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The federal government’s 2025 budget marks a decisive shift in Canada’s trade strategy. With a new $5-billion Trade Diversification Fund, Ottawa is signaling that the country must look beyond the United States for future growth. As Prime Minister Mark Carney emphasized in his national address last month, Canada intends to double its non-U.S. exports over the next decade. The new fund—managed by Transport Canada—aims to modernize ports, rail corridors, and key export infrastructure to support that goal, while opening the door to deeper engagement with emerging trade partners such as Mercosur.
Mercosur, established in 1991 and composed of Brazil, Argentina, Paraguay, and Uruguay, represents more than 270 million consumers and one of the world’s most influential agricultural forces. The bloc’s global profile is defined by its dominance in beef, soybeans, sugar, grains, pork, and particularly poultry, Brazil being the world’s largest chicken exporter. For Canada, exploring an FTA with Mercosur offers potential commercial gains, but also exposes sensitive sectors to competitive pressures unlike anything seen in past trade agreements.
Within this context, Brazil stands out as the most consequential player and a structural competitor for Canada’s chicken sector. Brazil is the world’s largest chicken exporter and the third-largest producer, slightly behind the U.S. and China. According to recent USDA report[1], the country is expected to export roughly 5.2 million metric tons of chicken in 2025—about one-third of its entire production. Its cost structure is dramatically lower than that of other global exporters, driven partly by currency dynamics: live chicken costs approximately US$0.84 per kilogram in Brazil which is very competitive. This cost advantage alone positions Brazil as an unparalleled force in global poultry markets.
Brazil’s market reach is expanding quickly. The country is actively pursuing new export opportunities and opened 20 new poultry markets in a single year. Its exports to Chile, Cuba, Russia, and Singapore are also rising rapidly. For Canada specifically, imports from Brazil reached 15.5 million kilograms in 2024, making it our second-largest supplier after the United States—consistent with trends observed in 2022 and 2023.
This combination of scale, efficiency, and expanding global access makes Mercosur, and particularly Brazil, a uniquely sensitive file for Canada’s supply-managed poultry system. Even in the context of a forward-looking diversification strategy, the risks to domestic producers are substantial. Canada’s chicken farmers operate within a carefully balanced framework based on stable import controls, predictable pricing, and domestic production aligned to national demand. Any preferential access for a country with Brazil’s export capacity could deeply disrupt this market balance.
Europe’s experience offers a useful warning. Despite having one of the world’s largest, most sophisticated agricultural sectors, EU member states’ agricultural organizations have long expressed strong reservations about the agricultural implications of a Mercosur agreement. Concerns include the potential for import surges, competition from lower-cost production, and discrepancies in environmental and animal-welfare standards. If Europe’s agricultural sector sees difficulty absorbing Mercosur’s influence, Canada—whose poultry market is significantly smaller—would be even more vulnerable to destabilization.
Canada’s trade diversification agenda is both necessary and strategically sound. Expanding export infrastructure and pursuing new markets will help Canadian industries position themselves for long-term growth. However, as the country deepens its engagement with high-impact partners like Mercosur, policymakers must strike a careful balance between ambition and prudence. For the chicken sector, this means ensuring that over-quota tariffs remain intact, that import access does not exceed existing market access commitments, and that safeguard mechanisms and enforcement tools remain strong.
Canada can pursue a more global trade footprint without compromising the stability, food security, and community benefits provided by supply management. Achieving this balance will be essential as the next phase of trade diversification unfolds.
[1] https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Poultry%20and%20Products%20Annual_Brasilia_Brazil_BR2024-0028.pdf
