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Canada’s Processed Food Industry Trade Balance Deteriorating

November 14, 2012

OTTAWA, Nov. 14, 2012 /CNW/ – Canada’s trade balance in processed food
is deteriorating, having reached a deficit of $6.3 billion in 2011,
according to a new report from the Canadian Agri-Food Policy Institute
(CAPI).

For 20 years, Canada has recorded trade deficits in value-added
processed food which includes secondary processing of food products and
beverages.

But since 2004, the deficit has worsened from less than $1 billion to
$6.3 in 2011. (See Figure 1).

These data are examined in the report The State of Canada’s Processed Food Sector: Trade Balance, released today by CAPI. The analysis does not focus on primary
processing.

Historically, Canadian exports of processed food products have
increased. But since 2004 that growth has stalled, while imports have
continued to steadily rise.

“Undoubtedly, there are companies that are growing and investing but we
need to better understand the implications of sustained and deepening
trade deficits for the future competitiveness of the processed food
sector and the agri-food sector as a whole,” said David McInnes, CAPI’s
President and CEO.

The situation is far-reaching. Canada’s processed food trade with the US
and Mexico has shifted from a surplus of $2.2 billion in 2004 to a
deficit of $1.3 billion in 2011. For all other countries, the trade
balance has worsened from negative $3.2 billion to negative $5 billion
over the same period.

The deficit picture in processed food contrasts sharply with the
positive trade balances of all the other categories of agricultural
production, namely commodities.

Most of the data were supplied by Industry Canada; these data are
grouped by categories established by the World Customs Organization’s
Harmonized Commodity Description and Coding System. 

Why are these findings important? Food processing is one of Canada’s
largest manufacturing sectors and is also the recipient of a
significant share of Canada’s agricultural output, particularly in
certain provinces. In addition, many retailers and food service
providers are interested in making Canadian agri-food products
available to Canadian consumers.

CAPI commissioned the report to foster a constructive dialogue on the
state and prospects of the processed food sector and the actions needed
to go forward.

The report concludes that more work is required to explain the causes of
the change in trade performance. For example, the report:

        --  acknowledges that the Canada-US exchange-rate pattern mirrors
            to some degree the timing of changes in the processed
            food trade balance but questions whether this is the underlying
            cause of the changes;
        --  underscores the importance of foreign market access but
            questions whether erosion of their benefits is affecting the
            Canadian processed food sector;
        --  notes that more analysis is required to better understand
            investment trends and regulatory impacts.

Figure 1: Canada’s Trade Balance in Processed Food

http://files.newswire.ca/1153/Fig_1_Eng.pdf

A high-resolution copy of the graph is available for download at: http://capi-icpa.ca/highlights2012/process-food-study_111412.html

The Canadian Agri-Food Policy Institute (CAPI) is an independent,
unbiased policy forum that is dedicated to the success of Canada’s
agriculture and agri-food sector. CAPI is a catalyst. It identifies
emerging issues, promotes dialogue and advances alternative solutions
to issues with stakeholders across diverse agri-food supply chains and
among other food stakeholders. Based in Ottawa, CAPI was established as
a not-for-profit corporation in 2004 by the federal government and is
guided by a diverse Board of Directors and an Advisory Committee.

SOURCE Canadian Agri-Food Policy Institute

PDF available at: http://stream1.newswire.ca/media/2012/11/14/20121114_C8104_DOC_EN_20676.pdf


Source: PR Newswire