Food processing in Canada is in crisis, says Ted Johnston, chief executive officer of Alberta Food Processors Association. He told a recent forum held by of the Agriculture and Food Council that the industry is currently facing many challenges including the high Canadian dollar, rising input costs, labour shortages and growing competition from foreign countries.
Between 50 and 55 per cent of all agricultural products are bought by the food industry, the largest manufacturing industry in Canada, said Johnston. He said current government policies do not reflect the importance of the food sector, nor the economic contribution made by the sector, which is worth two per cent of the nation’s Gross Domestic Product. Johnston said he industry generates about $87 billion each year and employs about 300,000 people in Canada.
Food processing encompasses a broad category which can include butchering and wrapping steaks or washing and bagging vegetables. Even canola oil could be considered a processed food.
“The current global economic recession had a minor impact on the processing sector,” he said, noting consumer demand has declined in some areas.
The recession also made it difficult for processors to borrow money for new projects or expansion.
Johnston said industry performance and trade in the food processing sector has weakened over the past few years. “It’s become scary and we need to become worried about what’s happened.” He said the recession led to plant closures, which meant a loss of about 9,000 jobs and the closure of 24 large plants with more than 200 employees. Plants have also consolidated and centralized, and some companies have left Canada altogether, said Johnston.
The past lower Canadian dollar allowed the country to be more competitive in the global market, explained Johnston. “When we had a 70-to 80-cent dollar, we could compete because our dollar was so much less than the American dollar and everything in world trade was based on the U. S. dollar, But at 95 cents, we are a disaster. We can’t compete with anyone anymore,” Johnston said.
He said the difference between imports and exports is widening. “We expect that we will have a two-billion dollar trade deficit in value-added food in Canada by the end of the year,” he said.
The Canadian Food Inspection Agency (CFIA) has developed guidelines that continue to be extremely challenging for the industry, said Johnston. CFIA guidelines make it harder for Canadians to identify Canadian food. “We have the slowest approval process for new products, additives and ingredients in the world,” said Johnston.
He said government support and better policy is needed and that regulations need to be changed to accommodate the special needs of the industry, which will help ensure Canada’s food sovereignty.