MNP Finds 65% of Exporters Plan Market Expansion as Tariff Pressure Hits Canada’s Food Industry

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Canada’s food exporters are increasingly looking beyond their traditional markets, and a new industry outlook suggests the shift is gathering momentum.

A report released by Canadian accounting and advisory firm MNP on October 13, 2026, finds that 65% of exporters are planning market expansion as tariffs, rising operating costs and changing trade relationships reshape the country’s food and beverage industry.

The findings arrive as Canadian companies face growing uncertainty over their access to American customers. MNP reports that exports to the United States have declined 3.8%, while exports to other markets have increased 11.2%.
For food manufacturers, farmers and processors, the challenge extends beyond finding new buyers. Businesses must manage production expenses, supply chains and changing consumer preferences while remaining competitive internationally. The industry’s response could influence everything from factory investment to prices on Canadian grocery shelves.

MNP Reports That 65% of Exporters Are Planning Market Expansion

MNP’s Food and Beverage Business Outlook: Momentum Built. Advantage Ahead., released October 13 ahead of World Food Day, identifies market diversification as an important response to growing trade uncertainty. The firm reports that 65% of exporters are planning market expansion, reflecting efforts to identify additional customers and reduce exposure to unpredictable trading relationships. The finding is particularly significant because the United States has traditionally been the most convenient and commercially important foreign market for many Canadian food manufacturers.

However, the 65% figure describes expansion intentions, not completed investments or confirmed export sales. MNP’s public announcement does not provide the sample size or detailed methodology behind that statistic, making it important not to interpret the result as proof that two-thirds of all Canadian exporters have already entered new markets. The broader message remains significant: companies are reconsidering where future growth should come from. For smaller processors, that could mean developing relationships with distributors overseas, entering new retail channels or exploring partnerships that would previously have seemed unnecessary.

U.S. Tariffs Are Creating Financial Pressure Across the Food Supply Chain

Tariff uncertainty affects more than the price of food crossing an international border. MNP warns that Canadian food and beverage businesses can encounter additional expenses involving agricultural ingredients, packaging materials, equipment, transportation and distribution. A manufacturer might avoid a direct tariff on its finished product but still face higher costs because a supplier imports affected materials. These indirect pressures can squeeze profit margins, complicate production planning and make businesses reluctant to commit capital to expansion.

Recent trade measures have intensified those concerns. Following new American tariffs announced in August 2026, Canada introduced additional countermeasures effective September 8, applying rates of 15%, 25% and 50% to selected American products. The affected categories include certain dairy products and agricultural equipment, alongside industrial goods. Not every Canadian food export faces these tariffs, and individual impacts depend on the product and applicable trade rules. Nevertheless, a company that relies on cross-border suppliers may still experience substantial disruption even when its own exports remain eligible for preferential treatment.

Canadian Exports Are Already Showing Signs of Geographic Diversification

Two export figures illustrate why Canadian food businesses are looking for alternatives. In its October outlook, MNP reports that exports to the United States declined 3.8%, while exports to non-U.S. destinations increased 11.2%. The firm also highlights Canada’s C$24.3-billion agri-food trade surplus, demonstrating the country’s substantial presence in international food markets. These findings suggest overseas demand could provide an important counterweight when trade relationships with Washington become uncertain, although different agricultural industries face different conditions.

MNP’s public announcement does not specify the comparison period for those percentage changes, so they should not be interpreted as results from a particular month or quarter. Broader government figures provide additional context. Agriculture and Agri-Food Canada reported that the country exported nearly C$101.2 billion in agri-food, fish and seafood products during 2025, compared with C$100.4 billion in 2024. Those figures cover a wider range of products than processed foods alone. For exporters, the opportunity is to spread commercial risk across several destinations rather than concentrating revenue among a limited number of foreign customers.

The United States Still Dominates Canadian Processed Food Exports

Despite growing interest in international diversification, the United States remains overwhelmingly important to Canada’s food manufacturing industry. Agriculture and Agri-Food Canada reports that processed food and beverage exports reached a record C$59.8 billion in 2024, representing a 3.8% increase from 2023. Approximately 80% of those exports went to the United States, compared with 5% to China and 4% to Japan. Although Canadian processed food products reach almost 200 countries, those three markets accounted for approximately 89% of the industry’s export value.

