Trade volatility putting food and beverage sector margins under pressure: FCC

Trade and energy volatility are putting pressure on Canada’s food and beverage manufacturers, says Farm Credit Canada (FCC).

In a new report, FCC Economics reported a 4% increase in sales for the first half of 2026—reaching $88.1 billion—but cautioned that new headwinds are shifting the outlook for the sector. 

Energy and freight volatility, higher input costs, U.S. trade restrictions and Canadian counter-tariffs are creating additional uncertainty around production costs, export opportunities and margins for food and beverage manufacturers.

FCC said the gain in sales was driven largely by higher prices rather than stronger volumes. After adjusting prices, real sales were flat compared to the same period last year.

"When gains are tied more to prices than volumes, it can signal that companies are still operating in a cautious demand environment while also managing higher and less predictable costs,” said Craig Johnston, vice-president and chief economist at FCC, in a press release.

Grain and oilseed milling, fruit and vegetable processing and animal food manufacturing recorded some of the strongest gains, while sugar and confectionery manufacturing, breweries and distilleries posted declines.

Margins are expected to improve modestly in 2026, but FCC said the recovery is expected to remain “fragile” amid trade and cost pressures. 

FCC Economics' estimates suggest the direct impact of the new trade measures will be limited in 2026 because most take effect only in September.

"Reducing interprovincial trade barriers and expanding internationally can help open broader market opportunities,” Johnston said.