Economist Al Mussell has issued a new report from Agri-Food Economic Systems detailing pressure food processors will face if and when United States President imposes tariffs of 25 per cent across the board.
The largest grouping of U.S. imports from Canada, and the fastest growing, is bakery, cereal, and pasta manufacturing.
U.S. import values of beef have grown, along with fresh vegetables and processed vegetables and fruit.
Food preparations are significant and growing; U.S pork imports from Canada are significant and steadier in nature, he wrote,
“Surely many food processors are on edge and reviewing their options. Some may fear for their financial viability,” Mussell said.
“Others are perhaps looking at relocation to the U.S. due to the anticipated impact of U.S. tariffs on their businesses.
"Still others are looking at doubling down on niche products in which they have few competitors, and could be capable of maintaining most of their sales despite the tariffs, or searching for other markets where they can redeploy their existing U.S. volume.”
When processors suffer, so do their farmer-suppliers.
For example, Mussell said a hit taken by companies in the Canadian bakery sector obviously impacts grain milling and grain
production; but it also impacts the supply chains and companies supplying other ingredients such as eggs, dairy, vegetable oils, sugar; and others.
Ironically, some of these ingredients may be imported by Canadian companies from U.S. suppliers.
Farmers face a direct hit on exports of grains, livestock, greenhouse vegetables and potatoes, but the tariff effects on exports of manufactured foods effectively magnify the losses to farm products, and could come as a shock if not anticipated, Mussell said.
And the data are telling us that we have a lot to lose in terms of processed food exports to the U.S.
Canada has had considerable success in penetrating the U.S. market in the last few years and the U.S. tariffs could not only halt the growth in exports but sharply reduce or eliminate recent gains.
The decline in the value of the Canadian dollar has helped Canadians to be more competitive in both export and domestic markets.
