{"id":94510,"date":"2025-06-06T12:44:25","date_gmt":"2025-06-06T16:44:25","guid":{"rendered":"https:\/\/www.rbcroyalbank.com\/en-ca\/?post_type=rbc_my_money_matter&p=94510"},"modified":"2025-06-09T14:45:54","modified_gmt":"2025-06-09T18:45:54","slug":"how-canadas-food-and-beverage-producers-can-adapt-to-market-instability","status":"publish","type":"rbc_my_money_matter","link":"https:\/\/www.rbcroyalbank.com\/en-ca\/my-money-matters\/business\/right-sized-business-advice\/commercial\/how-canadas-food-and-beverage-producers-can-adapt-to-market-instability\/","title":{"rendered":"How Canada\u2019s Food and Beverage Producers Can Adapt to Market Instability"},"content":{"rendered":"\n
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Recent trade tensions have put a spotlight on Canada\u2019s food and beverage manufacturing sector.<\/p>\n\n\n\n

That\u2019s because more than 60 per cent<\/a> of the nation\u2019s agriculture and agri-food exports are sold on the other side of the border, along with 30 per cent of its food processing and 10 per cent of beverage processing sales<\/a>.<\/p>\n\n\n\n

The argi-food industry is also a significant contributor to Canada\u2019s economy, accounting for 7 per cent of its GDP in 2023<\/a>\u2014totaling nearly $100 billion in revenue\u2014and is responsible for one in nine of the nation\u2019s jobs, employing a domestic workforce of 2.3 million.<\/p>\n\n\n\n

This vital sector, however, is facing a range of new challenges in the wake of the tariffs imposed by the United States. It\u2019s not just the higher cost of selling into its primary export market; the trade war is also having a range of secondary effects<\/a>, including the higher cost of ingredients and inputs due to reciprocal tariffs, lower consumer confidence, and a general atmosphere of volatility. \u00a0<\/p>\n\n\n\n

As circumstances change, Canadian food and beverage producers need to adapt. Here are some ways Canadian food and beverage producers can prepare for the uncertainty ahead.<\/p>\n\n\n\n

Get your facts straight<\/h2>\n\n\n\n

Navigating volatility requires the ability to make informed decisions, fast. <\/p>\n\n\n\n

Experience and industry knowledge may be enough to confront recurring challenges but in unprecedented circumstances it\u2019s important to base decisions in data, not instinct.<\/p>\n\n\n\n

\u201cYou need to consider what data you have available to support some of these decisions and leverage the data to build forecasts and test different scenarios,\u201d advises Jane Henderson, RBC\u2019s Vice President of Senior Commercial Markets. \u201cYou need to really understand your numbers so you can make decisions with a strong business case.\u201d<\/p>\n\n\n\n

In periods of volatility, good data can go a long way, making now a good time to invest in its collection and utilization.<\/p>\n\n\n\n

Upgrade your tech<\/h2>\n\n\n\n

The agricultural sector is undergoing a major technological transformation, and much of that innovation is being made right here in Canada.<\/p>\n\n\n\n

The country\u2019s \u201cAgTech\u201d sector has received over $4 billion in investment<\/a> over the last decade, with a 8.4% compound annual growth rate, far outpacing the global average of 2.6%. These home-grown solutions, and others from around the world, strive to help improve labour costs, decision making, output, product quality, pest management, waste reduction, and facilitate greater cost efficiency.<\/p>\n\n\n\n

\u201cAs a country we\u2019ve historically under-invested in technological adoption,\u201d says Henderson. \u201cThis is the time to focus on what you can control, and a great time to make those investments in automation, in data gathering, in production line improvements, to help make your operations more efficient.\u201d<\/p>\n\n\n\n

Such investments can be difficult for food producers managing new economic challenges. That\u2019s why Henderson recommends working with a banking partner to explore programs offered through the federal and provincial governments and agencies, as well as industry associations and networks. \u00a0<\/p>\n\n\n\n

Lean into \u201cBuy Canadian\u201d<\/h2>\n\n\n\n

As Canadian food producers confront an external threat, their local communities have stepped up<\/a> in a big way.<\/p>\n\n\n\n

A recent survey<\/a> found that more than 60% of Canadians are willing to pay a premium of 5-10% for Canadian-grown produce, dairy or meat over American alternatives.<\/p>\n\n\n\n

