Canada's food processing industry needs more policy attention, researcher says

Friday, March 14, 2014

by MATT MCINTOSH

Food processing is a major economic driver for Canada and an important industry for farmers, but the government needs to do a better job of helping the industry stay competitive, says a study from Western University released Monday.

“Developing a stronger food manufacturing industry will create more demand for the raw products produced by farmers,” says David Sparling, one of the study’s authors and agri-food innovation chair at Western University’s Ivey business school. Erin Cheney, a research associate at the school was the other author.

Sparling says that Canadian food manufacturing, which according to his study is an $88 billion industry that employs over 236,000 people, could be more globally competitive if the government continues pursuing trade deals like the recently announced Korean trade agreement. This, he says, means a wider market share for Canadian food manufacturers, and in turn, a greater demand for agricultural products.

Sparling also says the government should set up programs that encourage food companies to invest in new equipment, as well as in research and development.

“A lot of our bigger companies are still working with older facilities and older equipment, which can be less efficient” he says. “Large companies in particular need to be cost competitive if they are going to compete and succeed in a global market.”

While Canadian food manufacturers are exporting an increasing amount of product, says Sparling, Canada as a whole is increasing food imports at an even quicker rate. Combined with a major recession, higher Canadian dollar, increased foreign competition, and higher input costs, food manufacturers are having their ”margins squeezed.”

According to the study, governments tend to forget food manufacturers partially because the wages were historically lower than in the auto sector, and the end products are not as interesting as those from the aerospace and other high-technology industries. BF