Mathew Wilson, Senior Vice-President, Policy & Government Relations discusses the global opportunity for Canadian food manufacturers.
In 2016 I had the opportunity to consult with roughly 1,200 manufacturing executives about the future of the sector and opportunities for growth. This initiative was dubbed Industrie 2030 and our goal is to double manufacturing output and value-added exports by 2030. To achieve this we examined a range of policy issues that would impact investment, R&D, growth and scale up of all manufacturers across the country. We also looked at specific sectors, those sectors with untapped potential that can and must be harnessed to meet our objectives. Canada’s agri-food manufacturing sector was one of those sectors that stood out above almost all others for potential.
The reason is simple really. Canada for generations has been an agri-food powerhouse. We started out as a country supplying fish and other natural resources. We became the bread basket of the Empire. We even turned into the largest suppliers of alcohol to a prohibition era United States. And today, Canadian companies have built global brands supplying everything from French fries to meat products to pulses.
But so much more can and should be done. We believe Canada is only scratching the surface of what is possible for two critical reasons.
First, the sector has historically underinvested in technology and productivity and has the potential for greater growth if we can drive greater investment. Today, food processing is one of Canada’s fastest growing manufacturing sub-sectors. In the last five years, the value-added food processing sector has grown by 21% – twice as fast as the entire manufacturing sector. This growth happened despite machinery and equipment spending in the food processing sector peaking in 2014, and declining ever since, much like the rest of the manufacturing industry. We need to reverse this investment slide.
The second issue is more focused on the domestic nature of the business and opportunities for growth internationally. Unlike many other sectors in manufacturing, food manufacturers tend to produce and sell to a domestic consumer base, and there are much greater markets globally where Canada can succeed and expand. While value-added food exports have roughly doubled in value over the last decade, there is much more room for growth. By comparison, Canada’s auto sector accounts for roughly 15% of all manufacturing output and 22% of all value-added exports, while the agri-food sector also accounts for about 15% of all output but only 9% of value-added exports. So the sector is roughly the same size and scale of Canada’s auto sector, but exports less than 40% of their total.
These twin challenges can be significant opportunities for Canada and our food manufacturing sector. But to capitalize on them, we need government to act and support that growth. Specifically, we think there are 3 core areas for government to focus its attention:
1. Create a competitive business environment that reduces the cost of doing business and encourage growth and production through tax and regulatory reform to ensure efforts and actions are in line with comparative jurisdictions.
2. Introduce globally-competitive investment support programs to assist companies with plant expansion, technology adoption, and product innovation and commercialization, including an expanded Accelerated Capital Cost Allowance program to support investment.
3. Support international expansion by creating export readiness programs for SME’s; the introduction of a private sector-controlled export concierge program to link SMEs into government services; introducing an export tax credit for companies who are actively growing exports; developing a “Made in Canada” promotion campaign for use at home and abroad; and focusing free trade agreements and related support programs on agri-food exports.