How to start export of organic products to Canada

Canada is one of the world leaders in the consumption of organic products: an average Canadian spends about CAD 150 a month for organics. The Canadian organic food market is the fifth largest in the world (about CAD 5.4 billion).

How to get into this market, and which niches are the most profitable for exporters?

Today, the issue of organic production is on everyone’s lips among farmers like never before. On the one hand, it requires more costs for alternative methods of soil cultivation and plant protection with limited use of agrochemicals, as well as the need for product certification. On the other hand, the sale of organics can be much more profitable than conventional agricultural products. That is why the number of organic producers in the last 10 years has increased in geometric progression.

As of 2018, there are 550 organic producers registered in Ukraine, of which 300 are agricultural producers mainly oriented to foreign markets.

The market of Canada falls into the sphere of interests of Ukrainian exporters of organic products. After all, due to the Free Trade Agreement between Ukraine and Canada (that came into force in August 2017), the trade turnover between our countries increased significantly.

According to Vice Prime Minister, Stepan Kubiv, exports of Ukrainian goods to Canada over the past year grew by 74.4%, and for the first half of 2018 – by 37.1%. In addition, Canadian investments since the beginning of 2018 increased by $ 47 million, with 31% of them targeting manufacturing industry. As experts admit, however, Canadian market is rather specific, and one cannot do without proper strategy and tactics here.

Tip 1. Analyze the market

As of 2017, Canadian sales of organic products amounted to CAD 4.2 billion. As Zoya Pavlenko, Environmental Protection Expert of the CUTIS Technical Assistance Project, assures, there is shortage of organic products in Canada’s market despite the fact that the country is a large producer of organics.

For example, 202 million kg of organic products worth CAD 637 million were imported in 2016. This is more than the volume of exports from Canada indicating a shortage and a market opportunity for Ukrainian producers. Although Canada is also an exporter for a number of organic positions.

The Canadian government does not sit idle and tries to promote domestic production: large-scale support programs for farmers were launched in 2017 in Manitoba. Therefore, the gap between demand and supply will decrease over time. “Now is a good time to start exporting to this market. However, one should pay attention to a number of details”, Pavlenko advises. For instance, any agricultural product called organic is regulated by the Canadian Food Inspection Agency (CFIA). It is also worth focusing on packaging and labeling of organic products as they can differ from both Ukrainian and European approaches.

Tip 2. Focus on popular positions

Organic food and drinks make up about 90% of the organic “basket”. In particular, fresh vegetables and fruits – 40%, drinks – 13%, dairy products and eggs – 12%, cereals, macaroni and bread – 9%.

It should be noted that Canada has become one of the first countries to monitor organic exports and imports. Imports are tracked by 65 categories, and exports – by 18. If you look at import statistics, organic coffee, bananas, strawberries, green salads, tomatoes and tomato paste are among the top 20 most popular organic products. However, this does not mean that one should concentrate only on those products.

If you can advertise your product and present it as efficiently, as possible, there is a chance for almost any product. For example, TEKMASH Institute, a research and production enterprises, which is particularly known in Ukraine for manufacturing organic berry paste Liqberry, has succeeded in entering the Canadian market. They even managed to sell not only the product but also the technology of processing agricultural raw materials to Canada.

“Canada is far, but if it comes to supply of processed goods, for which sanitary and phytosanitary requirements are significantly lower or sometimes not applicable, it is profitable. With a processed product that has a longer shelf life, you can overcome the logistical constraint – territorial remoteness of Canada from Ukraine. It is therefore logical to recommend organic producers to start selling processed goods. The most popular ones will be Ukrainian juices, confectionery products, dried and frozen vegetables, sauces, vegetable oils and snacks”, says Zoya Pavlenko.

Tip3. Find your buyer

In order to get to the Canadian organic market as efficiently as possible you should clearly know the profile of your consumer.

According to the Canadian Organic Trade Association (COTA), these may be both men and women (since both family members do shopping in Canada), young enough – 18-34 years, and mostly residents of large cities. Mostly residents of British Columbia or Alberta are interested in organic products. These are not the largest provinces, so Quebec and Ontario should not be ignored.

