FCC calls for investment in Canadian food manufacturing to drive innovation

Food manufacturing is the largest sector in Canada by employment and sales and it plays a crucial role in addressing the need to sustainably feed a growing global population, according to a recent Farm Credit Canada (FCC) report.

“If we’re going to tackle some of the most pressing challenges facing our planet like hunger, global health, climate change, and stagnant economic growth, we need to build new and ambitious partnerships with key sectors like food manufacturing,” said Krishen Rangasamy, FCC manager economic insights. “To fully capitalize on this opportunity, we also need to engage investment and innovation by those in our industry and beyond.”

With the world’s population expected to exceed 9 billion by 2050, the Food and Agriculture Organization (FAO) estimates that agricultural production needs to increase by 60 per cent over 2005 levels. This challenge requires producing more food with the same or fewer inputs.

“Just as steam, electricity, and the internet propelled us to produce more with fewer inputs during previous industrial revolutions, automation, robotics, artificial intelligence, and blockchain are shaping up to do the same in food manufacturing in the fourth industrial revolution,” said Amanda Norris, FCC senior economist. “These technologies can improve output and labour efficiency, manage inventory, prevent unplanned downtime, forecast demand, track production, and ensure quality control – all opportunities to help improve productivity in Canadian food manufacturing.”

Productivity increases when output grows faster than working hours, a trend that has been evident in Canadian food manufacturing over the past two decades. Despite challenges between 2008 and 2012, the industry has rebounded, demonstrating resilience and the ability to produce more food in less time.

“Food manufacturing in Canada has already proven its resilience and adaptability. After a period of decline, the industry rebounded by investing in new technologies and consolidating operations, leading to an 11 per cent productivity growth between 2013 and 2017,” Norris said. “Now, with productivity growth remaining relatively flat, it’s time for a renewed focus on innovation to drive the next wave of growth.”

Rangasamy also highlights the importance of attracting investment from sectors outside of agriculture and food. “To truly harness the potential of the fourth industrial revolution, we need greater investment from those who may not traditionally see themselves as part of the ag and food industry,” he said. “This will help us scale up and innovate, ensuring that Canada not only meets the food demands of tomorrow but does so in a way that benefits all Canadians.”

By embracing new technologies and fostering cross-sector investment, the industry can continue to lead in sustainable food production, ensuring a stable food supply and contributing to the global effort to feed the world, said the report.

“Productivity growth is not a one-size-fits-all solution; it requires a blend of efficiency, economies of scale, and innovation,” Norris said. “By embracing new technologies and supporting a qualified labour force, Canada’s food manufacturing sector can help sustainably feed the global population and maintain a competitive edge in the international market.”