For decades, Canadian farmers have relied on U.S. markets to purchase the vast majority of our country’s exported agricultural product. Potatoes are no exception: a whopping 86 per cent (totalling $1.37B) of all exported potatoes and potato products, of which the lion’s share is frozen fries, headed south across the border last year.
But, with NAFTA still unresolved, harsh new tariffs now targeting Canadian steel and aluminum, and trade talks of all kinds getting heated, many Canadian farmers are asking whether we’ve put too many of our eggs into one export basket. While I don’t think Canadian potato producers should worry (at least not yet), the current trade unrest is a good reminder that our industry needs to diversify its marketing plan.
The current U.S. administration has recently surprised Canada with several unexpected trade levies. This, together with the fact President Trump has repeatedly stated his dissatisfaction with Canada’s supply management system, means Canadian agriculture is right to perceive a trade threat. While Canadian potatoes are not likely to be among the most obvious to catch the U.S. administration’s critical eye, a broad-stroke ag tariff that affects multiple commodity groups, similar to the broad retaliatory tariff Mexico just levied against the U.S., is possible.
That said, many of the largest fry producers, chipping companies and fresh potato packers have infrastructure on both sides of the border. These major potato users will argue strongly against the inconvenience and cost of new tariffs. Their voices are likely to carry significant weight with the U.S. administration and may prove the biggest factor in keeping potatoes out of Canada-U.S. trade disputes.
Regardless of whether the U.S. decides to institute trade barriers now or not, the entire Canadian potato industry needs to push hard towards building additional export markets. Diversification is good advice for any industry in any position. While it can be daunting to push outside of one’s comfort zone, the more customers you have, the more stable your business will be.
Diversification requires much more than just finding a new customer; one needs to be able to meet that new customer’s demands. The Canadian potato industry will not be able to shift export programs nimbly, since consumption trends and desired products are very different in differing markets. Diversification will be hard, slow work, but there’s no better time to start than now.