Trade shocks put food and beverage margins under pressure, FCC reports

EmitenTrust.com REGINA, SK, Sept. 24, 2026 /CNW/ -- Tariffs and trade disruption are shifting the outlook for Canada's food and beverage manufacturers from resilience to risk management, according to a mid-year update from Farm Credit Canada (FCC) Economics. Sales rose four per cent in the first half of 2026, but new U.S. trade restrictions, Canadian counter-tariffs and renewed energy and freight volatility are putting pressure on margins.

Canadian food and beverage manufacturing sales reached $88.1 billion in the first half of 2026, with the gain driven largely by higher prices rather than stronger volumes, the update shows. After adjusting prices, real sales were flat compared to the same period last year.

"The first half of 2026 shows the sector remains resilient, but the headline sales number does not tell the whole story. For manufacturers, the key issue is not just whether sales are growing, but what is driving that growth," said Craig Johnston, vice-president and chief economist at FCC. "When gains are tied more to prices than volumes, it can signal that companies are still operating in a cautious demand environment while also managing higher and less predictable costs."

Results varied significantly across the sector. Grain and oilseed milling, fruit and vegetable processing and animal food manufacturing recorded some of the strongest gains, while sugar and confectionery manufacturing, breweries and distilleries posted declines.

The operating environment has also become more challenging. Energy and freight volatility, higher input costs, U.S. trade restrictions and Canadian counter-tariffs are creating additional uncertainty around production costs, export opportunities and margins.

Margins are expected to improve modestly in 2026 after a difficult year, but the recovery is expected to remain fragile as trade and cost pressures build later in the year. FCC Economics' estimates suggest the direct impact of the new trade measures will be limited in 2026 because most take effect only in September.

"As margins remain tight, diversification will become an increasingly important long-term strategy for food and beverage manufacturers," Johnston said. "Reducing interprovincial trade barriers and expanding internationally can help open broader market opportunities. Helping the food and beverage manufacturing sector to achieve 3 per cent growth over the next decade could contribute an additional $40 billion to Canadian GDP over the next decade, while supporting 217,000 new jobs, $16 billion in wages and benefits and $1.3 billion in tax revenues."

The mid-year update follows FCC Economics' annual food and beverage report and examines how sales, costs and margins are evolving across Canada's food and beverage manufacturing sector.

By sharing economic knowledge and forecasts, FCC provides insight and expertise to help those in the business of agriculture and food achieve their goals. For more economic insights and analysis, visit FCC Economics at fcc.ca/Economics.

About FCC
FCC is the leading lender in Canadian agriculture and food. FCC invests in industry success through innovation, productivity and sustainability. Customers rely on FCC for financing, capital, AgExpert management software, knowledge and industry connections. As a trusted partner and commercial Crown corporation that reinvests profits into ag and food, FCC is essential in building a stronger, more prosperous food industry for all Canadians. fcc.ca

SOURCE Farm Credit Canada