EDC’s economics research team has confirmed that businesses that export to multiple markets, export more products or directly invest in more foreign markets are more profitable and better protected against risk than those less engaged in these activities. In addition, trade diversification benefits not only the companies involved, but it can also benefits Canada’s economic growth and create more jobs.
The COVID-19 pandemic has had a massive impact on the global economy and strained on supply chains, including those in the agri-food sector. Lockdown protocols and social distancing resulted in the closure of bars, restaurants and shops. All of this influenced consumer behaviours and spending patterns, resulting in a significant increase in grocery purchases.
Although there were short-term challenges faced by the agriculture sector, the long-term outlook is positive. With the world’s population continuing to grow and an increase in household incomes, the demand for food is on the rise, creating opportunities for Canada to increase exports.
Canada has an extensive trade network, giving Canadians access to over 50 foreign markets, and creating new opportunities for investment.
As we’ve seen with the current pandemic, borders can close in an instant, immediately affecting supply chains. Market diversification protects businesses against this risk, allowing them to continue exporting when a particular trading partner might become unavailable.
Trade diversification can also maximize the value of goods. The FCC Trade Report points to the beef and pork subsectors. For example, there are select European markets that prefer offal, cuts and byproducts that are not popular in North America. Choosing to export to these European markets not only maximizes the value of the meat product, but it also limits waste.
