Report of Canada’s Economic Strategy Tables: Agri-food

From: Innovation, Science and Economic Development Canada

Canada's Economic Strategy Tables

Canada's agri-food sector spans a wide range of industries—from primary agriculture and aquaculture to food, seafood and beverage processing. Our passionate and hard-working producers, processors and value chain partners have earned Canada a global reputation as a supplier of safe and high-quality products. With the world's population projected to rise to 10 billion in 2050, there are huge opportunities to supply the growing global demand for protein. Seizing these opportunities is something we can do, but it won't be easy. The sector faces intense competitive pressures in global and domestic markets, which means we need Canadian leadership in innovation as well as an agile regulatory system and enabling infrastructure to secure our position as a preferred supplier to high-value markets.

Vision

By 2025, Canada will be one of the top five competitors in the agri-food sector, recognized as the most trusted, competitive and reliable supplier of safe, sustainable, high-quality agri-food products and an innovator in value-added products to feed the dynamic global consumer. We will have a leading digital and technology-based supply chain and stand out as the world's favoured protein provider.

Canada needs to seize value-added opportunities, including more domestic processing, innovative end-uses for our agri-food products, co-product manufacturing and turning waste products into revenue streams.

Murad Al-Katib, Chair, Agri-Food
Economic Strategy Table

Targets

$140B in domestic sales by 2025, an increase from $110 billion in 2017

$85B in exports by 2025, an increase from $64.6 billion in 2017

In February 2017, the Minister of Finance's Advisory Council on Economic Growth identified Canada's agri-food sector as having great potential to be a driver of economic growth for the nation. In Budget 2017, the Government of Canada presented a challenge to the sector by setting a goal of $75 billion in exports by 2025.

After assessing global and domestic trends and growth opportunities, the Agri-Food Table set a more ambitious target of $85 billion in agriculture, agri-food and seafood exports by 2025 (32% increase from $64.6 billion in 2017). In acknowledging the importance of the Canadian market, we decided it was equally important to set a target for the domestic market, which we have set at $140 billion in sales of agriculture and food processing products by 2025 (27% increase from $110 billion in 2017). These growth targets will position Canada as a global leader in high-value markets and reclaim previous lost domestic opportunities. Achieving these targets will require bold action in regulations, infrastructure and market readiness, supported by innovation and a future fit workforce.

Figure 1: Agriculture, Agri-food and Seafood Exports, 2005–2025

Agriculture, Agri-food and Seafood Exports, 2005–2025
Description of figure 1

This line graph shows the historical and targeted exports (in dollars) for agriculture, agri-food and seafood. The vertical axis is labelled “$ billions” and goes from 0 to 90. The horizontal axis lists the years from 2005 to 2025.

There are two lines on the graph.

A solid green line shows the historical growth of agriculture, agri-food and seafood exports, rising from about $30 billion in 2005 to $64.6 billion in 2017.

Extending from the end of this green line is a dotted yellow line that represents the sector’s target for growth, based on an annual growth rate of 3.5%. It rises from $64.6 billion in 2017 to $85.0 billion in 2025, connecting to a target/bullseye icon in the upper-right corner of the graph.

Figure 2: Domestic Agriculture and Food Processing Sales, 2005–2025

Domestic Agriculture and Food Processing Sales, 2005–2025
Description of figure 2

This line graph shows the historical and targeted sales (in dollars) for domestic agriculture and food processing. The vertical axis is labelled “$ billions” and goes from 0 to 90. The horizontal axis lists the years from 2005 to 2025.

There are two lines on the graph.

A solid green line shows the historical growth of domestic agriculture and food processing sales, rising from about $80 billion in 2005 to $110 billion in 2017.

Extending from the end of this green line is a dotted yellow line that represents the sector’s target for growth, based on an annual growth rate of 3.1%. It rises from $110 billion in 2017 to $140 billion in 2025, connecting to a target/bullseye icon in the upper-right corner of the graph.

What we need to overcome

There are several critical obstacles standing in the way of us achieving our goals. The following elements need to be overcome in order for us to realize our ambitions:

What we need to become

For Canada's agri-food sector to succeed, we need:

The actions we propose

Based on research, global best practices and insights shared at Table meetings, we propose the following five key areas to strengthen the Canadian agri-food sector:

Figure 3: Five key areas to strengthen the Canadian agri-food sector

This graphic features five hexagons presented side-by-side in a single horizontal row. Inside each hexagon is an icon representing one of the Agri-food Strategy Table’s six proposals for strengthening the Canadian agri-food sector. Brief summaries of the proposals are provided above and below the hexagons.
Description of figure 3

An agile regulatory system that promotes the competitiveness of the agri-food sector and moves at the speed of commerce

Build a state-of-the-art transportation and IT infrastructure network

Develop and diversify Canada's agri-food markets

Invest in innovation and boost competitiveness through increased automation and digitization

A diverse labour force with the right set of skills to help the sector achieve its maximum potential

The competitiveness of Canada's agri-food sector is stymied by the 'tonne of feathers' dilemma, whereby hundreds of well-intentioned and seemingly unobtrusive regulations add up to weigh down our performance, productivity and growth.

