Why We Need to Care About Food and Beverage Manufacturing in Canada

Canada’s current trade balance in the food and beverage manufacturing sector – a negative $6.5 billion - points to a changed landscape. In 2004, the trade deficit was less than $1.0 billion.

But does this new landscape mean tougher times ahead?

At the Canadian Ag Policy conference held late January in Ottawa, recent research suggested there’s a lot to do to ensure a viable long-term industry – and some significant success to draw on as we move ahead.

David Sparling of Ivey Business School noted that industry changes include increasing pressures from many sources. The Heinz and Kellogg closures highlight the challenges facing the industry.

His research answers the question: Is the picture of the industry as beset by closures an accurate picture? What’s the overall story?

  • Canada’s food manufacturing revenues keep increasing gradually, while other Canadian manufacturers’ are not. There’s regional variation in this, but overall, revenues are up. As is employment (also with regional differences).
  • Food manufacturing is the number one manufacturing employer in Canada.
  • Industry profitability is also gradually increasing.

The food industry in Canada faced difficult times in 2007 but has shown a positive trend since then. A small minority of manufacturers (16%) produce 83% of industry total production. Sparling’s research shows that closings are older, smaller, less productive facilities that are multi-plant companies re-structuring to become more competitive. Production isn’t necessarily moving out of Canada, but is being relocated within the country to accommodate efficiencies.

Today, Canadian food manufacturers compete on a global basis. Growing domestic demand from an increasingly ethnically diverse population and global demand arising from population and wealth increases are opening up markets. The conference session showed that Canada’s ability to compete for these markets depends on continuing efforts to increase scale, to reorganize and innovate products and processes.

Pressures have increased, but success stories exist too. Brynn Winegard of the Schulich Executive Education Centre noted that manufacturers don’t have to wait for, or even expect regulatory changes to make a difference. Canadian export competitiveness is driven by leadership communication, differentiation and the quality of relationships seen throughout the business chain.

Bob Seguin, working with the George Morris Centre, argued for the need for more and better research to help guide the framework for food manufacturing. He too stressed the importance of the need to innovate, change and adapt. The ongoing research conducted with the Canadian Agri-Food Policy Institute (CAPI) is a step in the right direction.

A difficult road may be ahead, but it’s not inevitable. There is a path to success. 

Martha Roberts, Economic Research Specialist