Canada’s food manufacturers have issued a warning about the “future sustainability” of the sector in the country.
Food & Consumer Products of Canada (FCPC), an organisation representing domestic food manufacturers and multinationals doing business in the market, said costs were growing faster than sales and hit out at the “unprecedented levels of government intervention” in areas such as marketing and labelling.
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In a new report, FCPC said the “high growth” in costs had “outpaced” the expansion in sales. The cost of placing a product on store shelves in Canada rose 22% from 2013 to 2017, FCPC claimed, while arguing costs had “flat” in the US.
The trade body said food companies in Canada expect that trend to continue “due to the high level of consolidation among retailers”, which, the organisation added, was “having a negative impact on the cost of placing and maintaining products on store shelves”.
The report also sought to draw comparisons between the food sector in Canada and other industries in the country. “Compared to other manufacturing sectors in Canada, food manufacturers rank amongst the lowest in terms of a competitive operating environment,” FCPC said. “Not surprisingly, manufacturing capabilities have remained constant in Canada, with little to no
change in the total number of plants.”
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Michael Graydon, the chief executive of FCPC, said what he described as “these ongoing challenges” were “having a negative impact on the future sustainability of our sector”.
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By GlobalData“Coupled with the unpredictability with our most important trading partner, retaliatory tariffs on our industry, and labour shortages, I’m concerned that manufacturers may look to more attractive markets to invest – putting Canadian jobs, rural communities and the economy at risk.”
The announcement earlier this month by Canada-based manufacturer Maple Leaf Foods of plans to build a processing plant for plant-based products in the US state of Indiana grabbed mainstream headlines in Canada.
Dr. Sylvain Charlebois, a Professor in food distribution and policy in the Faculties of Management and Agriculture at Dalhousie University, drew comparisons between food manufacturing in Canada and in the US.
“In the last decade, the US has seen almost 4,000 brand-new food processing plants, whereas Canada has seen a mere 20. Growing challenges linked to labour, costs, and skill management are more than apparent, and the situation is getting worse,” Dr. Charlebois said. “The number of full-time employees has declined by 7.3% over the last five years, due to labour relocation and outsourcing of certain operations outside of Canada. In five years, there have been 22,000 jobs lost within the sector, and all these positions are in food manufacturing. Essentially, the sector has lost 12 jobs a day, every single day, for five years.”
He added: “The state of our infrastructure to move food products around is also highly deficient, compared to the US. Another compelling statistic, 83% of new, branded products launched in Canada were neither developed nor manufactured in Canada. This lack of innovation is deeply rooted in our inability to think creatively and generate intellectual property for this critical sector within the agri-food sector.
“Unless some market fundamentals change, Canada has no case for harbouring more new processing plants. Something is clearly wrong. We have an abundance of ingredients and are on the leading edge of artificial intelligence that can make our manufacturing more efficient and productive. But it doesn’t compensate for our unskilled labour force, capital access deficiencies and poor infrastructure conditions. This needs to change.”
FCPC’s Graydon also argued Canada’s food manufacturers were facing pressure from government in areas such as marketing, packaging and labelling. The Canadian government is, for example, looking to make changes to nutrition labels. “No other manufacturing sector in Canada is being asked to make all of these changes all at once,” Graydon claimed. “The cumulative and costly regulatory burden appears to be limiting innovation, deterring companies from expanding or entering the market.”