As in Ukraine, there is some correlation in Canada between the level of welfare, education and purchases of organic products. People with higher earnings, respectively, are more aware of the benefits of organics and willing to pay for it. “Also, families with children are more willing to spend money for organic products. Therefore, organic food and products for children are a promising niche “, – says Zoya Pavlenko.

Important to know:

An indispensable condition for all exporters of products declared as “organic” is the organic certificate issued under the Canadian Organic Standard (COR). Organic products are subject to the usual rules and conditions similarly to other agroindustry products. They are individual for each product. Detailed requirements for each product are specified in the Automated Import Reverence System (AIRS).

Tip4. Importance of documents

Regarding the regulation of the Canadian organic market, it is significantly different from the Ukrainian and European markets. Canada has its own national organic standards (Canada Organic Regulations) adopted in 2009.

More detailed production requirements and a list of permitted substances are contained in CAN/CGSB 32.310-2015 standards – Organic Production Systems – General Principles and Standards of Management, and CAN/CGSB 32.311-2015 – Organic Production Systems – List of Permitted Substances.

At present, Canada, just like Ukraine, goes through active deregulation of the agricultural production and processing sector. Just in June this year, a new regulatory act, which brings together more than 10 legislative acts, called Regulation of Safe Food for Canadians was published. It includes organic products among others. Review of the above standards is scheduled for 2020. Therefore, interested organic producers should keep abreast as the requirements may vary.

Tip 5. Focus on organic certificates

Serhiy Halashevskyi, Director of the Organic Standard Company, says that organic products sold in Canada use the Canada Organic (COR) logo. At the beginning of 2018, Organic Standard became the only entity in Ukraine entitled to certify manufacturers for exports to Canada. “Organic certification is an important point that helps entrepreneurs in selling their products and the consumer in consuming them confidently. Certification identifies a company, opens up access to the premium segment, allows selling at a higher price and more profitably, as well as make yourself known on the market. In addition, certification has become cheaper because some organizations, such as CUTIS project, compensate half the cost of the procedure”, – he said.

Organic certification is a voluntary procedure. If manufacturers call their products organic, however, they are required to get certified. Otherwise, financial sanctions for unfair competition cannot be avoided.

Interestingly, the Canadian organic standard is equivalent to the American (NOP). Therefore, if a company is certified under the NOP standard, this certificate is recognized in Canada. And vice versa, Canadian organic certification is recognized in the United States.

There is also an agreement between the EU and Canada on mutual recognition of organic standards. These provisions, however, are tightly bound to production specifically in the EU and Canada. Therefore, Ukrainian organic products certified according to EU standards will still have to undergo additional organic certification to enter the North American market. This can be either NOP, or COR. COR is cheaper, however, so it is more profitable for the manufacturer to get it “, – recommends Halashevskyi.

He also emphasizes such an important point as a reputation in organic production. “On the one hand, organic producers have a better image in the market and often have better opportunities. On the other hand, it is easier to spoil the reputation of organic production. One unscrupulous manufacturer can spoil reputation of the whole sector “, – assures Halashevskyi.

Tip 6. “Break through” to the market

Another quite problematic issue is sanitary and phytosanitary regulation in Canada. If you use the “organic” prefix for the product this does not mean a complete grace as a series of stringent requirements is applied, which can be found through the Automated Import Reference System (AIRS). It is similar to the well-known European Export Help Desk but focused solely on food and agricultural raw materials.

As Pavlenko notes, sanitary and phytosanitary norms and certificates between Canada and Ukraine are being harmonized as of November 2018 only with regard to chicken. For all other categories of subquarantine goods (for example, beef, pork, eggs), there is no progress. There is a ban on the import of Ukrainian grains and wheat into Canada, as pests were found in the grain imported by one of Ukrainian suppliers. Because of that, the ban on deliveries was applied to all Ukrainian grain companies.

“If business starts showing greater interest in the Canadian market, more active work on harmonizing certificates between countries will begin. This requires additional communication of business with state bodies (in particular, the State Service for Food Safety and Consumer Protection of Ukraine). Manufacturers themselves should take the initiative to “break through” the market rather than sit idle”, – says CUTIS Expert Zoya Pavlenko.

Source: Delo.UA