Canada- Imports and exports continue to flourish

The Canadian pet food industry is strong and continues to grow. Recognized as an essential industry by the government during the pandemic, the sector has grown significantly since early 2020. In April 2022, its total contribution to GDP was C$5.66 billion (€4.31B) and the industry was responsible for over 45,000 full- time equivalent jobs along the supply chain.

While no data is available on the current pet population, there are believed to be more pets today than in 2020 when, according to the Canadian Animal Health Institute, 58% of Canadian households owned at least one dog (7.7 million) or cat (8.1 million). Canadians love their pets and are willing to pay substantial amounts for their food and care, generally following global trends for premiumization and humanization.
 

Sales steadily on the rise

Pet food retail sales in the country grew 5.7% annually from 2016 to 2021 to over C$4.4 billion (€3.4B) and are expected to reach C$5.9 billion (€4.5B) by 2025. Grocery retailers have remained at around 40% of market share, while pet specialty was approximately 13% in 2020. Both these channels have been declining since 2016. While e-commerce continues to grow, it is not as popular as in other countries.

According to 2022 figures from Statista, Ontario is the province with the highest number of pet stores (776), followed by Quebec (506), British Columbia (347) and Alberta (271).

Most imports from its neighbor

Part of the sales growth is due to an increase in US imports – over C$100 million (€76M) in 2021. The US is Canada’s largest trading partner, accounting for 90% of all imports last year (C$1.2 billion / €0.9B).

Canada is a major exporting nation, and pet food is no different. The industry has diversified its trade, with products now going to over 90 countries around the world. In 2021, exports accounted for over C$1.1 billion (€0.8B), up from C$680 million (€518M) in 2017. The largest market is the US, at 40% of total exports, followed by China (almost 20%), the EU region, South Korea, Hong Kong and Japan.

Provincially, Ontario, Alberta and British Columbia were the 3 largest exporters in 2020, followed by Saskatchewan, Quebec and the Maritimes (New Brunswick, Nova Scotia and Prince Edward Island).

Free trade agreements

Canada has the benefit of several free trade agreements that allow for reduced or zero tariffs to much of the world, including the Canada United States Mexico Agreement (CUSMA) – which substituted NAFTA – the Canada-European Union Comprehensive and Economic Trade Agreement (CETA), and the Comprehensive and Progressive Agreement for Trans- Pacific Partnership (CPTPP), along with several bilateral agreements.

The Canadian government continues to have an ambitious trade agenda, with an aggressive Indo- Pacific strategy and ongoing discussions with India, Indonesia, ASEAN, MERCOSUR and other regions.

External and internal challenges

Because Canada enjoys preferential tariff rates from its trade agreements, the biggest challenges the industry faces are ongoing non-tariff trade barriers that generally fall under the commercial requirements of the receiving nations, as well as growing protectionist countries that block imports for political reasons.

Another challenge that is shared by much of the agri-food sector in North America is labor – there are simply not enough skilled workers to fill the many vacancies. The industry is collaborating with other stakeholders to advocate for improved programs and opportunities to increase the labor force.

Through its trade association, and in close cooperation with government partners, the Canadian pet food industry continues to try to advance these issues through advocacy and with other external relations.

Close cooperation in the sector

As the national association for the pet food industry in Canada, the Pet Food Association of Canada (PFAC) represents pet food manufacturers and their suppliers. PFAC members account for almost 80% of market share, and represent Canadian companies, US based companies that do business in Canada, and multinational companies with a presence in Canada.

PFAC’s main role is to advocate on behalf of its members with the government on regulatory and trade challenges, working closely with the Canadian Food Inspection Agency (CFIA) and other government departments.

PFAC provides members with market intelligence and webinars on key markets of interest, working with trade commissioners around the world. It also holds various events throughout the year for members to learn, network, and discuss key industry challenges, trends and the future of the sector.

One area where PFAC is highly active is at the Global Alliance of Pet Food Associations (GAPFA). This group is made up of national pet food associations and corporate members. Its goal is to harmonize pet food trade across the globe. The work done at GAPFA is instrumental in facilitating trade, through working with the World Organization for Animal Health (WOAH) to ensure pet food is considered a safe commodity for certain animal diseases and by mitigating risk through its processing methods.