July 16th, 2015
Canada’s food and beverage processing sector remains as one of the country’s most important channels for agricultural products, and for the overall Canadian economy. Of course, this sector is not without its challenges. Trade deficits in secondary processing have proven damaging in recent years.
Of course, many individuals have a vested interest in seeing the Canadian food-processing sector succeed. There are many public and private initiatives designed to maintain, support, and grow the sector’s competitiveness. Despite its importance, food manufacturing is often an overlooked aspect of the Canadian economy. This is one of the major reasons for some of the recent challenges to Canadian food processors.
The current role of Canadian food processing
As of 2012, the food and beverage processing industry represented the largest manufacturing industry in the country, accounting for 15.9% of the overall manufacturing sector’s GDP.
At the same time, food and beverage processing accounted for the lion’s share of jobs in the manufacturing sector, sitting at 16.7%.
Since 1992, the industry has continued to grow, more than doubling in size and in the value of products produced. By 2012, the industry’s output reached CAD $93.7 million. These impressive statistics and dollar amounts illustrate the importance of Canadian food processors
Challenges faced by food processors
The environment surrounding food processing is one of the biggest recent challenges for Canadian food processors. Recessions, the value of the Canadian dollar, retail concentration, the increase of foreign competition, and higher input costs are all factors that limit profit margins.
While growth has not continued to double since 1992, the sector experiences success regardless. During a difficult recession period, the Canadian food processing industry produced gains of 20% relating to both margins and net income, which was greater than the inflation rates of approximately 14%. They thus experienced success despite economic hardship.
Food and beverage processing is an essential part of the Canadian economy, but it has yet to receive any extensive treatment from Canadian policy makers. While this has been changing in recent years, it is certainly a setback to the industry overall. Providing the economic and employment opportunities that are available to other industries to the food and beverage processing sectors will encourage their growth and progress.
The resilience of the sector
Despite these challenges faced by Canadian food processors, they remained consistent in their employment rates and outputs nevertheless. During difficult periods, the food-manufacturing industry came out relatively unscathed in comparison to other industries in Canada. While recessions and economic downturns affected almost every industry, the food-processing sector proved remarkably resilient.
Employment in the industry did change to an extent: some direct food-processing jobs were lost, for instance. A series of indirect jobs made up for these losses, producing an overall net gain.
Responding to challenges
One way that many food processors and manufacturers responded to the challenges they faced was through investments into new equipment. Adding value by improving processes is a smart choice for almost any industry, and it is a decision that has paid dividends for food processors. New equipment assisted with the creation of indirect jobs, for instance.
Of course, paying for new equipment to grow the industry is no easy task. Many food processors struggle to afford modernizing efforts to improve their equipment. This is where the Canadian government is attempting to assist the food-processing sector. While policy still has a way to go, several government grants exist to help food processors improve their businesses. Get in contact with us at INAC today and let us help you find funding to raise your businesses’ profile.