Canadian Federal Budget Aims for Export Growth and Trade Diversification

The Canadian federal budget unveiled on March 15, 2025, sets ambitious goals for enhancing export growth and trade diversification, particularly targeting the agriculture sector. The government aims to double non-U.S. exports over the next decade, with a strong emphasis on the Asia-Pacific region. This strategic approach includes significant investments in biofuel production and enhanced business management support for agricultural producers.

In recent months, the government has faced mounting pressure from the agriculture community, particularly concerning tariffs and trade uncertainties. The budget highlights the introduction of a new biofuel production incentive, which was initially announced in early September. This initiative is designed to support Canadian canola and agriculture producers while amending the Clean Fuel Regulations to bolster the domestic biofuels industry.

Focus on Infrastructure and Trade Relationships

To further strengthen trade links, additional funds will be allocated for deepening relationships with European markets. The budget also addresses infrastructure needs, allocating $213 million for the Major Projects Office, which will oversee public and private investments aimed at enhancing Canada’s export corridors. Furthermore, a new $5 billion Trade Diversification Fund is established to facilitate the necessary improvements to port infrastructure, critical for maintaining efficient export operations. With nearly 70 percent of Canadian grain destined for international markets, timely and competitive transport solutions are essential.

The Grain Growers of Canada (GGC) welcomed specific measures that aim to benefit grain farmers, including the permanent reversal of the capital gains tax increase. GGC Executive Director Kyle Larkin stated that this reversal acknowledges the significant tax burden that family-run grain farms have faced, allowing for more effective succession planning. He emphasized, “This will ensure that family farms can continue their succession planning with certainty and that the next generation of farmers does not pay millions of dollars more in taxes.”

Adding to the conversation, Scott Hepworth, Chair of the GGC and a farmer from Saskatchewan, expressed concerns about the ongoing challenges related to trade. He noted, “With challenges in the U.S. and tariffs in China, producers are under real pressure. The new investments in digital export tools and market diversification are positive steps.”

Concerns Over Budget Cuts and Missing Measures

Despite the positive developments, the budget has drawn criticism for plans to reduce the operating budget of Agriculture and Agri-Food Canada by 15 percent over the next three years. This reduction raises concerns about the potential impact on public research and breeding programs, which are vital for fostering innovation within the agricultural sector.

Larkin remarked, “While the budget provides much-needed clarity for farmers, it falls short of delivering the full competitiveness framework needed.” He reiterated the importance of continued collaboration with the government to ensure the sector remains competitive and profitable.

Another crucial aspect missing from the budget is the commitment to extend interswitching, a measure that expired in March 2025. This policy had allowed farmers to access competing rail lines, resulting in reduced shipping costs and improved service. Larkin emphasized the importance of maintaining this competitive tool: “Without extended interswitching, farmers lose a competitive tool that kept costs in check and performance accountable.”

As the Canadian agriculture sector navigates this evolving landscape, the federal budget represents a pivotal moment for trade diversification and export growth. The focus on biofuels, infrastructure improvements, and strategic partnerships provides a foundation for strengthening Canada’s position in the global market while addressing the immediate challenges faced by farmers across the country.