There are practical reasons this trading relationship developed. Geographic proximity allows relatively quick truck deliveries, established distribution networks and convenient coordination with major North American retailers. Manufacturers producing fresh or frozen products can often reach American warehouses more efficiently than customers across an ocean. Diversification does not necessarily mean abandoning these advantages. Instead, businesses can gradually develop additional overseas customers while maintaining profitable American relationships. The objective is to reduce vulnerability so that a sudden tariff increase, border disruption or change in U.S. retail demand does not determine the future of an entire Canadian production facility.

Canada’s Food Processing Industry Has Billions of Dollars at Stake

Food manufacturing represents a substantial part of Canada’s economy, making the consequences of trade uncertainty particularly important. Federal government figures show that food and beverage processing generated approximately C$173.4 billion in manufacturing sales during 2024, accounting for 20.3% of total Canadian manufacturing sales. The industry employed roughly 318,400 people nationwide. Meat processing was the largest segment, generating C$43.8 billion in sales, followed by dairy manufacturing at C$19.6 billion and grain and oilseed milling at C$18.9 billion. These businesses support agricultural communities, transportation providers and regional employment.

Recent statistics also demonstrate why the industry’s performance cannot be characterized as universally declining. Statistics Canada recorded approximately C$13.9 billion in seasonally adjusted food manufacturing sales in July 2026, an increase of 4.9% compared with July 2025 but a decline of 1.4% from June 2026. These figures measure sales value rather than physical production or profitability. A business can generate higher revenue while simultaneously facing rising costs for ingredients, wages and equipment. MNP’s concerns therefore focus on the ability of Canadian processors to remain competitive and financially resilient under changing market conditions.

Rising Grocery Costs Bring the Trade Debate Into Canadian Households

The financial pressure on food manufacturers eventually intersects with household affordability. Canada’s Food Price Report 2026, developed by researchers at eight Canadian universities, forecast food price increases of 4% to 6% during the year. The researchers estimated that an average family of four could spend approximately C$17,572 on food in 2026, potentially nearly C$995 more than in 2025. These projections underscore why businesses face difficult decisions when managing higher costs while trying to retain customers who are increasingly sensitive to prices.

More recent figures offer a useful distinction between forecasts and actual developments. Statistics Canada reported that grocery prices increased 2.8% in the twelve months ending August 2026, slower than the 3.0% increase in overall consumer prices. However, groceries remained approximately 29% more expensive than in August 2021. Tariffs can contribute to higher costs through imported ingredients and transportation, but currency movements, agricultural commodity prices, weather, wages and retail competition also influence food inflation. The entire increase in grocery prices cannot reasonably be attributed to tariffs. For manufacturers, improving efficiency while maintaining acceptable prices has become an important competitive challenge.

Expanding Domestic Food Processing Could Help Canada Capture More Value

Canada possesses substantial agricultural resources, but MNP argues that the country could generate greater economic value by expanding domestic food processing. Its latest outlook ranks Canada seventh among the G20 countries assessed for agri-food competitiveness, reflecting strengths in agricultural production and innovation. However, producing raw agricultural commodities is only one part of the economic opportunity. Transforming those materials into finished products can create additional manufacturing activity, improve profitability and help Canadian businesses reach customers seeking convenient, ready-to-use foods.

Increasing processing capacity requires investment in machinery, facilities, packaging systems and workforce development. This can be particularly challenging for smaller manufacturers. Agriculture and Agri-Food Canada estimates that approximately 8,800 food and beverage processing establishments employ workers nationwide, with roughly 92% having fewer than 100 employees. Many cannot finance major expansions as easily as multinational competitors. MNP emphasizes that greater commercialization and processing capacity could help Canada retain more economic value domestically before goods are exported. Achieving that objective will depend on sufficient financing, reliable demand and manufacturers’ ability to meet international standards.

