Food for the world, prosperity for Canadians: Unlocking the power of Canadian food and beverage manufacturing

According to a new report from FCC Thought Leadership, we have reached a crossroads when it comes to investing in the future of our national food system. Canada’s food and beverage manufacturing sector is a cornerstone of both the national food system and manufacturing economy. As the largest manufacturing sector in Canada, it employs over 300,000 Canadians supporting nearly 8,800 businesses — mostly small, and mid-sized — serving as a vital market for domestic agriculture.

Despite its importance, productivity growth in the sector has slowed in the past decade, especially in beverage manufacturing. As highlighted in FCC’s recent Food and Beverage Report, trade disruptions and geopolitical uncertainty are exerting additional pressure on producers, affecting sector investment and growth. This could potentially contribute to a further deceleration of productivity growth.

Figure 1: Labour productivity growth – 2000 to 2024

Sources: Statistics Canada, FCC Thought Leadership and CAPI

A new report from FCC Thought Leadership, Prospects for future productivity growth in Canadian food and beverage manufacturing, examines the implications of this productivity growth slowdown and what is required to reverse it. The report recommends the following:

• Investing in innovation and infrastructure to promote the adoption of productivity-enhancing technologies.

• Diversifying trade by reducing interprovincial barriers and expanding internationally.

• Attracting and retaining skilled labor through training, immigration, and career awareness.

• Reforming regulations to lower costs and complexity while maintaining public trust.

By embracing these targeted strategies, the food and beverage manufacturing sector can build resilience and secure its role as a leader in the global marketplace while driving prosperity at home. Now is the time for the industry to come together and lay the groundwork for lasting productivity and prosperity.

What is productivity?

Productivity can be measured at the individual processor level, and for the entire food and beverage manufacturing industry. It’s a measure of how efficiently inputs – such as labour, equipment, and energy – are transformed into food and beverage products. We aim to grow productivity because it allows us to increase output using fewer resources, at lower cost, while producing less waste.

Why productivity matters

For manufacturers, productivity drives sustainable growth, competitiveness, profitability and resilience. It supports job creation, higher wages, food affordability and export growth. A robust and productive food and beverage manufacturing sector helps Canadian farmers manage risk, by ensuring stable domestic demand for their output even during global disruptions.

While food manufacturing labour productivity remains above the national average, growth has stagnated since 2015. And beverage manufacturing productivity growth has declined, due to discretionary demand and rising costs. Given the critical importance of food and beverage manufacturing to the Canadian food system and overall economy, Canada cannot afford to maintain this status quo.

The cost of standing still — and the upside of change

The report explores an ambitious potential high productivity growth scenario, where real GDP in food and beverage manufacturing increases by 3% annually between 2024 and 2035. Under this scenario, food and beverage manufacturing would contribute an additional $40 billion to Canadian GDP across the entire decade, generating 217,000 new jobs, $16 billion in wages and benefits and $1.3 billion in tax revenues. These numbers illustrate that the opportunity cost of continued stagnation is very high.

Figure 2: Real GDP growth in food and beverage manufacturing – business as usual (BAU) vs. potential high growth scenario – 2015 to 2035

Sources: FCC Thought Leadership and CAPI

Productivity isn’t ‘one-size-fits-all’

It is important to note that productivity performance varies across food and beverage manufacturing subindustries, due to differences in factors like regulatory burden, evolving consumer demand and market shocks. For example, bakeries and tortillas manufacturing has seen labour productivity improvements in recent years from increased capital investments, while meat manufacturing has seen labour productivity declines. Targeted strategies are essential to address these differences.

Looking ahead: what needs to happen next

Productivity growth is not a catch-all solution, but without it, the sector risks falling behind amid mounting concerns about food security, affordability, and competitiveness. The next decade will bring uncertainty. Shifting demand, rising costs, labour shortages, and evolving trade relationships will all have potential impacts on the sector, and these challenges make productivity growth more urgent.

Canada has strong fundamentals: abundant resources, growing demand for Canadian food, access to global markets, and opportunities in digitization and automation. With targeted investment, coordinated action, and a renewed focus on productivity, the sector can strengthen Canada’s food system while delivering long‑term prosperity for workers, businesses, and communities.

Read the full report.

Article by: Bethany Lipka, Senior Economist