Ottawa-Canada should diversify its $12 billion worth of food and beverage exports to reduce its dependence on the U.S. market, says Farm Credit Canada (FCC).

Selling more to non-U.S. markets would protect against trade disruption, enhance global competitiveness and build a more resilient agriculture and food system, FCC said in a report.

“Canada’s food and beverage sector is heavily reliant on the U.S. as over three-quarters of its exports were destined to the southern neighbour, compared with 31 per cent of primary agricultural products in 2023.

“In terms of imports, 65 per cent of food and beverage products came from the U.S., compared to 78 per cent for primary agriculture. This reliance leaves Canadian ag and food producers vulnerable to unpredictable trade dynamics.”

While the U.S. will always remain a key market for Canadian exports, the evolving trade landscape underscores the need to diversify to non-U.S. markets, FCC said.

Justine Hendricks, FCC president and CEO, said the ongoing trade disruptions created by the Trump administration have created uncertainty and barriers to growth. “Diversifying exports beyond the U.S. will not only strengthen producers’ resilience but also benefit Canadian consumers and the broader economy.”

The FCC report is intended “focus Canadian dialogue on how diversification is important, viable and an opportunity we can’t miss out on,” she said

The diversification strategy focuses on three key areas. Strengthening inter-provincial trade would redirect $2.6 billion in imports from the U.S. to meet domestic demand reducing import reliance, support Canadian producers and help stabilize the food system nationally.

The strategy would also maximize benefits from Canada’s 15 existing free trade agreements, which collectively cover 51 countries and 66 per cent of global GDP, to expand Canadian food and beverage exports globally.

It would lead to new international partnerships to capture emerging opportunities in high-value markets in Europe, Asia and Latin America, targeting $9.4 billion in growth beyond the U.S.

The report identifies trade diversification opportunities across commodity groups, including prepared foods, vegetable oils and animal feed. Prepared foods represent the largest category, making up 19 per cent of Canadian food and beverage exports, which totaled $8.6 billion in 2023, with 90 per cent currently destined for the U.S.

Boosting inter-provincial trade can replace approximately 10 per cent of these exports domestically, while the remaining 90 per cent must be redirected to high-value markets in Europe and rapidly expanding markets in Asia.

FCC Chief Economist J.P Gervais said “Investing in infrastructure, innovation and expanding product offerings will be critical to supporting this transition. Shifting $12 billion in exports will reduce risk and secure stability for the Canadian agriculture and food sector.

“A balanced trade portfolio will make the ag and food industry more competitive, adaptable and prepared to succeed in a changing global economy.”

The report also recommends promoting the Buy Canadian movement to stimulate domestic demand and enhancing Canada’s global brand to signal quality, safety, and versatility of Canadian food products.

Expanding domestic value-added processing will allow Canada to capture a larger share of the food dollar, while exploring a variety of protein sources and sustainably processed items will open new opportunities both at home and abroad.

This news report prepared for National Newswatch.