The amount of processed food imported into Canada has grown significantly over the last eight years, while processed food exports have stalled, according to a report from the Canadian Agri-Food Policy Institute.
Prior to 2004, Canada's trade deficit in the area of processed food was relatively steady at around $1 billion. Since then, it has ballooned to $6.3 billion last year.
"Canada is experiencing a rapidly declining trade balance in the processed food space," explains CAPI President and CEO David McInnes. "Our report aims to draw attention to this, and raise some questions about the implications of this for the agri-food sector as a whole."
He says there are a number of possible reasons for the change.
"It could have to do with the appreciation of the Canadian dollar. It has to do with how we manage our costs - some regulatory issues probably have to do with this," explains McInnes. "It also has to do with firms that have mandates to expand into Canada. Is processing being consolidated outside the country to serve the Canadian market? There are probably a variety of reasons."
He says for farmers, the increasing trade deficit means less of the "value-adding" to commodities is happening in Canada.
"The processed foods sector pulls a lot of product from primary producers," says McInnes. "Consumers and retail outlets also want to serve Canadian-sourced food, so all along the supply chain, a deficit has implications."
He notes CAPI commissioned the report to lead dialogue on the state and prospects of the processed food sector.