Long recognized among the world’s leading suppliers of foods ranging from meats and seafood to grains and legumes, Canada has earned a global reputation as a ‘bread basket’ nation. Along the way, Canadians have also built formidable strength in related industries that span sophisticated fertilizers to farm equipment.
As impressive as that track record may be, experts say the future of Canadian agri-food trade hinges increasingly on Canada’s ability to shift from being a supplier of commodities, expertise and equipment into a full-fledged producer of high-quality, healthful and nutritiously enriched food ingredients and finished products.
EDC vice president, Resources, Justine Hendricks, whose sector-team responsibilities include agriculture, forestry and equipment, says, “Citizens in the U.S. and EU, in particular, already demand high-quality foods. At the same time, millions of citizens in emerging markets including Brazil, China and India are also entering the middle class each year. As they do, they want higher-quality foods too.”
Further pushing this trend, Ms. Hendricks says global enterprises such as McDonalds and Frito Lay are also seeking better ingredients.
As a result, she says forward-thinking companies are building their competitive advantage by employing innovation and transparent processes designed to yield superior quality foods.
“Today, there is a huge interest not only in the end product, but also in the methods used to modify or process foods. Companies are investing in R&D to make nutritional extraction and enhancement more pure, so that it provides the best outcome possible.” Justine Hendricks, Vice President, Resources, Export Development Canada
She says, for example, Atlantic Canada-based Ocean Nutrition – recognized among the world’s biggest buyers of sardine oil – is intently focused on finding superior ways to incorporate omega-3s into foods. “They recognize that the research aspect and quality are key ingredients to success.”
Leveraging Canada’s positive reputation for quality is another key to future success, says Ms. Hendricks. Perhaps no other industry has made greater recent strides in this regard than Canada’s promising organic foods sector.
The global market for organic foods is now valued at $56 billion, with more than 96 per cent of demand attributable to U.S. and EU consumers. While Canadian organic food producers sell $2.5 billion of products domestically and export about $400 million annually, trade proponents including Agriculture Canada and the Canada Organic Trade Association (OTA) have helped lay the foundations for an even more prosperous future.
OTA executive director Matthew Holmes says while organic producers worldwide welcomed organic regulations that would ensure consumer protection, regional differences such as climates, growing conditions and other factors meant the resulting standards evolved with a similar intent but differing specifications.
“The standards weren’t the same. This created significant trade barriers,” said Mr. Holmes. “In Canada, we had organic wheat farmers sending product by the shipload. They were working to U.S., EU, Japanese and other national standards and paying for each one. At the end of the day they were all organic, but the system was inefficient.”
Recognizing a need for more progressive trade policy, the OTA joined Agriculture Canada in 2006 on the development of a long-term international strategy. “We prioritized equivalency agreements – to meet domestic socio and environmental standards – but also that would enable Canadian producers to certify under standards recognized by our trade partners.”
The strategy paid off. In 2009, Canada and the U.S. signed a historic Organic Equivalency Agreement. Then, this summer, another triumph: “Canada signed a deal with 27 EU countries recognizing the Canadian standard. And we have done the same with theirs,” said Mr. Holmes.
As a result, Canada is now the world’s only country that can produce organic products based on its own national standard and supply them into these key markets.
Among Mr. Holmes’ priorities now is to help boost Canada’s production of processed organic foods.
“We have a growing processing sector, but we still ship a lot of commodities,” said Mr. Holmes. “More agreements that facilitate the efficient trade of organic ingredients such as spices, which are used to make food products, are needed.”
For now, Mr. Holmes says the enhanced access to the mature U.S. and EU markets offers Canadian organic producers an opportunity to scale-up for anticipated demand for organic foods grows in countries like China and India.
“If we act now, when these big markets come on-board, we will have the capacity to serve them.”
Whether or not an agri-food product is organic, Ms. Hendricks encourages Canadian companies to consider advancing their interests by participating in supply chains.
“The supply chain aspect of trade is becoming stronger and more important,” she says. “Let the big players with the infrastructure, investment heft and international market penetration do what they do best, and the smaller players feed that demand.”
The bottom line, she says, is to focus on quality. “The ability to connect with consumers and respond to their needs, in terms rising demand for high-quality foods, is key. It’s not an easy play, but it’s definitely something we can leverage.”
