New markets abroad, more value at home: Agri-food’s next opportunities
Canada held onto seventh place in global agri-food rankings among G20 nations, but food and beverage businesses continue to face challenges in bringing new products to market, managing rising costs and navigating trade uncertainty.
That’s according to the latest MNP Food and Beverage Business Outlook report, based on research commissioned by the Agri-Food Analytics Lab at Dalhousie University. The report compares G20 countries across six dimensions of agri-food competitiveness, including innovation, trade performance and food security. Canada ranks behind Germany, Italy, the United States, France, the United Kingdom and Australia.
In last year’s report, Canada jumped to seventh place from 11th in 2024.
Overall, MNP says progress in the food and beverage sector remains steady but measured.
“It’s a bit of a threading-the-needle exercise when looking at where countries rank, because we change some of the indices year to year,” says Matt MacDonald, national food and beverage processing leader at MNP.
Tariffs and rising diesel costs have yet to fully affect the report’s indicators, while the impacts of initiatives such as Farm Credit Canada’s $1-billion funding commitment to agri-food projects will take time to materialize. “But if you compare year one to year three, you can see some of the pieces moving around,” MacDonald says.
The innovation challenge
When it comes to agri-food innovation, “Canada continues to punch above its weight,” according to the report, with nearly $515 million invested in Canadian agri-food startups in 2025. However, attracting investment doesn’t necessarily mean a business will succeed. The report identifies limited scale-up funding and commercialization support as major hurdles.
“There is a myth that a good product is all you need… that ‘if you build it, they will come’ mentality,” says MacDonald. “It’s a much more complicated equation than a great product.
"The economics have to work, it has to profitable and you have to be able to logistically ship it across our vast country.”
Getting listed at retail, he adds, is one of the easier factors. “It’s selling through that’s harder. People have to buy it.”
Another misconception, adds MacDonald, is that investors are funding innovation itself, when in reality, they’re funding a business’s ability to commercialize it. The report suggests that more accessible funding is needed to support entrepreneurs as they move from the concept phase to building viable businesses with mass-market reach.
Affordability remains in focus
Price pressures continue to weigh on consumers and the industry. Food inflation reached 4% in March, rising faster than comparable markets.
“Higher costs are changing how Canadians shop, putting added pressure on businesses to manage margins while continuing to deliver value,” the report states. It also describes a more polarized consumer landscape and a growing divide between value and premium products.
“Some consumers continue to pay for premium products with quality ingredients, strong nutrition and a clear value proposition,” the report notes. “Others are gravitating toward lower-cost options as affordability becomes the deciding factor.”
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Despite the squeeze on household budgets, interest in nutrition, ingredient transparency and wellness continues to influence purchasing decisions.
“We continue to see a movement toward not just better-for-you ingredients and healthier options in the grocery store, but also an increased desire for transparency,” says MacDonald. It’s not that consumers won’t buy ice cream with a long list of ingredients— they just want to know what they’re eating, he explains.
“I do believe the public is moving toward cleaner and fewer ingredients, but I wouldn’t say it’s a mass trend,” MacDonald says. “There is a larger portion of people who just want knowledge and transparency, even when they are choosing things that aren’t necessarily healthy.”
Agri-food looks beyond the U.S.
On the trade front, Canada continues to be a major global supplier, with an agri-food trade surplus of $24.3 billion. However, MNP points out that while Canada excels at producing and exporting commodities, the country could create more value by processing and manufacturing more products at home.
Amid trade disputes with the U.S., the report notes that Canadian governments and industry are placing greater emphasis on expanding into non-U.S. markets. Government of Canada figures show that exports to the U.S. declined by 3.8% while exports to non-U.S. markets increased by 11.2% year-over-year in 2025.
“One of the encouraging pieces coming out of this report is we’re starting to see processors lean into diversification geographically,” MacDonald says. “The sentiment is, ‘Maybe we were too dependent on our U.S. buyers or customers,’ and they are now looking elsewhere.”
The challenge, though, is the geography itself. MacDonald notes it’s much easier to get product to the U.S. than it is to ship to Europe or Asia. “And so, the logistics piece becomes a much more meaningful part of the equation,” he says.
Overall, though, MacDonald says Canada’s food ecosystem is becoming more unified—from farmers and processors to retailers, associations and government.
“Businesses are adapting and government and policy makers are starting to put in frameworks that incent and drive innovation,” he says. “And so, we’re seeing each player do their part. That’s encouraging because I don’t think we saw that in year one of the report. It was very much like everyone was trying to protect their own piece of the supply chain or food ecosystem.”
Now, he adds, the change is tangible, with businesses and policymakers recognizing the need to work together to enhance the Canadian food and beverage industry.
