Nova Scotia exports down 33%
Posted on March 04, 2014 | Christopher Goodfellow | 0 Comments
Jean-Paul Deveau of Acadian Seaplants and David Ernst of Terra Beata Farms explain why seafood and cranberries continue to do well
Nova Scotia’s exports have fallen by a third over the last four years. The province is lagging behind the marginal export growth experienced across Canada and faring worse than the wider Atlantic Canada region, which recorded a 10 per cent reduction in trade.
“The export of goods to international markets has experienced a number of challenging factors,” explains Jeff Larsen, executive director of Investment and Trade in the province. “Natural gas prices have been in decline, and prices for the forestry and fish sectors are flat. This has been compounded by mill closures in Nova Scotia, reduced production at the Sable Offshore and weak demand in the US.”
The statistics may be daunting, but Nova Scotia’s crucial seafood and rubber products sectors are growing, with seafood product preparation and packaging up 14 per cent over the same period, and much of the falling demand is due to a significant drop in revenue from the oil & gas extraction sector. It’s also worth noting that Nova Scotia’s exports of services to other provinces increased by 26 per cent over the last decade, according to the province’s statistics.
Local businesses that are exporting successfully have targeted new regions to reduce exposure and grow sales in a difficult environment. Jean-Paul Deveau, president of technical seaweed-based products manufacturer Acadian Seaplants, which now operates in 70 different countries, says: “When challenges are experienced in one market, we have been able to offset them by growth in other geographies. In our experience, market diversity reduces risk.”
Acadian Seaplants does almost all of its business internationally, but its main processing facilities are based in Charlesville, Yarmouth and Cornwallis, Nova Scotia.
Exports make up 95 per cent of revenue for cranberry processing and farming business Terra Beata Farms, which is based on Heckmans Island, and the company is proud of the fact that it’s bringing money into the local economy. “The export volume facilitates better jobs for our employees, but the cash flow from these sales into Canada gets spread out to many other companies that we purchase supplies and services from,” says company president David Ernst.
Terra Beata Farms has been able to grow during the recession by leveraging its existing export business to sell fruit for other farms. This was crucial when US demand fell and other producers looked for new markets for their products. That said, the cranberry business has been hit by international prices, which Ernst estimates have dropped nearly 80 per cent since 2009, leading the business to target a dramatic increase in domestic sales through a new range of value-added products over the next few years.
“The pricing for cranberries has dropped, not because of a drop in demand, but because of the growth in supply. When the market is very adverse, like it is right now, it means we have farms where I know I’m returning too small a number to cover the costs. So there’s a lot of pain in the cranberry industry and we’ve seen quite a few businesses sell.”
A new trade agreement between Canada and Europe could help offset some of the difficulties facing the province’s exporters by putting them on an even footing with European competitors. At the moment, the European Union applies tariffs to a wide range of products, which can vary a lot depending on their status. For example, live lobsters are levied with an eight per cent tariff, but frozen lobsters 16 per cent.
“The fishery is a prime example. Nova Scotia exports more fish and seafood – over $160 million – to the EU than any other Canadian province. The EU currently has very high tariffs across this sector and the agreement will eliminate all of these, creating opportunities for competitiveness, growing the industry and leading to job creation,” says Larsen.
The trade agreement is expected to be ratified next year.
Ernst says the deal will open up new opportunities for his business: “Our business is frozen cranberry and as it stands there are no tariffs against frozen cranberries, but the agreement opens up the potential opportunity to compete on an open playing field with sweet and dried cranberries, or a cranberry juice product.”
South America is among the regions that have provided a welcomed boost to exporters. Nova Scotia has experienced consistent revenue growth from a number of countries in the region and experts say the area isn’t targeted as much as other high-growth regions, making it easier to compete.
“Chile, Peru and Columbia are on Nova Scotia’s radar. Since 2010, staff in our International Business Development division have actively pursued business opportunities in Peru. There appears to be a strong interest from the Government of Peru to work together with the province in key training areas such as education, infrastructure, tourism, agriculture and forestry,” says Larson.
The province offers a number of support programs to help SMEs identify markets like this and helps them access capital and improve their competitiveness. The Atlantic Canada Opportunities Agency (ACOA) is also involved in this process, with nine regional offices in Nova Scotia, and the two bodies work together on trade missions, shows and conferences.
Ernst, who has worked with the ACOA, says the company welcomes the government assistance, which has helped finance trips to meet new and existing customers, although he notes that it’s difficult for these organisations to identify customers.
Deveau advises businesses that want to grow export revenue in new regions to think about hiring foreign staff: “Their knowledge of the nuances of how to conduct business in their native countries, language skills and experience have greatly assisted the company in entering new overseas markets.” This has led the company to hire from a range of countries, including Brazil, Mexico, Colombia, Peru, Venezuela, Chile, China, Poland, India, USA, France, England and Japan.
While the overall trend in the export business has been negative since the end of the recession, there are success stories which have helped bring jobs and tax revenue into the province. Acadian Seaplants has been one of them and Deveau says the company is investing over $4 million to double the capacity of the company’s flagship production facility in Cornwallis.
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