For Syed Ali, the easy part of being a Canadian exporter is that everyone always needs the product he exports – food.
The hard part is getting it to them.
"There are areas where we face challenges. Market access, for one," says Mr. Ali, founder of Markham, Ont.-based Riz Global Foods Inc.
Speaking from India during a business trip, Mr. Ali explains that the food distribution business he started in 2012 faces obstacles, not only on the Indian subcontinent, but also in other markets, such as the Middle East and Russia.
Entering global markets is challenging because Riz Global Foods has a wide range of food products it delivers from supplies in Canada, the United States, Australia, Europe, China and South America. It specializes in halal-produced meats but also offers prepared foods, desserts and cakes, bakery ingredients, sauces and spices, cooking oils – even frozen pizza and pasta.
"The regulations for all the countries we export to have to be met by our producers, especially in terms of the way the animals are raised," Mr. Ali says.
Customers in different countries have different requirements, such as antibiotic-free beef, or in Middle Eastern countries, vegetarian-fed beef. He can't sell beef at all to Hindu customers in India.
Navigating the food regulations of various countries is more challenging because many of the agreements aimed at encouraging freer trade are now either in limbo or at risk of being rolled back.
As well, Mr. Ali says he has experienced import duties between 35 and 80 per cent for different types of food in India. "It prices some of our products completely out of the market," he says.
In April, 2015, a visit to Canada by Indian Prime Minister Narendra Modi brought promises of opening up trade and generating as much as $1.6-billion in bilateral business, but Mr. Ali says he and others are still waiting.
It's not that global agribusiness is impossible for Canadian companies; in 2015 Canada enjoyed a worldwide $11-billion trade surplus in food and agricultural products, just slightly less than the year before but up from 2013.
Food and beverage processing is Canada's largest manufacturing sector, according to Industry Canada statistics for 2012, which were published last year. The sector accounts for 15.9 per cent of our total manufacturing shipments and for 1.7 per cent of Canada's gross domestic product (this includes tobacco products), according to a government report from September.
Ontario and Quebec together accounted for about 57.5 per cent of processed food and beverage sales, with Western provinces making up about 30.5 per cent and the Atlantic Provinces about 11.9 per cent. The sector provides nearly 250,000 jobs across Canada – more than 125,000 in Ontario alone, spread across about 3,000 businesses in that province.
While about half of the food processing shipments from Canada come from just 3.1 per cent of the companies, mostly the large ones, the other half comes from the nearly 97 per cent of companies that are small and medium-sized enterprises (SMEs) like Mr. Ali's.
Competition is fierce in the sector, he says, but Mr. Ali was quite deliberate in choosing the food export sector as his business. He sold the condo he had purchased when he moved to Canada in 2007 to raise the money to start Riz Global Foods.
He started Riz to replace his first business in Canada, exporting construction equipment to Iraq.
"I was looking for something that wouldn't be affected by recession. We started exploring the opportunities in food," he said in an earlier interview with Export Development Canada.
Mr. Ali started by exporting pulses – Canada is a huge exporter of lentils and other beans – but found the margins were better in beef, despite the challenges. Today, 85 per cent of Riz Global's exports are beef.
The challenges Mr. Ali faces come not just from trade barriers and sluggish negotiations to lower these.
"Both Canada and the United States have the same production methods, but the U.S. has more clout and they have been successful in meeting and monitoring regulatory requirements," he says. Canada is not as effective "because of lack of resources, especially when it comes to beef," Mr. Ali adds.
An Industry Canada report last year on the "technology readiness" of Canada's food processing sector found that Canadian exporters find the disparity difficult between the size and scale of Canadian and U.S. companies.
"Scale is an important factor," the report said. "Canadian firms operating in this sector are significantly smaller in scale than their counterparts in the United States … The existence of major scale differences exist in all food processing sub-sectors, with Canadian processing facilities using half the labour and generating less than half the sales revenue of U.S. facilities on average."
Because Mr. Ali's company is an exporter and not a producer, this challenge shows up mostly in his ability to procure Canadian beef and other products for export at globally competitive prices. Industry Canada notes that the U.S. food and beverage processing sector has been improving in productivity, "while Canadian firms are lagging."
Mr. Ali's approach aligns with Industry Canada's solution, both for his own company and for the Canadian food producers from whom he obtains his products:
"In order to achieve appropriate scale, Canadian companies need to gain access to markets outside Canada."
The global trade picture is generally unclear right now. At the same time, Canada's biggest trading partner, the United States, is pushing to renegotiate the North American Free Trade Agreement, which could lead to unpredictable consequences for the food and beverage sector.
Mr. Ali has been travelling to his markets to determine what foods he might export along with beef. Ultimately, he figures, food has to be a good export – people have to eat.