U.S. tariffs pose major risk for Canada's export-dependent greenhouse sector

Tomatoes grow in a greenhouse at Windset Farms, in Delta, B.C., on Friday, January 24, 2025. THE CANADIAN PRESS/Darryl Dyck

U.S. tariffs on Canadian goods pose a big risk for the greenhouse sector, which relies heavily on exports south of the border and would suffer if importers buy less because of the trade war.

“These tariffs have some significant consequences,” said Richard Lee, executive director of Ontario Greenhouse Vegetable Growers. Ontario grows the majority of greenhouse vegetables in Canada.

The three days tariffs were in place earlier this month cost the Ontario greenhouse sector more than $6 million, Lee said.

On March 4, U.S. President Donald Trump enacted tariffs on Canadian and Mexican imports. Just two days later, he announced a one-month pause on goods that meet the rules-of-origin requirements under the Canada-U.S.-Mexico Agreement.

Canada’s fruit and vegetable sector is deeply intertwined with the U.S. market, according to Fruit and Vegetable Growers of Canada — but the greenhouse industry is particularly vulnerable due to its reliance on exports to the U.S.

The U.S. is by far the main export market for Canadian greenhouse vegetables, making up 99.5 per cent of the $1.7 billion exported in 2023, according to Agriculture and Agri-Food Canada.

The U.S. and Canadian agricultural markets complement each other, Lee said, especially on a seasonal basis — for example, in the winter, Canada imports a lot of lettuce.

“It’s a very symbiotic relationship,” he said.

Canada’s greenhouse sector has expanded rapidly over the past couple of decades to keep up with demand, said Lee, to the point where “the produce ... we grow here in Ontario alone will feed Canada 10 times over.”

Industry experts say Canada can’t consume all the extra produce that could be left in limbo due to the trade war.

Canada’s greenhouses are relatively limited in terms of what they can grow at scale. The biggest greenhouse crops by far are tomatoes, cucumbers and peppers, which made up more than 92 per cent of the financial value of 2023 greenhouse vegetable harvests. Lettuce and strawberries are much smaller, but growing, areas for greenhouse companies.

“It’s impossible for us to absorb all of that,” said Dana McCauley, CEO of the Canadian Food Innovation Network.

“How many salads can we eat?”

Some things we just can’t grow in our climate even in a greenhouse, said Lee. The facilities also can’t be built just anywhere, as they still require certain kinds of conditions to be successful, he said.

It’s also easier said than done to diversify export markets as fresh vegetables don’t travel well, said McCauley.

The variety of crops being grown in greenhouses is diversifying, but it takes time. Some farms have been investing in research to look at expanding what they can grow, even testing out tropical fruits like papayas or bananas, said Lee.

“They’re investing in different technologies and hoping that they’ll pay off in the long term by creating new market segments or new commodities that can be grown in a greenhouse setting.”

A 2024 RBC report identified spinach, bananas, coffee, okra and certain berries as key opportunities for the greenhouse sector in Canada.

“Canadian tastes are evolving and diversifying and Canada’s access to highly consumed items such as bananas and coffee could become more challenging over time amid concerns about climate change, supply chain disruptions, and geopolitical shifts,” the report said.

But the sector faces infrastructure challenges such as access to energy, water and other key inputs, it said.

For the relatively small but growing vertical farm industry, which tends to focus on the domestic market, the trade war could open a window of opportunity.

Lenny Louis, CEO of Welland, Ont.-based Vision Greens, said he’s seen a “tremendous uptick” in demand from grocers and suppliers for his lettuce and spring mix in the wake of tariffs. That includes companies that don’t already stock his products.

Vertical farms use a stacked model to grow more crops with a smaller footprint, usually without natural light and often using hydroponics. Greenhouses take up a bigger footprint as they grow crops in soil and use sunlight, and grow a wider array of produce.

“It is quite different because I think (vertical farms) really have positioned themselves to be seen as a local alternative,” said McCauley.

Grocers and suppliers need additional supply of Canadian produce because of customer demand, said Louis.

“It certainly has changed the mindset for grocers, to accelerate their desire to put Canadian product on shelves.”

However, McCauley said the greens often grown by vertical farms tend to be a bit more expensive than the other options at the grocery store — but the more they are able to scale up, the better positioned they will be to lower prices.

Vision Greens recently raised a well-timed $20 million to expand its business, with plans to triple its capacity, said Louis — an expansion that couldn’t come soon enough.

“Obviously we have limited supply, so it makes us want to expand even faster,” he said.

“I think it’s here to stay, with or without tariffs.”

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Rosa Saba, The Canadian Press

This report by The Canadian Press was first published March 20, 2025.