Proposal

An agile regulatory system that promotes the competitiveness of the agri-food sector and moves at the speed of commerce

Why this matters

Canada's regulatory system provides globally renowned quality and safety assurance to Canadians and our trading partners. Regulatory safeguards are, of course, a necessary part of producing, processing and selling food, and essential for protecting consumers, producers and other value chain stakeholders. Unfortunately, Canada's system is increasingly inhibiting industry's nimbleness by restricting innovative practices and products, by being slow to make approvals, and by not being coordinated across departments and levels of government. Most importantly, there is no central body that looks at the cumulative impact of regulations from multiple departments on the sector's competitiveness.

To make matters worse, amending regulations in Canada–even those regulators agree are redundant–is usually a long, technical process that draws considerable resources. Canada needs its regulatory system to move at the speed of commerce.

Figure 4: Global Competitiveness Index (Burden of Government Regulation) for OECD Countries

Global Competitiveness Index (Burden of Government Regulation) for OECD Countries
Description of figure 4

This bar graph shows the Global Competitiveness Index rankings for Organisation for Economic Co-operation and Development (OECD) countries with respect to burden of governmental regulations.

The vertical axis is labelled “Score” and goes from 0 to 7. (A higher score means it is less burdensome for businesses to comply with governmental requirements.) The horizontal axis lists the names of 36 OECD countries. They are presented in order of score, with #1-ranked Switzerland on the left and #36-ranked Italy on the right.

The score for each country is indicated by a vertical green bar with the exception of Canada, which is represented by a red bar. Countries with higher scores have taller bars. Canada is ranked 14th among OECD countries.

Canada is facing intense competition from other jurisdictions, many of which have more agile regulatory environments. If we hope to achieve our vision and growth targets, it is imperative to have in place a regulatory system that works in tandem with industrial growth strategies and supports the sector's competitiveness.

What we recommend

The Government of Canada set in motion a regulatory reform agenda that includes a targeted review of regulatory requirements with a focus on agri-food and aquaculture. We encourage the government to use this review as an opportunity to support industry competitiveness.

Our call is to:

Fundamentally transform regulatory processes to bolster Canada's agri-food competitiveness by reforming regulators' mandates to include innovation, growth and overall sector competitiveness as a core consideration

Case study: Nestlé Kit Kat and fortified wheat flour

In Canada, all types of flours must be fortified with folic acid and iron as part of our public health policy. However, some of our key trading partners (e.g., the European Union, Australia) do not require it.

Mandating compulsory compliance with this prescriptive regulation causes business disruption for Nestlé when it wants to tap into its global supply chains to source ingredients or pilot a new product in Canada that is popular in a foreign market.

Nestlé would like an exemption on this requirement for products containing a small amount of wheat flour, such as Kit Kat bars, based on the principle that these products do not contribute meaningfully to Canadians' dietary intake of folic acid and iron.

The health and safety of Canadians are, without question, of paramount importance. In addition, our world-renowned food safety system is a key part of our national brand and helps secure access to markets. However, more regulation is often mistakenly assumed to automatically lead to better health and safety outcomes. The fact is we need smarter regulation to ensure that legitimate risks are mitigated at the lowest economic cost. The mandate of Canadian regulators, therefore, should be modernized to reflect this dynamic (including the cumulative impact on competitiveness), and be based on the principles of investor confidence, be outcome-based, and consider the full range of regulatory and non-regulatory tools available. During our Table meetings, members were unanimous that one of the key elements essential to the success of this initiative is the need for regulators to do a better job of consulting earlier and more often to fully appreciate the competitiveness challenges faced by the regulated party as well as the sector more broadly.

Establish a permanent and independent panel of industry experts to advise regulators

This panel would perform a "challenge function" by identifying efficiencies and enhance opportunities for industry participation. It would also work with regulators to regularly review the stock of all regulations, technical guidance and associated policies to ensure they are necessary, appropriate and effective in achieving intended objectives in the most cost-effective manner possible.

The panel would identify unintended impacts and find ways to mitigate or eliminate them as quickly as possible and identify opportunities for efficiencies, such as alternate service delivery opportunities, compliance strategies that recognize a key trading partner's assessment of product safety, and third-party accreditation.

