Canada Initiative

Canada Initiative “Helping southern U.S. companies export food & agricultural products around the world.” www.susta.org

The Big Picture Brief Description • U.S. is Canada’s number one trading partner. • The United States is Canada's largest agricultural trading partner, buying 51% of Canadian exports and supplying 59% of Canadian imports. • Agricultural exports from the United States to Canada accounted for 16% of total U.S. food and agricultural product exports of $98.5 billion. • Consumer-oriented agricultural products accounted for 76% of total U.S. food and agricultural product sales to Canada in CY2009 with fresh and processed fruits and vegetables, snack foods, red meats, breakfast cereals, and fruit and vegetable juice products as the category leaders. “Helping southern U.S. companies export food & agricultural products around the world.” www.susta.org

The Big Picture Current Exports to Canada “Helping southern U.S. companies export food & agricultural products around the world.” www.susta.org

The Big PictureProducts Exported to Canada (2010) Source: Statistics Canada “Helping southern U.S. companies export food & agricultural products around the world.” www.susta.org

The Big PictureProducts Exported to Canada (2010), continued “Helping southern U.S. companies export food & agricultural products around the world.” www.susta.org

The Big Picture:Opportunities and Challenges “Helping southern U.S. companies export food & agricultural products around the world.” www.susta.org

The Big PictureOpportunities • Pressure is growing on Canada to dismantle the quotas and import restrictions that protect its dairy and poultry producers from foreign competition • Geographic proximity • Little language barrier (exception: Quebec) • Due to NAFTA, there are limited tariffs and fee barriers • Canadian food preferences tend to be similar to those of Americans “Helping southern U.S. companies export food & agricultural products around the world.” www.susta.org

Challenges to Export • Market size: The relative market size is small, with a limited number of retailers, brokers, importers and distributors • Changing Consumer and Societal Demands: Canadian consumers are demanding more variety, convenience, environmentally-friendly and healthier food choices • Increased Government Support: Government support of domestic public R&D in agri-food innovation and competitiveness has increased • Technical requirements (e.g. product nutrition labeling) may pose challenges for select SUSTA producers “Helping southern U.S. companies export food & agricultural products around the world.” www.susta.org

ChallengesGMO Ingredients • Health Canada must be notified with sufficient accompanying information prior to the sale or advertisement of novel foods which are products ofgenetic modification • Voluntary claims on foods that are and are not products of genetic engineering may be made provided such claims are truthful, not misleading, not deceptive, and not likely to create an erroneous impression of a food's character, value, composition, merit or safety “Helping southern U.S. companies export food & agricultural products around the world.” www.susta.org

ChallengesTariff Barriers • First Come, First Served (FCFS) Tariff Rate Quotas (TRQ): Import quota allocations are not issued to individual companies • Products subject to FCFS TRQs • Margarine • Wheat and wheat products • Barley and barley products “Helping southern U.S. companies export food & agricultural products around the world.” www.susta.org

ChallengesTariff Barriers, continued • Tariff Rate Quotas (TRQ) Subject to Allocations: importers must have a specific import permit issued by the Minister for International Trade • Goods subject to these TRQs • Broiler hatching eggs and chicks, chicken, turkey • Eggs and egg products • Cheese, butter, milk and cream • Butter milk, yogurt, ice cream and other dairy products “Helping southern U.S. companies export food & agricultural products around the world.” www.susta.org

ChallengesNon-Tariff Barriers • Alcoholic Beverages: Provinces and territories have full control over the importation of intoxicating liquor into their jurisdictions • Dairy Products: Subject to Dairy Products Regulations under the Canada Agricultural Products Act • Eggs and Processed Eggs: Subject to Egg Regulations and Processed Egg Regulations of the Canadian Agricultural Products Act “Helping southern U.S. companies export food & agricultural products around the world.” www.susta.org

ChallengesNon-Tariff Barriers, continued • Fish and Fish Products: Subject to the Fish Inspection Act and Regulations, which contain requirements for wholesomeness, labeling, packaging, grading, and health and safety • Food Additives: Must conform to specifications in the Food Chemicals Codex • Food Colour: Regulations concerning food colours are listed in the Food and Drug Regulations and must be certified “Helping southern U.S. companies export food & agricultural products around the world.” www.susta.org

ChallengesNon-Tariff Barriers, continued • Foods for Special Dietary Use, including Weight Loss: Subject to Food and Drug Regulations • Fresh Fruits and Vegetables: Regulated by the Fresh Fruit and Vegetable Regulations under the Canada Agricultural Products Act (includes nuts) • Fruits and Vegetables, Processed: Subject to Processed Products Regulations under the Canada Agricultural Products Act “Helping southern U.S. companies export food & agricultural products around the world.” www.susta.org

ChallengesNon-Tariff Barriers, continued • Honey: Regulated by the Honey Regulations under the Canada Agricultural Products Act • Infant Formula (Human Milk Substitutes): Regulated under the Food and Drug Regulations and manufacturers • Low Acid Foods in Hermetically Sealed Containers (Canned Foods): To prevent and control any public health threat • Maple Products: Subject to the Maple Products Regulations under the Canada Agricultural Products Act “Helping southern U.S. companies export food & agricultural products around the world.” www.susta.org

ChallengesNon-Tariff Barriers, continued • Meat and Poultry: Regulated by the Meat Inspection Act and Regulations, the Health of Animals Act and Regulations and the Export and Import Permits Act • Novel Foods - Biotechnology: Subject to the Novel Food Regulations under the Food and Drugs Act and Regulations • Sports Nutrition Products: Canada has very specific compositional and labeling requirements, with strict controls on the addition of vitamins, minerals and amino acids to foods “Helping southern U.S. companies export food & agricultural products around the world.” www.susta.org

