Incoming U.S. president Donald Trump has threatened high tariffs on imports from countries including Canada, raising concerns about inflation within the U.S. but also the potentially devastating impact on Canadian agriculture and food companies as well as consumers.
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Ottawa agritech companies say a potential tariff war between Canada and the United States puts a spotlight on the urgent need to bolster the country’s domestic food production capacity.
Incoming U.S. president Donald Trump has threatened high tariffs on imports from countries including Canada, raising concerns about inflation within the U.S. but also the potentially devastating impact on Canadian agriculture and food companies as well as consumers.
Noting that 95 per cent of leafy greens consumed in Canada are imported from the U.S., Jon Lomow, the co-founder and president of Ottawa-based Fieldless Farms, said a trade war between the two countries would hit Canadian consumers hard.
“We rely on other countries to feed us, and that’s hugely risky,” said Lomow, whose company operates a 60,000-square-foot indoor facility in Cornwall that uses renewable energy to grow lettuce, kale, spinach and mushrooms. “As a country, we’re not ready for this.”
Fieldless Farms, which has raised more than $20 million in venture capital since it was founded in 2019, employs about 40 people and supplies produce to various Ontario grocery chains, including Farm Boy and Loblaws.
Lomow said he expects sales to increase if Canada and the U.S. follow through on their tariff threats.
“If there are retaliatory tariffs, obviously that’s going to make (produce) more expensive, and it’s going to make us far more competitive, that’s for sure,” he said. “We’re getting emails now saying, ‘Thank you so much. I want to stop buying American products because of what’s going on, and you let me do that.’”
Experts say U.S. tariffs on Canadian goods could accelerate a push to ramp up domestic food processing and manufacturing, even as some companies consider moving operations south.
But if real change is to happen, they say more government support is needed.
“Until ... we actually focus our attention on a strong manufacturing strategy for food in this country, we're just going to continue to try to incentivize people to do things, but not necessarily have a strong plan in place,” Michael Graydon, CEO of Food, Health and Consumer Products of Canada, recently told The Canadian Press.
Canada’s food processing and manufacturing capacity has declined significantly in recent decades as the country's reliance on imported products rose, said Graydon. But after the supply chain struggles of the COVID-19 pandemic and other disruptions, “I think there is a resurrection of this desire to be more self-sufficient."
Canada generally has a trade surplus with the U.S. when it comes to food, meaning it exports more than it imports, said Tyler McCann, managing director of the Canadian Agri-Food Policy Institute. But there are some products where Canada relies heavily on imports from the U.S., he said.
Experts said Canada is particularly vulnerable when it comes to those products, such as fruits and vegetables, and processed foods like jams, sauces and snacks. Those areas could be good targets for boosting domestic capacity, said McCann.
Today, there are several "pushes and pulls" sparking interest in reinvesting in domestic operations, said Evan Fraser, director of the Arrell Food Institute at the University of Guelph.
Technology is one of them, he said, as Canada now has more tools to grow fresh produce year-round. But on a broader level, he said supply chain disruptions and geopolitical tensions are sparking more interest in so-called “nearshoring," or moving operations closer to home.