Country in Focus
Canada: The Quiet Rich Man Up North
By Tong Yee Siong, The Halal Journal
Feb 1, 2007, 09:26

Long overshadowed by its Number One neighbour, the United States, Canada appears at best to be an appendage in North America. Thus, many often overlook Canada’s potential and actual strengths. For one, Canada is a massive country by area, the second-biggest in the world after Russia, and with such diverse geographical conditions, the country is well-endowed with mineral and agricultural resources.

Canada currently is in an upbeat mood lubricated by wealth. 15 years ago however, ballooning deficits and a prostrate economy made Canada look like a candidate for an International Monetary Fund (IMF) rescue. That would have been a bitter humiliation to a G7 member country.

Against expectations, a Liberal government elected in 1993 turned the public finances around, so much so that Canada is now the only big industrialised country to notch up consistent surpluses both in its federal budget and in its trade and current accounts.

As a result, Canada has had the G7’s fastest growth rate for five years now, at almost three per cent in 2005. Unemployment is at its lowest levels for three decades, producing big gains in incomes, profits and tax revenues.

Commodity boom
The current rosy outlook is not a product of fiscal discipline alone. Canada has reaped advantages from the free trade agreement with the US that came into force in 1989, and later the North American Free Trade Agreement.

More recently, the economy has been supercharged by booming prices for energy prices and commodities, of which Canada has in abundance. China in particular, has a growing appetite for Canada’s energy, metals and chemicals. In fact, Canada is one of the few rich countries that has seen exports to China soar by 40 per cent in the past year. Such exports helped push Canada’s trade surplus to a near-record CDN$66 billion last year.

Better still, with energy prices rising steadily, vast Canadian energy investments, like the so-called oil sands of northern Alberta, have now started coming on stream. Although Canada is already the biggest supplier of oil and natural resources to the US, those new unconventional resources in Alberta means that Canada now has the world’s second-biggest oil reserves after Saudi Arabia.

Canada’s strength in energy and mining is reflected in its equity market: energy-related stocks have a weight of 44 per cent. Helped by the global boom in commodities, the Toronto Stock Exchange has handsomely outperformed Wall Street in local currency terms. There are 53 Canadian companies big enough to make it into the Financial Times Stock Exchange 100 Index. In 1996, Canada had only one corporation in the world’s top 200 by market capitalisation. Today, it has seven.

‘United Colours of Canada’
Another remarkable detail about Canada is its open-door policy. About a quarter of a million immigrants come to Canada every year.

Uniquely in the rich world, a large majority of Canadians welcome immigration. This perhaps helps explain why Canada is increasingly becoming a “global talent magnet”, attracting mostly skilled Asians while the US – with 11 per cent of its population being foreign-born – is importing unskilled Latin Americans.

Unsurprisingly then, that the leading sources of migrants to Canada in each of the past eight years have been the two countries at the top of many western businesses’ list of growing markets – China and India.

Many companies, both foreign and domestic, have spotted a benefit in Canada’s relatively skilled multicultural and multilingual workforce.

For the US-based wooden fixture manufacturer Leggett & Platt, 40 per cent of its staff at the Canadian office were either born outside Canada or have immigrant parents. The company has turned to employees with Indian, Chinese, South Korean and Japanese backgrounds to spearhead sales and investments in their countries of origin.

Immigrants have also offered one of the few sources of domestic retail growth for Canada’s five big banks since the federal government blocked them from combining or taking over each other in the 1990s. The banks have paid special attention to China, where they vie to sign up customers before they even set foot in Canada.

Agricultural powerhouse
Over the past decade, Canada’s position as an agricultural producer and trader has become even more entrenched than ever.

According to Agriculture and Agri-Food Canada (AAFC), a government agency aimed at promoting Canada’s agriculture trade, Canada’s agri-food exports grew by 92 per cent while world trade increased only at a modest pace (see table).

The US remained the largest market for Canada’s exports, absorbing over two-thirds of Canada’s agricultural shipments in 2002. At the same time, rising demand for food in Asia, thanks to higher spending power, also makes the region look promising for Canada’s diversification of its export markets.

In particular, Canada has witnessed significant increases in its exports of meat, prepared grains, vegetables and processed cocoa products. In line with Canada’s strategy to increase its value-added exports, the processed goods to bulk ratio rose from 64 per cent in 1993 to 79 per cent in 2002.

Canada’s agri-food and seafood exports are high against other industrialised countries, raking in a trade balance of over CDN$ 9 billion in 2002. Overall, in 2001, Canada commanded a 6.1 per cent share of global trade in agri-food, placing it only after the US and European Union and ahead of Brazil.

Halal opportunities
According to the Halal Food Products Market Report 2006 by AAFC, the Canadian domestic Halal meat market is estimated to be CDN$ 214 million. The 2001 Canadian census says that there are approximately 579,640 Muslims in Canada, constituting two per cent of the country’s total population.

The average annual household expenditure on Halal meat is CDN$ 1,623. On average, Muslim households spend CDN$ 31 per week on Halal meat products, almost double the Canadian household meat expenditure of CDN$ 17 per week. This may have to do with the difference in their diet: Muslims appear to be ardent consumers of meat and meat products, with feast days and celebrations that often include several different meat dishes, AAFC notes.

In Canada, the primary Halal meat retail channel are small, privately owned Halal meat shops located in larger urban centres. Each individual shop is responsible for acquiring its supply of Halal meat through local processors. There have reportedly been issues regarding the quality and Halal certification every now and then.

Evidently, there are vast opportunities for specialised Halal businesses, despite Canada’s dominance in meat products. An innovative producer and marketer may yet strike gold with products which Muslim consumers are confident of consuming in this affluent country.

Canada is not only growing in numbers, it is also becoming highly diverse in its population and more accepting in terms of cultural integration. It is these elements which can provide opportunities most favourable for a growing Halal market. The Halal industry in Canada has great potential for growth serving not only the Muslims but also the non Muslims as well.


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