Importing into Canada “Helping southern U.S. companies export food & agricultural products around the world.” www.susta.org

Road Map • Step 1: Contact SUSTA for possible financial assistance and marketing advice • Step 2: Research the competitive marketplace • Step 3: Locate a broker and distributor • Step 4: Understand Canadian government standards and regulations that pertain to your product “Helping southern U.S. companies export food & agricultural products around the world.” www.susta.org

Documentation • Two copies of cargo control document • Two copies of invoice • Two copies of completed Canada Customs Coding Form • One copy of Certificate of Origin • Any import permits, health certificates, or forms that other federal government deptments require • Calculate and declare the value for duty of the imported goods (where necessary) “Helping southern U.S. companies export food & agricultural products around the world.” www.susta.org

Regulations • Labeling Requirements: Bilingual labels, metric quantities, list of ingredients, common name of product, country of origin, etc. • Nutrition Labeling: The U.S. nutrition panel is not permitted on labels of foods sold in Canada “Helping southern U.S. companies export food & agricultural products around the world.” www.susta.org

Regulations • Packaging and Container Regulations: Canadian regulations govern package sizes for fruits and vegetables, processed horticultural products and processed meats that may differ from the U.S. sizes • Food Additive Regulations: Most foods approved for sale in the U.S. would comply with Canadian additive regulations but differences can occur in the permissible levels and uses of food colorings and food preservatives “Helping southern U.S. companies export food & agricultural products around the world.” www.susta.org

The Buying Process • Majority is through brokers, importers, distributors or wholesalers • A broker (or agent) sells your product without taking ownership • A distributor (or wholesaler) buys your product at a discount from the retail price and resells it to other firms • There are more than 800 brokers & distributors in Canada • A regional and/or national focus • Retail and foodservice • Look for non-competing products, exclusivity, innovation • Partial listing of Canadian food brokers is available on the Foreign Agricultural Service website http://gain.fas.usda.gov “Helping southern U.S. companies export food & agricultural products around the world.” www.susta.org

Retail versus Foodservice Landscape “Helping southern U.S. companies export food & agricultural products around the world.” www.susta.org

Retail Landscape • There are only two nationwide grocery store chains in the country, Loblaw Cos. Ltd. and Sobeys Inc. • Overall, 60.3% of retail food sales are from grocery store chains • Chains are most important in the Atlantic provinces (77.8%) but much less important in Quebec (36.4%) • Blurring of boundaries between food and non-food retailers • Specialty retail not as developed “Helping southern U.S. companies export food & agricultural products around the world.” www.susta.org

U.S.Exporter Customs Importer Broker Distributor Wholesaler Retailer Retail Distribution Process “Helping southern U.S. companies export food & agricultural products around the world.” www.susta.org

Retail Costs • Duties and Taxes • Canadian Food Inspection Agency fees (for products containing items regulated by the CFIA) • Import Permit Fee and Customs Brokers Fee (if applied through a customs broker) • Broker/Distributor Fee (if required) • Labeling Consultant Fee (if required) • Trademark Application Fee (Approximately $500, but not necessary) • Listing Fee: Ranges from $2,000/SKU to $124,000/SKU • Other costs: Variable funding to drive sales (Flyer, Demos, etc.) “Helping southern U.S. companies export food & agricultural products around the world.” www.susta.org

Foodservice Landscape • Top 5 Chains in Canada: Tim Hortons, McDonalds, Cara, Tricon and Subway • Approximately 10% of the meals/snacks are sourced from restaurants • Ethnic & specialty foodservice sector is growing • Foodservice is the third-largest consumer services expenditure category “Helping southern U.S. companies export food & agricultural products around the world.” www.susta.org

U.S. Exporter Customs Importer Broker Wholesaler Re-packer Distributor Hotel Institution Restaurant Foodservice Distribution “Helping southern U.S. companies export food & agricultural products around the world.” www.susta.org

Foodservice Costs • Duties and Taxes • CFIA Fees (for products containing items regulated by the CFIA) • Import Permit Fee and Customs Brokers Fee (if applied through a customs broker) • Broker/Distributor Fee (if distributed through a broker or distributor) “Helping southern U.S. companies export food & agricultural products around the world.” www.susta.org

2012 Planned Activities “Helping southern U.S. companies export food & agricultural products around the world.” www.susta.org

We are Here to Help! • Trade Shows • SIAL Show, Montreal (May) • Grocery Innovations Show, Toronto (September) • Landscape Ontario’s Expo, Toronto (October) • Wine Trade Show, Montreal (TBD) • Outbound Trade Missions • HVAP Mission to Ontario (September) “Helping southern U.S. companies export food & agricultural products around the world.” www.susta.org

We are Here to Help! • Inbound Trade Missions • Produce Mission, Florida (March) • Seafood Mission, Virginia/Florida (June/October) • Horticulture Trade Mission, Florida and Middle Tennessee (July) • Fancy Foods Show, Washington DC (July) • PLMA Show, Chicago (November) “Helping southern U.S. companies export food & agricultural products around the world.” www.susta.org

Thanks • SUSTA • 701 Poydras Street, Suite 3725 • One Shell Square • 504-568-5986 • www.susta.org • Argyle Communications • 175 Bloor Street East, South Tower, Suite 1007 • Toronto, ON M4W 3R8 Canada • 416.968.7311 • ageorge@argylecommunications.com “Helping southern U.S. companies export food & agricultural products around the world.” www.susta.org

Canada Initiative