Technology Investment Could Become a Competitive Advantage for Canadian Exporters

Innovation represents another opportunity for Canada’s food and beverage industry. MNP reports that nearly C$515 million was invested in Canadian agri-food technology startups during the first half of 2025. However, the firm estimates that approximately 75% of agricultural research and development funding comes from public sources, while private investment accounts for less than 25%. Those figures point to an important challenge: developing new technology does not automatically mean Canadian processors have the financial resources or operational capacity to adopt it commercially.

Artificial intelligence, automated production equipment and advanced demand forecasting could help businesses reduce waste, manage inventory and improve manufacturing efficiency. For example, better sales forecasting can help a processor avoid producing excessive quantities of perishable food, while improved packaging technology may allow products to travel farther without compromising quality. MNP acknowledges that digital adoption remains uneven among smaller businesses, creating opportunities for targeted investment. As competition intensifies, manufacturers that can improve productivity may be better positioned to manage rising costs and establish profitable relationships in international markets.

Europe and Asia Offer Opportunities but Bring New Exporting Challenges

International trade agreements already provide Canadian food exporters with opportunities beyond the United States. The Canada-European Union Comprehensive Economic and Trade Agreement, known as CETA, eliminated tariffs on 94% of European Union agricultural tariff lines when provisional application began in 2017. Meanwhile, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership provides preferential access to markets including Japan. Eligible Canadian products such as meat, grains, pulses and maple syrup can benefit from reduced trade barriers under these arrangements.

However, exporting internationally involves more than securing favourable tariff treatment. Businesses must comply with local food safety regulations, labelling requirements and product standards, which can vary considerably between countries. The Canadian Food Inspection Agency explains that exporters must satisfy Canadian requirements as well as the importing country’s rules, including applicable certification procedures. Refrigerated products may require specialized transportation and storage infrastructure, adding costs that shelf-stable products can sometimes avoid. Manufacturers must also understand local consumer preferences and establish dependable distribution partnerships. Market diversification can reduce dependence on American customers, but successful expansion requires preparation, investment and consistent execution.

Ottawa Is Offering Financial Support to Help Food Exporters Find New Markets

The federal government has introduced programs intended to support businesses seeking new export opportunities. In February 2026, Agriculture and Agri-Food Canada announced C$75 million over five years for new market-diversification funding streams under the AgriMarketing Program. This investment is separate from the existing C$129.97-million program established through the Sustainable Canadian Agricultural Partnership. The new funding supports eligible small and medium-sized enterprises and national industry associations, with priority attention to sectors affected by trade disruptions, including canola, pulses, pork, fish and seafood.

Under the small-business stream, federal contributions can generally cover up to 70% of eligible project costs, with funding normally below C$100,000 per project and a maximum project duration of 18 months. Eligible activities include market research, trade shows, promotional campaigns and developing international business relationships. These measures could help manufacturers explore unfamiliar markets without bearing every initial expense themselves. However, government assistance does not eliminate the commercial risks associated with expansion. Companies still require competitive products, dependable buyers and sufficient financial resources to fulfil orders once new business opportunities emerge.

Canada’s Food Industry Faces a Choice Between Dependence and Diversification

The findings from MNP suggest that Canada’s food and beverage industry is entering a period of important strategic change. Market expansion does not always require entering another country. Businesses can also reduce commercial concentration by developing new suppliers, targeting different customers, introducing private-label products or expanding domestic distribution partnerships. At their July 2026 meeting in Halifax, federal, provincial and territorial agriculture ministers emphasized market diversification, stronger trade relationships and efforts to reduce unnecessary internal trade barriers. They also outlined priorities for the next agricultural policy framework, scheduled to begin in 2028.

For exporters considering international expansion, the real test will be turning business plans into sustainable revenue. Entering new markets requires understanding consumer demand, managing delivery costs and building relationships that can withstand economic uncertainty. The United States will remain an essential customer for Canadian food manufacturers, particularly those benefiting from established North American supply chains. However, relying too heavily on one destination creates vulnerabilities when trade policies change. MNP’s findings highlight an opportunity for Canadian companies to strengthen domestic manufacturing while developing a broader international customer base. Whether that shift succeeds will depend on investment, competitiveness and the ability to deliver products that customers genuinely want.

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