Lower-valued food exports hurt Prairies

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Published: April 27, 2000

The value of Canadian farm and food product exports fell close to four percent last year while the value of imports increased, reversing a recent trend to larger food trade surpluses.

An Agriculture Canada official said the figures reflect low prices for export grains and sharply reduced sales to Asian and European markets.

But Gilles Lavoie, a director general within the department’s market and industry services branch, said the one-year reversal should not be considered a setback in Canada’s goal of increasing its share of world food trade to four percent by 2005.

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Some industry analysts have said reaching the goal would mean an increase in the value of exports to $40 billion.

“We do not judge this year to year so much,” said Lavoie after a House of Commons agriculture committee meeting where he presented the 1999 results. “What is important is the trend, and over the past few years the trend has been up.”

Agriculture Canada’s preliminary 1999 trade figures indicated the value of exports fell more than $800 million to $21.67 billion. The three prairie provinces took the greatest hit in falling exports.

The value of imports increased almost a percentage point to $16.5 billion. The result was a $5.18 billion food trade surplus, 16 percent below 1998 and the lowest in years.

Lavoie said it is not yet clear if Canada also lost ground last year in its share of world food trade.

After falling to 2.6 percent in 1989 because drought reduced available grain stocks, the Canadian share of the world market has been steadily increasing to 3.5 percent last year.

According to government figures, the financial turmoil infecting some Asian economies last year played a significant role in Canada’s declining exports. The value of Canadian sales to China fell 28 percent last year and 57 percent to Hong Kong.

The other major decline came in trade with the European Union, where the value of sales slumped 18 percent, worth almost $300 million.

Ironically, despite years of government arguments that Canada must broaden its markets to reduce dependence on the United States, last year exports to the U.S. increased almost three percent.

Lavoie said there is some good news in the numbers.

While the value of bulk commodity exports fell, the value of processed consumer products increased.

Almost 65 percent of Canada’s $13.2 billion in sales to the U.S. last year was in higher-value consumer products.

Commons agriculture committee chair John Harvard noted that even when trade volumes and values increase, farm incomes do not seem to rise with them.

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