Growth opportunities for Canadian agri-food in the ASEAN market

As Canada looks to further diversify export markets and reduce the marketing risk that comes from an overreliance on the U.S., Asia looms large. China and India are Asian markets that have not been fully tapped yet but ongoing geopolitical tensions are making it difficult to develop more significant trade relations. Another option for Canadian exporters is Southeast Asia, a key area within the larger Indo-Pacific region. Canada’s exports there have grown across the three major categories of agriculture, food and fertiliser, but there’s even more growth that’s possible.

In this post, we identify some food products and ag commodities highlighted in recent research that are currently not reaching their export potential.

The ASEAN market is one of the world’s largest
The Association of Southeast Asian Nations (ASEAN) is a regional intergovernmental organization with 10 member states: Brunei Darussalam, Cambodia, Indonesia, Lao People’s Democratic Republic, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

It’s a region that, in 2023, had the third-largest population in the world at around 679 million - and it’s growing. If the ASEAN were one economy, it would be the fifth largest in the world with a combined nominal Gross Domestic Product (GDP) of US$3.8 trillion in 2023. ASEAN is one of the world’s fastest-growing economic regions, with real GDP projected by the IMF to grow 4.6% in 2024 and 4.7% next year.

As a group of countries, the 10 member states of ASEAN represented Canada’s fourth-largest merchandise trading partner in 2023. The bulk of that trade is to the six largest countries within the region (Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam), for whom food exports are, by far, the smallest of the three export categories (Figure 1).

This replicates a trend found among Canada’s major export markets outside the U.S. Since 2018, food export volumes have nonetheless grown at an average annual rate of 8.1%, suggesting the market holds promise for further development. Existing growth has come so far without the aid of a trade agreement which, nonetheless, is in the works as of 2021. As an added focus, Canada’s broader, more encompassing Indo-Pacific Strategy (IPS) was launched in 2022, guiding Canada’s diplomatic, trade, defence, security, and development assistance approach to the region for the next decade and potentially boosting Canadian exports further.

Agriculture export volumes have also risen since 2018, growing at an average annual rate of 7.8%. The largest factor underlying the overall drop in our exports to the ASEAN region since 2018 is in the decline in fertilizer exports. Between 2018 and 2023, they fell at an average annual rate of 11.2%. By far the largest category of exports, they’ve been a major influence on our overall trade performance.

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