Analyst says Canada needs to do more market development for crops like oats and canola and for livestock and meat
There has been a lot of talk lately about the importance of China, but the United States is still far and away Canada’s top customer of agricultural products.
The U.S. bought $24 billion worth of goods last year, which was 51 percent of Canada’s agricultural exports, according to a report by the U.S. Department of Agriculture.
The next largest buyer was China at $4.3 billion, representing nine percent of exports, followed by Japan with $3.5 billion in sales, or seven percent of exports.
This is the 14th time in the last 20 years that the U.S. has accounted for more than half of Canada’s export program.
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China purchased just over 20 million tonnes of wheat, corn, barley and sorghum last year, that is well below the 60 million tonnes purchased in 2021-22.
“They are a big market of ours, mostly because we’re right next door,” said CWB weather and crop specialist Bruce Burnett.
Greg Kostal, analyst with Kostal Ag Consulting, said if Canada has to put half of its eggs in one basket, the U.S. is a pretty good place to do it.
Many other agricultural export markets are far riskier places to conduct business. For instance, China and India are two markets that buy a lot of Canadian pulse, cereal and oilseed crops.
“These offshore nations are fraught with higher levels of political risk and phytosanitary and letters of credit (issues),” he said.
“The U.S., at least at face value, is a much simpler, predictable type market.”
Chuck Penner, analyst with LeftField Commodity Research, be-lieves Canada has become overly reliant on the U.S. market for certain commodities.
“You’re in a better position if you diversify your destinations, just so that you’re not held hostage.”
Penner said oats is a prime example of a commodity that relies too heavily on the U.S — 97 percent of last year’s export program went south of the border.
“We ship almost all of our oats to the U.S., and frankly, the market development strategy is to do more of that, which to me is not the best use of resources.”
Penner believes Canada should do more market development work in Southeast Asia and South Asia, where consumers are starting to understand the health benefits of oats.
Australia is servicing those markets and reaping the rewards with oat prices of $5 to $6 per bushel.
“A couple of weeks ago, I saw that we finally put an oat vessel out of the West Coast,” said Penner.
“We need other outlets, especially for crops where we’re heavily dependent on the U.S.”
The U.S. is the largest market for 13 of Canada’s top 15 agricultural exports and has a greater than 60 percent share in 10 of the top 15.
For instance, the U.S. accounts for 68 percent of Canada’s canola and mustard oil exports, 99 percent of live bovine exports and 88 percent of bovine meat exports.
Even in categories where U.S. market share is not high, such as soybeans, wheat and pork, it is still the top market for those products.
Most agricultural exports to the U.S. fall under the prepared foodstuffs category, such as bread, chocolate, prepared vegetables and oilcake.
By contrast, Canada’s top exports worldwide are in the vegetable products category, which includes wheat, canola and pulses.
Agricultural trade with the U.S. is far from a one-way street. Canada imported $21 billion worth of U.S. products last year, which represented 61 percent of its agricultural imports.
“While agricultural trade be-tween Canada and the United States has traditionally been balanced, in recent years Canada’s agricultural exports to the United States have exceeded its imports from the United States,” stated the report by the USDA’s Foreign Agricultural Service.
Kostal said the report is a good reminder of how important the Canada-U.S. trade relationship is to both countries.
