As most in the business know, there are striking similarities between the Canadian and U.S. produce industries, as well as important differences. We headed north—going straight to the source—to delve into these sometimes significant variations, so we could report back to you.
Canada has always been one of the U.S.’s premier trading partners, but for some Americans doing business in Canada, tapping into this rich reciprocal market without proper guidance can be difficult.
Earlier this year, Blue Book Services sent out a survey to over 650 Canadian produce professionals, asking about disparities in trade, important regulatory and market factors, and other key information buyers and sellers should consider when doing business. We also reached out to respondents and industry experts to comment on the findings and expand on these nuggets of knowledge. The summarized results below will hopefully provide insight and a bit of guidance about the ins and outs of navigating Canadian business culture.
Survey Says
Given the weight our respondents placed on Canada’s demographic diversity, there was no clear consensus on any ‘major’ differences between the Canadian and American produce industries. A slight plurality, 19 percent of those polled—said there was little or no difference, but almost as many believed the opposite: that differences between the two industries were very pronounced. It was in their explanations that some interesting distinctions truly emerged.
Potatoes or Pommes?
Foremost among the distinctions was Canada’s dual language requirements, with 25 percent of respondents singling it out as a factor. Several survey takers cited the country’s large French-speaking population and considered dual-language labeling requirements a key aspect of cross-border business.
Although English is the U.S.’s sole official language, Spanish-language versions of documents and signs are plentiful in restaurants, retailers, and other public venues—but it is not federally mandated nor required in the produce industry.
In Canada, however, there is both English and French, with French the official language of Quebec. All product labels are required to have information in both French and English.
“Given Canada’s labeling regulations,” advises Ron Lemaire, president of the Canadian Produce Marketing Association, “it is important to consider membership in the Dispute Resolution Corporation and the Canadian Produce Marketing Association to negotiate these aspects of doing business in Canada.”
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As most in the business know, there are striking similarities between the Canadian and U.S. produce industries, as well as important differences. We headed north—going straight to the source—to delve into these sometimes significant variations, so we could report back to you.
Canada has always been one of the U.S.’s premier trading partners, but for some Americans doing business in Canada, tapping into this rich reciprocal market without proper guidance can be difficult.
Earlier this year, Blue Book Services sent out a survey to over 650 Canadian produce professionals, asking about disparities in trade, important regulatory and market factors, and other key information buyers and sellers should consider when doing business. We also reached out to respondents and industry experts to comment on the findings and expand on these nuggets of knowledge. The summarized results below will hopefully provide insight and a bit of guidance about the ins and outs of navigating Canadian business culture.
Survey Says
Given the weight our respondents placed on Canada’s demographic diversity, there was no clear consensus on any ‘major’ differences between the Canadian and American produce industries. A slight plurality, 19 percent of those polled—said there was little or no difference, but almost as many believed the opposite: that differences between the two industries were very pronounced. It was in their explanations that some interesting distinctions truly emerged.
Potatoes or Pommes?
Foremost among the distinctions was Canada’s dual language requirements, with 25 percent of respondents singling it out as a factor. Several survey takers cited the country’s large French-speaking population and considered dual-language labeling requirements a key aspect of cross-border business.
Although English is the U.S.’s sole official language, Spanish-language versions of documents and signs are plentiful in restaurants, retailers, and other public venues—but it is not federally mandated nor required in the produce industry.
In Canada, however, there is both English and French, with French the official language of Quebec. All product labels are required to have information in both French and English.
“Given Canada’s labeling regulations,” advises Ron Lemaire, president of the Canadian Produce Marketing Association, “it is important to consider membership in the Dispute Resolution Corporation and the Canadian Produce Marketing Association to negotiate these aspects of doing business in Canada.”
Regulatory Landscape
Canada is also not subject to the U.S. Department of Agriculture’s Perishable Agricultural Commodities Act (PACA), although there is a push to introduce similar legislation (see our article on the Regulatory Cooperation Council in this supplement).
Several participants—18 percent—remarked on this disparity and Patrick Hanneman, a principal of Farm2Market Agribusiness Consulting, explains that in the absence of mandatory and binding PACA-type rules, buyers and sellers should certainly “establish rules to govern the parameters for a successful transaction, [with] recourse for both sides.”
The importance of using experienced customs brokers was also stressed by those surveyed. Regulatory issues, naturally, vary widely between the two countries.
Existing legislation such as E-Manifest and the Safe Food for Canadians Act, as well as upcoming changes in the modernization of inspection methods will impact cross-border business. “The regulatory environment, official quality standards, and enforcement options are all different in Canada as compared with the United States,” notes Hanneman.
