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.

3. 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.

4. 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.

5. 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.

6. Bulk Commodities • Grains • Oilseeds • Cotton & Jute • Coffee Beans

7. High-Value Processed Products • Red meat and poultry meat. • Dairy products, milk and eggs. • Processed fruit and vegetables. • Sugar products. • Imitation dairy products.

8. High-Value Processed Products • Packaged and branded food products. • Juices. • Water. • Beer. • Wine.

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

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

11. 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.

13. Food Industry Adjustments • Consumer Focus • Value or Supply Chain Relationships • Marketing Strategies • Globally Competitive Operations

14. Consumer-Driven Marketplace • Price • Quality • Variety • Safety and Health • Nutrition

15. 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.

18. Food Value Chain • Consumer • Retailer or Food Service • Wholesale/Distribution • Processor • Producer

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

20. 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.