CFTA) – coming into effect July 1 – provides measures to address Canada’s internal trade barriers. Within the Agreement, a regulatory body has been established to work with provinces and territories to identify and harmonize costly regulations. While little red tape will be cut come July 1, the CFTA is a step in the right direction for reducing internal trade barriers.  

Europe 

The Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union (EU) is also set to kick in July 1. This is Canada’s largest and most significant trade agreement since NAFTA.  

CETA represents a big opportunity for Alberta’s agribusiness sector, removing 94% of the EU’s agriculture tariffs. Alberta’s livestock and agri-food producers will see much greater access to European markets through greater duty-free allowances. The Agreement will allow for roughly 65,000 tonnes of duty-free beef (333% quota increase), generating up to $600 million for Canadian beef producers annually. Two-thirds of Canada’s increase in beef exports are expected to come from right here in Alberta.

While much of the European agri-foods market will remain protected from Canadian producers, greater market access to the world’s largest importer of agriculture represents a significant opportunity for Albertans. 

United States 

As of late, most news coming from the United States on trade – border adjustment proposals, tariffs on Canadian lumber, withdrawal from the Trans Pacific Partnership (TPP) – has been a source of concern for Canadian businesses. However, recent announcements targeting Canada’s protected dairy industry is likely good news for many producers in Alberta.  

Not only have these protections increased prices for consumers, input costs for processors and restaurants, they have also limited our access to foreign markets. In fact, other nations have been reluctant to open their markets without Canada first addressing our dairy protections.  

If the renegotiation of NAFTA can reduce dairy protections, other producers – especially in the agriculture industry – may benefit from greater access to foreign customers. 

Emerging markets

By 2020, more than half of the world’s GDP growth is expected to occur in emerging markets such as China, India, and countries in the Asia Pacific. According to the Conference Board of Canada, over the next decade, emerging economies will increase their demand for food by 5% each year. As these economies continue to grow, individuals will not only demand more food, but their diets will rely more on high-quality protein sources. In fact, China is expected to increase their demand for protein by 3 – 4% per year. This bodes well for Alberta agriculture. 

Alberta producers are well established in emerging markets, with 44.4% of total agriculture exports flowing into Asia. Furthermore, Alberta is world-renown for high-quality and safe agriculture commodities and food products. Especially with the U.S. withdrawal from the TPP, Canadian policymakers must continue to push for greater access to markets in China, India, and the Pacific. 
It appears that the 21st century is presenting Canada’s agriculture industry with plenty of opportunities.  

However, important questions remain:

  • What is the federal government doing to ensure that Canadian products are the preferred choice in international markets?
  • What policies will enhance the industry’s competitiveness?
  • How will the government help foster the innovation and productivity gains needed to meet the rising global demand? 

Minister of Agriculture Lawrence MacAulay: The 21st century belongs to agriculture

To address the issues outlined above, your Calgary Chamber is looking forward to hosting Canada’s Minister of Agriculture and Agri-Food, Lawrence MacAulay on Thursday, July 13, 2017.

Minister MacAulay will be discussing the growing global demand for food, along with the federal policies that will help Alberta’s industry meet this tremendous opportunity.

Learn more about the event

Franco Terrazzano is an Economic Policy Analyst at the Calgary Chamber.