NAFTA Trade Flows General Agriculture and the Food Industry

1
NAFTA Trade Flows General Agricultureand
theFood Industry
2
Objectives - Food Industry

• Eliminate barriers to trade and facilitate
  cross-border movement of goods and services.
• and
• Increase substantially investment opportunities
  in their territories.

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Commentary - Objectives

• As a result of the NAFTA, the food industry in
  all 3 countries has had no choice but to find
  ways to be competitive, now that trade is
  essentially unrestricted and industry investments
  can be made on a North American or global basis.

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Commentary - Objectives

• The agri-food industry continues to have
  difficulties adjusting to NAFTA in those sectors
  where
• government has guaranteed something to one or
  more industry stakeholders
  or government continues to regulate a
  sector.

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Trade Flows - HVPP

• US high value processed product (HVPP) export
  shares to both Canada and Mexico increased
  significantly.
• Mexican HVPP export shares to both Canada and
  the US increased significantly.
• Canadian HVPP export shares to the US remained
  constant to Mexico declined.

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Bulk Commodities

• Grains
• Oilseeds
• Cotton Jute
• Coffee Beans

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High-Value Processed Products

• Red meat and poultry meat.
• Dairy products, milk and eggs.
• Processed fruit and vegetables.
• Sugar products.
• Imitation dairy products.

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High-Value Processed Products

• Packaged and branded food products.
• Juices.
• Water.
• Beer.
• Wine.

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Processed Intermediates

• Live animals and birds.
• Flour and starch.
• Feeds of all types.
• Oils and fats.
• Hides and fur.

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Processed Intermediates

• Soya products - vegetarian products.
• Ginseng root - functional foods.
• Enzymes - biotechnologies.
• Extracts/oils - nutraceuticals.
• Wool and hair.

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Produce and Horticulture

• Fruits
• Vegetables and potatoes.
• Flowers and plants.
• Nuts and spices.
• Mushrooms.

12
Related Agriculture

• Fish and shellfish.
• Lumber and wood products.
• Spirits.
• Cigarettes and cigars.
• Wool and cotton yarns.

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Food Industry Adjustments

• Consumer Focus
• Value or Supply Chain Relationships
• Marketing Strategies
• Globally Competitive Operations

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Consumer-Driven Marketplace

• Price
• Quality
• Variety
• Safety and Health
• Nutrition

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Price Food Expenditure Shares

• Canada - 9.8
• USA - 10.9
• Mexico - 33.2
• Japan - 17.8
• Australia - 14.6

16
Variety and Availability

• Consumer wants apples, bananas, mango,
  corn-on-the-cob, available every day.
• Consumer wants access to any product discovered
  in travel or from a home country.
• Consumers want products as inputs to recipes
  available on demand - shellfish lemon grass.

17
Food Safety

• Most agri-food products historically grown,
  raised, processed/manufactured and consumed
  locally.
• Processors, retailers, restaurants, and food
  service largely purchased local.
• Consumers did not question the food chain re
  safety
• Food safety issues/problems were localized or,
  in the case of imports, isolated at the border.
• No longer true today.

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Food Value Chain

• Consumer
• Retailer or Food Service
• Wholesale/Distribution
• Processor
• Producer

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Marketing Strategies

• Adding value to commodities.
• New food products (e.g., nutraceuticals)
• Certified Products
• Organics
• Angus Beef
• Specialty Eggs

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Marketing Strategies

• Quality Assurance - VQA for wine.
• Farm Processing/Direct Farm Sales
• Complementary Marketing of Products
• Regional Marketing
• Local identification programs
• Psychographic profiling

21
Globally Competitive Operations

• Source product/inputs globally.
• Provide quantity and quality based upon a
  national or continental market.
• Invest in other North American markets.
• Protect domestic market through marketing
  strategies, not protectionism.