Canada’s food system is broken and the nation’s farmers should be worried, according to the chief executive officer of the Alberta Food Processing Association.
“Seven years ago, Canada was the No. 3 food exporter in the world,” Ted Johnston told attendees at a recent meeting of the Canadian Association of Farm Advisors. “Two years ago, we were No. 9. We’ve now crept back up to No. 7.”
Those statistics, for value-added products, not primary ones, show Canada now lags behind Malaysia, China, Brazil, and the European Union in terms of food manufacturing.
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“Seven years ago, we ran a $2-billion trade surplus. The numbers from last year came in and we’re now at a $7-billion deficit. We’ve dropped over $2 billion plus $7 billion negative in seven short years.”
Canadian food manufacturers are the biggest purchaser of agricultural products, but fundamental changes are needed to keep the sector healthy, said Johnston. One of the problems is cheap imports, which come with health and environmental concerns.
Johnston noted his concerns are echoed by a recent report from the Canadian Agriculture Policy Institute (CAPI) think-tank. That report said Canada’s dollar value of agrifood exports needs to double to $75 billion, said Johnston.
“That doesn’t mean we got to sell or ship twice as much raw grain, because we’ll never make it,” he said. “Guess what? We don’t have a hell of a lot more arable land that we’ll be able to develop in this country. It’s pretty much all under cultivation now. You’re not going to get it by increasing volumes of primary products. If you’re going to get that kind of number, you’re going to add a heck of a lot more value to what we’re doing today. That’s what we got to start focusing on.”
Canada produces about 75 per cent of its own food, but that number is falling rapidly, he added.
“This is not good news for this country and it’s certainly not good news for farmers in Canada.”
Falling short
The CAPI report suggests Canada, with the planet’s third-largest arable land base and 22 per cent of its fresh water, is in a position to be one of the best food producers in the world, but is still falling short.
“We haven’t yet figured out to take those two factors and turn that into the tremendous economic advantage for the well-being of all Canadians,” said Johnston.
Two years ago, Canadian food processors bought 53 per cent of all Canadian agricultural outputs. That number fell to 51 per cent last year and is continuing to fall. Food manufacturing is still the largest manufacturing sector, accounting for 17 per cent of the national total. But it has only retained that ranking because the automotive sector has slipped badly in recent years. The value of food manufacturing has fallen from $93 billion to $89 billion in the past few years, said Johnston.
“This is not a trend line that anyone in this country should be slightly happy about,” he said.
Food manufacturers account for two per cent of the national gross domestic product and is the largest employer in Canada, with almost 300,000 Canadians employed directly. Almost a million people are directly dependent on food manufacturing for income, if suppliers and producers and transportation are added to that number.
This can also have a direct impact on farmers, as many farmers work in food manufacturing as a way of earning off-farm income, he said.
A high Canadian dollar has reduced Canada’s ability to compete. During the recession, a large number of plants closed and jobs were lost.
“Every time a plant closes in Canada, that’s a customer gone for Canadian agricultural outputs,” he said.
Johnston cited a study by the George Morris Centre that found Canadians are 40 per cent less productive than Americans.
“The Americans are not the gold standard. They don’t even come close to what goes on in Europe,” Johnston said.
Canadians fall short in maintaining food manufacturing because they do not reinvest in new facilities or upgrading at the same rate Americans do and are living off the depreciation, he said.
Johnston said he believes pressure to improve the manufacturing sector in Canada needs to come from primary producers and processors, because it will not come from retailers or food service.
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“EverytimeaplantclosesinCanada,that’sacustomergoneforCanadianagriculturaloutputs.”
TED JOHNSTON
