Canada’s agri-food equity gap: growth capital is missing
Canada is widely recognized as a world-leading agricultural powerhouse.
However, many Canadian agri-food companies struggle to access the capital required to scale. While early-stage funding and government support programs are available, growth-stage investment is far harder to secure. As a result, promising Canadian companies frequently turn to foreign investors or move operations abroad to continue growing.
The issue has gained renewed attention. In February 2026, Farm Credit Canada (FCC) announced a coalition of over 20 investment organizations deploying up to $5 billion into Canadian agriculture and food innovation by 2030. Combined with FCC Capital’s earlier $2-billion commitment, the initiative represents up to $7 billion in potential investment aimed at helping scale Canadian agri-food innovation.
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According to the Royal Bank of Canada (RBC) report Seeding Scale: Addressing Canada’s agri-food growth capital gap, Canada’s agri-food sector represents a $13-billion investment opportunity yet remains significantly undercapitalized.
The report notes that Canadian agri-food companies encounter difficulties raising $15 million or more in capital, particularly beyond early venture rounds, and domestic venture firms are often unable to deploy more than $30 million into a single company.
Several characteristics of the agri-food sector contribute to the current capital gap, namely, capital-intensive growth, fragmented investment pathways and sector complexity.
Since Confederation, Canada has continually built infrastructure to export raw agricultural products. However, some Canadian laws have delayed the construction of facilities that handle and transport these products, causing reputational damage to the sector and more uncertainty and risk for investors and foreign companies looking to expand into Canada.
Canada now needs to build the infrastructure and assets to extract more value from those raw agricultural products, either through processing before export around the world or processing them into Canadian food products for Canadians to eat here at home.
The RBC report cautions that, without improved access to growth capital, Canada risks losing talent and innovation in the agri-food sector to other jurisdictions that provide deeper investment pools and clearer pathways to commercialization.
There are also implications for domestic processing and manufacturing capacity. Many agri-food innovations ultimately require large-scale facilities to move from concept to commercial production. If capital for these projects is unavailable in Canada, new facilities may be built elsewhere.
Despite challenges, there are signs that the conversation around agri-food investment is evolving. Governments, financial institutions and industry groups increasingly recognize the sector’s strategic importance, driven by global supply chain disruptions, food security concerns and growing demand for sustainable food production.
Governments can implement proactive policies to achieve a common vision of increasing the value of raw agricultural products through processing, including:
- Creating investment tax incentives, such as flow-through shares, for investments in agri-food processing to attract the necessary equity capital.
- Standardizing provincial rules on rural land ownership for agri-food processing to: (a) eliminate competing restrictions between provinces; (b) allow companies to build more efficient facilities, which do not offend farmland ownership policies; and (c) promote investment in such facilities by institutional investors and pension funds.
- Creating new zoning categories for agri-food processing and food production and changing municipal utility rates to encourage water recycling.
- Utilizing a portion of FCC’s $2-billion commitment to guarantee loans obtained by Indigenous Nations to invest in the production of raw agricultural products or food processing facilities.
- Implementing rules to encourage local investment in processing facilities and accommodate intergenerational transfers of those investments.
- Harmonizing provincial food safety requirements to implement a base standard for agricultural and food products that will remain in Canada.
- Where Canadian licensing timelines for agricultural and food products are significantly longer than those in other countries, consider automatic approval based on the approval in other countries.
There is also a need for specialized investment expertise, tailored government investment programs, blended capital structures and stronger commercialization pathways.
Canada has many of the ingredients needed to build a globally competitive agri-food sector. Ensuring entrepreneurs and innovators have access to sufficient growth capital will be a key factor in determining whether the country can fully realize that potential.
If you have a topic or question you would like us to address in future issues, please email gholding@mltaikins.com.
Note: This article is of a general nature only and is not exhaustive of all possible legal rights or remedies. In addition, laws may change over time and should be interpreted only in the context of particular circumstances such that these materials are not intended to be relied upon or taken as legal advice or opinion. Readers should consult a legal professional for specific advice in any particular situation.
Source: producer.com