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Canada and the European Union (EU) organic equivalency arrangement went into effect in June 2011. This streamlined trade between our market has enabled organic food and agricultural products certified in Canada or the EU to be labeled and sold as organic in either market. In addition, the vast majority of the tariff barriers between both jurisdictions were alleviated with the ratification of The Canada-European Union Comprehensive Economic and Trade Agreement (CETA) in September 2017.
After 6 years of CETA and more than 12 years of organic equivalency arrangement with the EU, what does our export look like for cereals and oilseeds in this region of the world? What are some of the factors influencing the EU organic markets?
The state of our exports - Canada's overall volume of organic export to the European Union declined by 30% from 2021 to 2022 (from 30,610 to 21,172 MT). We have seen a consistent decrease in the volume of cereals and oilseed exports in the EU since 2018; with 60% less volume compared to 2018. Table 1 below shows that all the major categories of oilseeds and cereals, except for soybean and other feed & feed ingredients, have declined when compared to the pre-pandemic volume (2018).
Table 1 - Canada Export by Volume (MT) of organic Cereals, Oilseeds and Flour Products to the EU
Wheat Canada is the 4th largest supplier of wheat in the EU behind Ukraine, Bosnia and Herzegovina, and Kazakhstan. Canadian wheat exports are concentrated in Belgium and Italy. In Belgium 100% of the wheat imported in 2022 was Durum wheat and in Italy, Durum was classified as wheat (including wheat, meslin and durum). The total volume exported to the EU last year represented 15% of Canada’s wheat exports.
It is important to note that the overall wheat imports to the EU have severely declined in the last five years. In 2018, the EU imported 60% less organic wheat than in 2022 (by volume). Thus although Canadian wheat exports declined in the same period,our market share more than doubled from 2018 to 2022, from 7.42% to 16.92% of total EU wheat imports. Ukraine dominated wheat exports to the EU in 2022 with more than 20,700 MT, which represented 65% of total EU wheat imports.
Lentils & peas- In 2022, 12% of Canada's global export of organic lentils and peas went to the EU, for a total of $15.1M, an increase of $5M compared to 2021. The top 4 export markets in value in 2022 were Italy (26%), Germany (21%), Belgium (16%) and Spain (14%), together accounting for 78% of the overall market in the EU.
In terms of volume in 2022, Canada exported 1% of the overall volume of dried and shelled lentils to the EU with 2,286 MT. Even with this small number we are considered the 2nd most important exporter, way behind the number one exporter,Turkey, that led the way with 17,046 MT, which represented more than 77% of total imports.
The soybean market in the EU is expanding. Importation almost doubled in the past five years from 104,794 MT in 2018 to 191,898 MT in 2022. Togo and Ukraine were the top exporters of soybeans last year, with 62.5% and 16%, respectively, of the total volume of imports coming from these two countries. Although Canada is the 10th largest exporter of soya beans in this region, this market cannot be qualified as important for Canada. Indeed, in 2022, less than 1% of Canada's export of soybeans (by volume) went to the EU. Canada exported around 0.4% of total imported soybeans in the EU.
Organic hemp grain exports were almost nil, with only 7 MT exported last year to the Netherlands. China dominates this market with more than 97% of the total EU organic hemp grain imports of 1114 MT in 2022.
Canada consistently exported less than 1% of the flax in the EU in the past 5 years, and only 0.33% of the total import in 2022 (75 MT). Note, however, that the UK which is no longer in the EU, is Canada’s number 1 organic flax export destination.
Exports of organic mustard from Canada to the EU has also declined from 2018 to 2022 from 127 MT to 18 MT. Canada had 14% of this market in 2018 and only 2% in 2022.
The future of the organic cereals and oilseeds market presents a complex landscape. In 2021, the market was valued at an impressive $58.6 billion (US). However, trade disruptions and soaring inflation, largely fueled by escalating energy costs and rising food prices, have impacted consumers. We have seen a slight drop in the number of EU consumers buying organic food in 2022.
Although the EU has been reliant on importing organic cereals and oilseeds in the past, a trade export specialist consulted for this article anticipated future declines in organic grain imports. The EU has made substantial efforts to boost certified organic farming through its "farm to fork" strategy, offering crucial subsidies to encourage growers to transition and maintain organic certification. The EU aims to expand the organic certified land area, targeting up to 25% of total agricultural land depending on the country. Furthermore, the EU’s push to become climate neutral will likely make neighboring countries like Ukraine the preferred choice for imports, while North America and other third countries may become less attractive in the mid-to-long term. However, we shouldn’t ignore prices which will always be the top factor influencing imports.
In summary, we might see a decline in future imports of organic cereals and oilseeds that can be produced within the EU border, marking a shift in the dynamics of the global organic market.