Brazil and Canada: bilateral commerce on the rise


Brazilian sales growth: food and beverages

By Sérgio Siscaro| March 26, 2021

Despite the economic uncertainties that were brought about by the new coronavirus pandemic last year, the commercial exchanges between Brazil and Canada have intensified. According to trade balance information, in 2020 the trade chain (that is, the sum between exports and imports) between Brazil and Canada totaled US$ (FOB) 6.041 billion – an increase of 7% compared to US$ (FOB) 5.645 billion verified in 2019.

Based on data from Quick Trade Facts – quarterly analysis made by Chamber of Commerce Brazil-Canada (CCBC), which details the exchange between Brazil and Canada, based on official foreign trade data between the two countries, the month of December was the one that presented the highest value in the chain of trade between the two countries: US$ (FOB) 630.05 million. The second highest result was achieved in March, when it totaled US$ 594.9 million. In that month, the new coronavirus was considered a global pandemic by Organização Mundial da Saúde (World Health Organization) – OMS.

The trade flow also shows how the process of growth in trade between Brazil and Canada has occurred in a consistent manner, over the past 20 years. In 2000, the sum of exports and imports was US$ (FOB) 1.656 billion, an amount that would triple in the next ten years to US$ (FOB) 5.03 billion, and would grow 20% by 2020, when it reached US$(FOB) 6.041 billion.

A jump in exports

Statistical data demonstrate an increase in demand for products “made in Brazil” by Canadian importers, especially from the second half of the year, which, according to CCBC’s analysis, would have been made possible by the favorable exchange rate. In 2020 there was an increase of 25.25% in Brazilian exports, totaling US$ (FOB) 4.235 billion, compared to US$ (FOB) 3.38 billion in 2019.

Most of the sales to Canada were semi-manufactured products (58%), followed by manufactured (35%), and basic products (7%). This distribution is quite distinct from that seen in 2019, when there was a predominance of manufactured products exports (49%), followed by semi-manufactured (38%) and basic (13%).

Confirming a trend that had been observed throughout the year, one of the most expressive highlights in the list of exports to Canada was the golden bullion – which is gold in raw form, cast without having gone through a process of refinement or industrialization. Between 2019 and 2020, sales of this product increased 148% in value, to US$ (FOB) 1.4 billion – which made it responsible for one third of revenues with foreign sales, in the period. The predominance of gold is due to the fact that, in the context of the uncertainties brought by the pandemic, the ore was more demanded by investors interested in protecting their assets, thus increasing the commodity’s price, throughout the year.

Representing 24% of exports to Canada in 2020, the segment of inorganic chemicals (which also includes inorganic or organic compounds) had an increase of 1%, totaling US$ 1.014 billion. The result is mainly due to products related to the production of aluminum and alumina. It was also found increases in products such as cast iron, iron, and steel (108%), and sugars and confectionery products (79%).They represent, respectively, 7.1% and 6.8% of Brazilian sales to the Canadian market.

Food and Beverage stand out

The growth in exports of food and beverage items was quite significant in 2020, reflecting a greater receptivity of the Canadian market to Brazilian products. External sales of butter, fat, and cocoa oil rose 403% to US$ (FOB) 7.4 million and placed 31st in the ranking of exports. The shipments of shelled peanuts (even crushed) reached US$ (FOB) 7.3 million – which represents a significant growth of 2,174% compared to the previous year and makes the product the 33rd best sold to Canada.

Natural honey sales also increased, in relation to 2019, totaling US$ (FOB) 4.28 million (a 43% increase). Fruit, such as mango, with US$ (FOB) 8.2 million (13%), melon, with US$ (FOB) 3.44 million (76%), watermelon, with US$ (FOB) 491.4 thousand (68%), and grape, with US$ (FOB) 446.1 thousand (103%).

It is also worth remembering that the segment of coffee, tea, mate, and spices, which corresponded to 2% of total exports from Brazil to Canada, had a drop of 6%, totaling US$ 103.49 million. However, sub items of this category had growth over the year, such as the case of soluble coffee, whose sales rose 9%, reaching US$ 15.2 million.

Imports downturn

On the opposite direction, there was a low growth on the Brazilian imports of Canadian products, with a slight upturn in August. At the end of the year, these purchases registered a decrease of 20.25% compared to 2019, totaling US$ (FOB) 1.8 billion.

Almost half of this total (47.4%) was due to the manure and fertilizer imports, which totaled US$ (FOB) 855.87 million last year, with a drop of 26% over the previous year. The segment of aircrafts, space devices and their parts, which accounts for 11.1% of Brazilian imports from Canada, recorded a 25% increase, reaching US$ (FOB) 199.8 billion.

In 2020, most of Canada’s purchases comprised of semi-manufactured products (43%), followed by manufactured (44%) and basic products (7%). Compared to 2019, we can see a decrease of four percentage points in semi-manufactured imports, an increase of seven percentage points in manufactured products, and a decrease of three percentage points in basic products.

According to CCBC’s analysis, the devaluation of the Real in the period was a determining factor to curb imports in general, and this eventually impacted on imports from Canada.

Quarterly performance

Analyzed quarter by quarter by Quick Trade Facts, bilateral trade figures between Brazil and Canada demonstrate that after a brief drop in Brazilian exports, they started showing an upward trend. Totaling US$ (FOB) 943.48 million between January and March, Brazilian external sales to the Canadian market decreased 3%, to US$ (FOB) 914.9 million, between April and June. In the following quarter came the recovery, and exports totaled US$ (FOB) 1.1 billion, an increase of 22.3% compared to the total found between April and June. On the last three months of the year there was a jump of 12.4%, to US$ (FOB) 1.25 billion.

Taken in isolation, the fourth quarter results represent an increase of 44.3% compared to the exports observed between October and December 2019. With these results, the share of exports to Canada, within total Brazilian foreign sales in 2020, increased from 1.5% to 2%.

Looking at the imports there was a similar trend, although in the opposite direction. Canada’s external sales to Brazil went from US$ 398.23 million on the first quarter to US$ (FOB) 536.5 million on the second (34.7% of increase), and then to US$ (FOB) 457.12 million on the third (14.8% of decrease), and finally US$ (FOB) 414 million on the fourth quarter (9.4% of reduction).

As a result, Canada’s position, as a supplier of products to the Brazilian market, shrank in 2020, when the country accounted for only 1.14% of total imports made by Brazil, up from 1.28% in 2019.

Source: CCBC – by Sérgio Siscaro

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