\u201cThis \u2018Made in Canada\u2019 movement has got legs, and it\u2019s a real opportunity for Canadian producers, manufacturers and retailers,\u201d says Henderson.<\/p>\n\n\n\n

Canada\u2019s food producers can take advantage of grassroots support by noting Made in Canada on packaging (where appropriate), telling stories on social media, and making their local status known.<\/p>\n\n\n\n

With inter-provincial trade barriers coming down<\/a>, interest in supporting local businesses skyrocketing, and retailers labelling Canadian goods on their shelves<\/a>, now is the time to explore opportunities to expand further into the domestic market.<\/p>\n\n\n\n

Look to new international markets<\/h2>\n\n\n\n

Canadian food producers have long maintained their focus on the American market, but now maybe be a great time to look further afield.<\/p>\n\n\n\n

Canada has 15 active free trade agreements<\/a> that cover 51 global markets, whose combined GDP accounts for 61% of the global economy. Canada is also widely recognized<\/a> for having one of the strongest food safety systems in the world, meaning local producers are well equipped to meet international standards.\u00a0<\/p>\n\n\n\n

\u201cIn an environment where standards are being relaxed, our safety standards, our requirements around traceability, all of that works to our advantage,\u201d Henderson says.<\/p>\n\n\n\n

One of the first places Henderson says Canadians should look to is the country\u2019s other North American trading partner.<\/p>\n\n\n\n

\u201cWe\u2019ve already got logistics, supply chains and trade routes established with Mexico, so that\u2019s a strong potential market for Canadian producers to explore,\u201d she says. \u201cBut don\u2019t ignore Europe or the Asia-Pacific, because the Canadian brand has a lot of strength, and its diversity positions it well to serve foreign tastes.\u201d\u00a0 \u00a0<\/p>\n\n\n\n

Those looking further afield can explore their options with RBC Global Connect<\/a>, which provides resources, news and insights on foreign trade opportunities for Canadian businesses.<\/p>\n\n\n\n

\u201cWe work very closely with the Export Development Bank of Canada to provide advisory solutions to help our clients export,\u201d says Johnny Blancas, RBC\u2019s Director, Senior Commercial Markets. \u201cWe also offer a Global Trade hub<\/a> where we connect local clients with global partners, whether they\u2019re looking for a customer or a vendor to engage with outside of North America.\u201d \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n\n\n\n

Find ways to circumvent tariffs<\/h2>\n\n\n\n

While investing in technology and seeking new markets can help blunt the effects of American tariffs, Canada can\u2019t afford to ignore the world\u2019s largest consumer market at its doorstep entirely.<\/p>\n\n\n\n

\u201cThe U.S. is always going to be the closest, most accessible, largest market, and avoiding it isn\u2019t always realistic,\u201d Henderson says, advising Canadian food producers to reduce their exposure to tariffs by reassessing how much crosses the border: \u201cYou need to take a hard look at your supply chains and sourcing and try to get more local.\u201d<\/p>\n\n\n\n

In some cases that will require increasing domestic production to serve the Canadian market, and in others it may require beefing up production in the United States for products bound for American shelves.<\/p>\n\n\n\n

\u201cWhat we\u2019re hearing from customers is they\u2019re looking for ways to approach their supply chain differently\u2014finding other suppliers, other vendors\u2014not just from the U.S. but globally, to avoid reciprocal tariffs on products coming into Canada,\u201d says Blancas. \u201cAs a banking partner, we try to bring in some advisory capabilities on trade financing, and help our clients better understand the global trade value proposition.\u201d<\/p>\n\n\n\n

Talk to the experts<\/h2>\n\n\n\n

Staying on top of rapidly changing trade policies and their downstream impacts is itself a full-time job.<\/p>\n\n\n\n

Canadian food producers already have enough on their plate, which is why it\u2019s important to seek advice from industry experts tailored to their unique circumstances.<\/p>\n\n\n\n

\u201cRBC\u00a0can help\u00a0clients\u00a0build\u00a0growth\u00a0strategies\u00a0and\u00a0manage\u00a0risk, not only with the expertise we bring to the table, but by connecting them with other resources within the bank and throughout the broader ecosystem.\u201d<\/p>\n\n\n\n

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