There are also new issues to be aware of in every aspect of cross-border transportation. With a few exceptions, most carriers are now required to carry Automated Commercial Environment (ACE) manifests as well as the Pre-Arrival Review System (PARS) barcode required by Canadian customs, and a Dispute Resolution Corporation number for inbound and outbound fruit and vegetable shipments.
Joe Rubini, president of Rally Logistics, explains another important factor: “The Canadian Ministry of Transportation also requires [Speed] Governors to be installed in all trucks, which are not allowed to have a shutoff switch,” he notes. “All Governors are to be set at 55 miles per hour; this greatly increases the transit times for carriers from anywhere in the United States and Canada, and drivers cannot make up any time by driving at some of the higher speed limits on U.S. highways. This is why it is so important that shippers get trucks out early, with as little waiting time as possible, to ensure on-time delivery.”
Culture Club
Many correspondents also emphasized the importance of learning the cultural differences between the United States and Canada. Though no one factor dominated the issue, various differences in culture, markets, and demographics were cited by 31 percent of survey-takers.
As many pointed out, Canada may be a smaller overall market, but there are big variations in growing seasons, national holidays, and preferences in consumption (smaller product sizes was repeatedly emphasized by survey respondents).
Also particularly relevant were demographic factors affecting the various provinces; nearly everyone responding to the poll, a full 93 percent, made comments about provincial differences. “My expertise is with the Quebec-Montreal market,” explained Sophie Perreault, executive director of the Quebec Produce Marketing Association, “but this doesn’t mean I have the same knowledge and insights for the state of the produce industry throughout Canada.”
Quebec and Toronto, located in the urban east of the country, are considered very distinct markets in terms of diversity and demand than the down-home, traditional makeup of the central and coastal provinces, or the young and hip demographics of Vancouver on the West Coast.
“It is because of Quebec that Canada has such a high per-day per-capita consumption rate,” notes Guy Milette of Courchesne Larose Ltd., referring to the French-Canadian metropolis’ cosmopolitan flair and ‘European’ style of buying groceries on a per-meal basis rather than for days in advance.
The Age of Reason
In addition to Canada’s ethnic diversity, toss in age for an even more potent mix. As well known educator and author Arnold Edinborough famously said, “Canada has never been a melting-pot…we are more like a tossed salad.”
Canada’s graying population, representing nearly a third of total population at or above retirement age (but without the fixed income of so many American retirees), has placed a new emphasis on quality and portion size surpassing previous concerns about food safety and traceability.
Both Lemaire and industry marketing consultant Chris Yii-Luoma cited age factors as a major aspect of both the survey and their own observations about Canadian preferences. Ignoring such variations could be costly for suppliers. “You have the Boomers who are more interested in health and nutrition,” commented Yii-Luoma, “and parents and their kids who are showing lots of interest in organics.”
Evolving Demographics
The major shift in Canada’s overall demographic patterns—with more immigrants arriving from the Middle East and eastern and southern Asia—was reflected in responses as well. The Chinese-Canadian population is expected to grow to 3 million by 2031 according to a government study, with South Asians and Indian-Canadians close behind; the Arab and West Asian population is the fastest growing, and could more than triple in that same period.
“The Asian influence continues to have an impact, as they move into more markets,” observed Yii-Luoma. “This isn’t just Chinese, but Korean, Japanese, East Indians, and Arabs.”
Lemaire also noted this shift in the country’s “cultural mosaic,” explaining how more companies were forming ties to mainland China to meet the growing demand for products like fresh ginger.
Demographic drivers are also reflected in the Canadian approach to retail: while traditionally dominated by local chains and a few nationals, multinationals are making an increased push into the market, forcing the locals to adapt quickly to match demand.
“Whole Foods continues to break ground on new stores, and every major retailer has an organic section,” notes Yii-Luoma, referencing the higher demand for organics cited by several respondents. “The impact of yet another American retailer—Target—has everyone sharpening their approach to the customer; [but] the Canadian market is not as easy as it appears, given that we already have numerous and well-established discounters.”
These demographic shifts can also impact factors like transportation time. “An increase in ethnic commodities from Central and South America and the Caribbean makes a difference in how we buy,” explains Rubini. “The shelf life of these commodities is very short, so on-time deliveries are even more critical.”
Other Variants
Other factors, cited by almost 20 percent of survey participants, will seem extremely familiar to American businesses, such as weather conditions, labor issues, fuel costs, and supply chain management.
