CNERG: Exchange rate effects and the Canadian food and beverage sector

Kenrick Jordan, PhD, School of Business 

The Canadian food and beverage manufacturing sector, a cornerstone of the national economy and a major source of manufacturing employment, is becoming increasingly reliant on exports, with roughly 25 per cent of industry shipments now heading to foreign markets. As a result, fluctuations in the Canadian dollar are more influential than ever, potentially impacting growth and competitiveness within this sector. This project aims to analyze how changes in the Canada-U.S. exchange rate affect net exports across different industry segments, providing valuable insights to businesses navigating currency fluctuations. 

Using econometric analysis, the project measures the sensitivity of net exports to changes in the exchange rate and examined whether this sensitivity has shifted over time. Data on key economic indicators such as shipments, imports, exports, and productivity were sourced from Statistics Canada and the Bureau of Economic Analysis, allowing for a comprehensive model to estimate exchange rate elasticities for the sector and its segments. By identifying which industry segments are most affected by exchange rate changes and exploring the underlying factors, this research can equip food and beverage companies with the knowledge needed to better manage exchange rate risks, supporting more resilient and effective business strategies in an increasingly global market.