Canadian omega-3s add value to foods worldwide
Kids in Ireland don’t know it’s in their bread. Greeks can’t taste it in their chocolate bars. Chinese families may not know their dinners were cooked with it.
Yet all these nutritious foods include omega-3 ingredients produced by Dartmouth-based Ocean Nutrition Canada (ONC).
“We provide omega-3 ingredients that our customers include in their products to add nutritional value,” says Don Habbick, ONC’s chief financial officer.
ONC began producing omega-3 oils for the global supplement market 12 years ago. In 2000, the company developed a breakthrough technology that transformed fish oil into a tasteless, odourless powder finer than flour that could withstand almost any food manufacturing process.
“We constantly innovate to develop products that better serve our customers,” Mr. Habbick says. “It’s always exciting to see what our team is working on.”
ONC operates the largest privately owned marine research and development facility in North America with 35 in-house scientists including 14 PhDs who work with ONC’s supply chain to improve the quality of the company’s fish oils.
ONC is the only omega-3 organization to receive USP dietary ingredient verification. However, Mr. Habbick says supplying customers in North America, Europe, Asia and Australia requires additional steps to ensure ONC’s products comply with local food and drug regulations.
“Providing local regulatory, technical and marketing is part of serving a global clientele,” he says.
GRAIN INSTITUTE MOVING FIELD CROPS UP THE FOOD CHAIN
How did a shortage of mung beans in China create a half-million ton export market for Canadian yellow peas?
“Mung beans are used to make vermicelli noodles,” explains Earl Geddes, executive director of the Canadian International Grains Institute (CIGI). “Canada doesn’t grow mung beans, so our researchers discovered how to extract and use yellow pea starch to make noodles.”
It was just the job for CIGI. A not-for-profit organization founded in 1972 – funded by Agriculture and Agri-Food Canada, the Canadian Wheat Board, other industry and government sectors – CIGI’s mission is to enhance global competitiveness of Canadian field crops.
Using a flour mill, pasta presses, cooking extruders and other food processing equipment in CIGI’s downtown Winnipeg office, researchers “fractionate” field crops into their component parts to make them more food-ready and broaden their usefulness.
“You can’t use raw lentils to make yogurt, but we discovered how to do so using red lentil flour,” Mr. Geddes explains.
None of CIGI’s innovative techniques are patented. What’s more, CIGI trains an average of 2,000 people each year from around the globe in the use of its methodologies. CIGI staff also work overseas helping countries resolve various food processing problems.
“Our objective is to sell more Canadian field crops at higher prices,” Mr. Geddes explains. “The more people use our technologies, the greater the demand for Canadian crops.”
Q&A AGRI-FOOD ECONOMICS With Peter G. Hall, Vice President, and Chief Economist, Export Development Canada How are major emerging markets influencing food supply and demand?
Collectively, tens of millions of Brazilians, Chinese and Indians are becoming middle-class income earners each year. Many other fast-growing emerging markets are also adding millions more citizens to the global middle-class cohort.
How does that affect food consumption?
When consumers enter the middle-class ranks, there is a discernible change in consumption patterns; they increase overall consumption and the quality of that consumption. And one of the first places they start is food. Among other things, meat consumption rises noticeably, putting significant additional pressure on food stocks.
How does that affect supplies?
Meat is food-intensive food, in that it takes a lot of food – that otherwise might have been consumed by humans – to bulk up meat. According to the USDA, it takes 7 kilos of grain to produce a single kilo of beef. This tenfold intensity of food usage ultimately implies an exponential increase in global demand.
How will the world meet these demands?
Technical breakthroughs on crop production could help, but they have long lead times. At present, global supplies are being augmented by increased usage of leading-edge farm equipment and by using fertilizer to boost production on more marginal lands.
What about Canada?
Canada is known for its advanced farm equipment, and we are an important producer of the essential ingredients of fertilizers. Both industries are seeing strong increases in exports and face bright, long-term possibilities.
The bottom line?
The global appetite for food, including higher-quality foods, is rising. This is good news for a ‘bread basket’ nation like Canada, and good news for our agricultural machinery and fertilizer industries too.
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