Trade 101: 10 Things To Know About US-Canada Ag Trade

Written by: Andrew Jason

By Christina Connelly, Agri-Food Trade Commissioner, Consulate General of Canada ([email protected])

Every day, more than $2 billion worth of goods and services cross the US-Canada border. While trade is an extremely complex operation, we brought in Christina Connelly, Agri-Food Trade Commissioner, Consulate General of Canada, to help simplify the matter.

1. We are #AgPartners

Canada and the United States enjoy the largest agricultural bilateral trading relationship in the world, creating jobs and economic opportunities in both countries. The U.S. exports more to Canada than to China, Japan and the United Kingdom combined! In fact, Canada is the top ag export destination for 28 U.S. states, including North Dakota and Minnesota. Two-way agricultural trade was worth more than US $48 billion in 2017. U.S. processed food and beverage products make up more than half of the ag exports from the U.S. to Canada ― think Cheerios from Minnesota-based General Mills, made with oats from western Canada that are processed in Iowa!  

2. Canada’s Ag Economy is Booming

Canada’s 200,000 farms average about 820 acres in size. In 2016, Canadians farmed a total area of 159 million acres, contributing US $1.7 trillion to Canada’s GDP. Exports are an important part of Canadian agriculture as the country produces more than it consumes. Top exports include grains and oilseeds, beef, cattle, hogs, pork, pulses (peas, beans, lentils) and horticulture (potatoes).

3. Canadian Ag-Tech is Sizzling

Some of the leading global ag-tech companies call Canada home. From genetics and breeding to farm management platforms and robotics, Canada’s ag-tech scene is heating up. Take Dot Technology Corp., a Saskatchewan-based company that’s creating the world’s first autonomous power platform capable of handling a variety of agricultural implements, including a dry spreader in collaboration with New Leader Manufacturing in Iowa. Or New Brunswick-based Somadetect that developed an AI-enabled in-line milk sensor to help dairy farmers monitor the health of their herd at every milking. Programs like the Canadian Agricultural Partnership, which is a five-year, CA $3 billion investment by federal, provincial and territorial governments help to strengthen Canada’s agricultural sector and continue to move the needle on Canadian innovation.

4. What is NAFTA?

The North American Free Trade Agreement (NAFTA) came into effect on January 1, 1994, removing tariffs and other trade barriers between Canada, the U.S. and Mexico. Since then, the North American economy has more than tripled, making it the biggest economic region in the world today: a US $20.7 trillion market with around 478 million consumers. U.S. exports of food and agricultural products to Mexico and Canada have quadrupled since NAFTA came into force. Trade between NAFTA members is estimated at more than US $100 million per hour.

5. How do NAFTA and the Canada-US Economic Relationship Affect Jobs and Trade in the US?

Millions of U.S. jobs depend on trade and investment with Canada. Canada is the largest single export market for the U.S. and the number one market for most U.S. states, including North Dakota and Minnesota. In fact, North Dakota sells more to Canada than to all other countries combined! In 2018, bilateral trade reached US $721.2 billion, representing almost US $2 billion worth of goods and services crossing the border every day. 

6. What is USMCA?

On September 30, 2018, negotiations concluded on a modernized trilateral agreement known as the U.S.-Mexico-Canada Agreement (USMCA). USMCA preserves tariff-free access in the North American trading bloc and secures essential cross-border supply chains that make North America more globally competitive. The agreement includes updates in key areas, including rules of origin for automotive manufacturing, agriculture, labor, intellectual property rights, culture and dispute settlement. The USMCA preserves existing agriculture trade commitments between Canada, the U.S. and Mexico, and expands U.S. market access in Canada for certain agricultural products. Until the agreement is ratified in all three countries, NAFTA remains in effect.

7. Cooperation at our Shared Border

Every day, around 400,000 people and US $2 billion in goods and services cross the Canada-U.S. border. Canadian and U.S. border agencies work together to facilitate the movement of legitimate travelers and products across the shared border in a way that is efficient and secure for both countries. Canada and the U.S. cooperate within law enforcement teams on both the land and marine border to enforce laws, share intelligence and manage the border between official ports of entry.

8. Agriculture Knows No Border

We make great food together because our supply chains are highly integrated. In many agricultural industries ― such as cattle, pork and soybean crushing ― NAFTA has enabled intra-industry efficiencies in which products are easily traded across borders. Take a simple burger: the beef could come from cattle born in Alberta, raised in Nebraska and processed in Colorado; the bun may have been baked in California with flour from Saskatchewan; the bacon could be from pigs born and raised in Manitoba and processed in Iowa. We also share expertise through ag equipment and technology. During harvest time in Canada, it is common to see John Deere combines, built in Iowa, in farm fields on the Canadian Prairies. 

9. Canada: A Great Place for Business

A stable business climate, low taxes and business costs, a highly educated and skilled workforce, generous R&D incentives and preferential access to global markets make Canada an ideal destination for American companies to grow their business. Canada has a highly competitive corporate tax system―one of the most competitive in the G7. Canada has been ranked by the World Bank as the easiest place to start a business in the G7 and OECD. Canadian-based companies have preferential access in Asia, Europe and Latin America through numerous free trade agreements. Canada also has a deep and diverse talent pool ― the most highly educated among OECD member countries.

10. Let’s Keep a Good Thing Growing

Canada is open for business, and there is no greater trading relationship than that between the U.S. and Canada. The Consulate General of Canada in Minneapolis services a five-state area of North Dakota, Minnesota, Iowa, South Dakota and Nebraska. Reach out to us with questions about U.S.-Canada ag trade and business development any time!

North Dakota & Canada: A Love Story

North Dakota exports $5.8 billion in goods to Canada annually
North Dakota exports to Canada by industry

  • Agriculture: 9%
  • Chemicals: 4%
  • Energy: 74%
  • Equipment & machinery: 7%
  • Transportation: 3%
  • Other: 3%

North Dakota imports $2.1 billion in goods from Canada annually
North Dakota imports from Canada by industry

  • Agriculture: 17%
  • Chemicals: 10%
  • Energy: 12%
  • Equipment & machinery: 18%
  • Forest products: 3%
  • Minerals & metals: 12%
  • Transportation: 8%
  • Other: 20%

Top North Dakota goods exports to Canada

  • Fuel oil: $2.3 billion
  • Crude petroleum: $1.8 billion
  • Natural gas & other gases: $185 million
  • Cereals: $140 million
  • Tractors: $118 million
  • Agricultural machinery: $118 million
  • Oil seeds: $109 million
  • Organic chemicals: $109 million
  • Animal feed & food industry residues: $103 million
  • Beverages & alcohol: $91 million

Top North Dakota goods imports from Canada

  • Oil seeds: $163 million
  • Crude petroleum: $142 million
  • Iron & steel tubes, pipes & sheets: $123 million
  • Fertilizers: $98 million
  • Cereals: $91 million
  • Agricultural machinery: $89 million
  • Inorganic chemicals: $85 million
  • Compressors & pumps: $83 million
  • Motor vehicle parts: $79 million
  • Iron & steel alloys & semi-finished products: $63 million

* Stats courtesy of Canada Consulate
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