“One of the biggest challenges on the horizon is the changing level of quality, knowledgeable labor from all areas of the supply chain,” says Lemaire, “from field to packing house and from transportation to the retail floor.” He also mentioned product sourcing, traceability, and an increased focus on food safety at the federal level concerning the increasingly complex requirements Canadian retailers must follow to meet market demands.
Some respondents even perceived a fundamental difference in the buying habits of American and Canadian consumers. “In the United States, bigger is better,” says Milette. “That’s not true for us; in Canada, we feel smaller fruits are of equal quality and taste, and most of the time, they’re much more affordable. The end result is that consumers get more fruit for their money.”
This ‘perception gap’ extends not only to consumers, but to retailers, shippers, brokers, and receivers as well, and the ‘bigger is better’ phenomenon cuts across all aspects of the cross-border trade. As many as 15 percent of respondents cited a fundamental difference in the degree of competition within the business climate of the two countries.
“I believe the Canadian produce industry is a little more lenient and a little less competitive than the United States,” says Rubini. “As much as Canada does have some pretty tough competition, in the United States, it is much tougher. Receivers are ready to ‘claim’ or charge back for service failures much more quickly than Canadian companies. I’ve had carriers [in the U.S.] stuck in snowstorms charged back a $200 late fee by receivers.”
As intimidating as all these factors can be, they shouldn’t be seen as a barrier to reaching out across the border. The majority of participants believed the disparities between the American and Canadian produce industries were truly minimal, and our member/experts agreed they were easily overcome with the proper diligence.
“In my experience,” explained Larry Davidson, vice president of the aptly-named North American Produce Buyers Ltd. in Toronto, “if you can do business in America, you can do business in Canada.”
Concluding Thoughts
Ask a dozen Canadians their opinion of the key issues facing cross-border business partners, and you’ll get a dozen different answers. It is not, however, a cliché—it is exactly what our survey found. But as is often the case, major differences can be largely minor, while similarities go to the bone; with a little research and the guidance by experienced professionals, interacting with your Canadian counterparts can be remarkably trouble free.
As Lemaire puts it, “All we want to do is sell fresh, good-for-you produce items to Canadians… how hard can it be?”
Our Survey
Here’s a look at the questions we asked our Canadian members to gather feedback on just what Americans need to know when working with a supplier from the True North.
1. On a scale of 1 to 10, with 1 being “not at all” and 10 being “extremely,” how different do you believe the Canadian produce industry is from the U.S. produce industry (i.e., regulations, quality expectations, supply chain management, product labeling, etc.)?
2. What are a few of the differences and why do you think they exist?
3. For an American who has never done business with Canada, are there things he/she should know to ensure smooth business transactions?
4. On a scale of 1 to 5, with 1 being “no impact” and 5 being “high impact,” have demographic changes in Canada impacted (a) your busy season (i.e., harvest times, holiday sales/promotions, etc.); (b) the commodities you handle; and (c) the types of accounts you buy or sell to?
5. For the trends you have observed in the previous question, does this impact your relationship with American businesses in any way?
6. What, if anything, do Americans need to know about the differences between provinces?
Spam Crackdown—Canadian Style
Nobody likes spam—and no, we’re not talking about the canned delicacy. But getting spam emails in Canada is a whole different ballgame than in other countries. If recent legislation is any indication, Canadians are particularly picky about what ends up in their electronic inboxes. Bill C-28, Canada’s Anti-Spam Legislation, passed in 2010 and in force in 2013—has pretty sharp teeth—significantly more so than the American equivalent, the CAN-SPAM Act.
Intended to fight off the most dangerous aspects of spam email, such as the distribution of viruses and malware, and the proliferation of fraud and so-called “phishing” scams, Bill C-28 also mandates that any email marketing lists must be opted into with the permission of the recipient, and features strict definitions of what constitutes commercial electronic mail. It also extends to ‘wireless spam’—messages of a similar nature sent over cell phones—and can result in substantial fines and penalties for those who violate the law. Patterned after an existing Australian law, Bill C-28 is expected to produce a considerable reduction in harmful spam within a few years.
While the government offers assurances that the bill will not adversely affect legitimate businesses that send mass marketing emails to consenting recipients, nor will it prevent the collection of email lists for lawful advertising purposes, it can be used against both American and Canadians who do not abide by its provisions.
The intent of penalties is to encourage compliance rather than act as a punitive measure, but violators found guilty by Canadian courts could face steep fines: up to $1 million for individuals, or $10 million for groups and organizations. Businesses are advised to keep thorough records of email communications to prove compliance with the law; while anyone seeking further information can find it at www.fightspam.gc.ca, which provides both the full text of the law and a simple, easy-to-follow breakdown of how it works, what it means for a business, and how to comply.