Take immediate action to address specific regulatory challenges that are hurting the agri-food sector's competitiveness

Overly prescriptive and process-driven regulations are preventing companies from adopting innovative products and production systems, responding to shifting market opportunities and accessing the latest technologies used by competitors. Regulators need to work with industry, as well as the panel recommended above, to identify opportunities to achieve our strict health and safety outcomes at the lowest cost to the economy.

Pilot Projects

Pilot projects and regulatory sandboxes can be used to test the efficacy of new technologies, products, production techniques and compliance systems in a safe space and demonstrate their effectiveness at improving the sector's competitiveness under real-world conditions. The Table recommends the following pilot projects be launched immediately:

Ongoing Regulatory Barriers

In addition to launching pilot projects, we recommend the government take immediate action to address the standing regulatory bottlenecks hurting the sector's competitiveness. There are many redundant regulations that were drafted under different market conditions and before the introduction of modern technologies. Failure to address these ongoing irritants will drag down the sector's competitiveness. The Table has identified the following issues for immediate action:

The Table has assembled a list of interprovincial regulations (see section on market development and diversification)

Tracking success

Canada will rank in the top 10 among Organisation for Economic Co-operation and Development (OECD) member countries for ease of regulatory burden by 2025. (The World Economic Forum ranked Canada 14 out of 36 OECD countries on its Global Competitiveness Index in 2017–2018.)

Proposal

Canada's infrastructure network under pressure

In 2013-14, transportation inefficiencies created huge backlogs to shipping the nation's grain harvest. This lack of capacity cost farmers across Canada an estimated $6.5 billion between 2013 and 2015.Footnote 1

In Spring 2018, a recurrence of grain supply chain problems left an estimated $500-million worth of grain waiting to get to market due to transportation inefficiencies, and a portion of this value has been lost due to missed marketing opportunities, storage costs and contract penalties.

Build a state-of-the-art transportation and IT infrastructure network

Why this matters

To support the growth targets of $85 billion in exports and $140 billion in domestic sales by 2025, Canada needs high-quality and resilient transportation and communications infrastructure.

A well-functioning trade-related transportation system is critical to Canada's reputation as a reliable supplier of high-quality products to Canadians and people around the world, and to long-term overall economic performance. New global regional trade pacts as well as population growth in Asia could radically transform what, where and how we ship in the future. But Canada's infrastructure is already struggling to deliver products to market in a timely, consistent manner, and long-term infrastructure planning is often muddied by short-term political considerations. If we are going to boost domestic sales and exports, we need to make transportation infrastructure development a strategic national priority.

Rural areas in Canada are disproportionately affected by a lack of access to reliable broadband service. The lack of broadband service in rural areas is a key bottleneck to why precision agriculture technologies and other digital tools have not been adopted as widely or extensively as they could — and should — be. While these precision agriculture technologies offer significant productivity gains for primary agriculture, universal broadband service in fact offers opportunities for all business that operate throughout the sector, including logistics, advisory services, food and beverage processing, and aquaculture. Potential benefits of expanding broadband service to under served areas includes enabling greater automation with Industry 4.0 technologies (e.g., robotics, Internet of Things [IoT], machine learning, etc.), optimizing supply chains through big data analytics, achieving higher yields through more precise application of farm inputs, and expanding e-commerce opportunities for all businesses.

Infrastructure is too important to the country's economic well-being to be politicized in election campaigns every four years.

What we recommend

Provide a strategic approach to infrastructure planning and funding with a coordinated 50-year rolling National Infrastructure Plan developed by government and industry, including prioritization of infrastructure projects to address critical bottlenecks

Such a plan would be critical to guiding long-term planning and funding decisions, providing greater certainty and stability to investors and industrial users with regard to infrastructure priorities. The National Infrastructure Plan would include a rolling list of high-priority short-, medium- and long-term (next 50 years) infrastructure needs, and any expected private and public infrastructure spending. The plan would be supported by multi-modal Gateway Strategies that reflect regional needs (Pacific, Atlantic, Arctic and U.S. trade corridors).

The plan should be developed by a permanent committee of government and industry representatives that report to the federal, provincial and territorial (FPT) ministers of transport. The committee would meet periodically to discuss transportation infrastructure issues and ongoing updates to the proposed National Infrastructure Plan.

Embrace digitally-enabled infrastructure systems, and coordinate infrastructure and supply chain performance data through a new National Transportation and Logistics Platform

To ensure a transportation system of the future, it will be crucial to begin investing in new and emerging technologies to support digitally enabled and data-driven infrastructure systems. The data from these systems could be coordinated with existing data through a National Transportation and Logistics Platform to inform the National Infrastructure Plan. That platform would collect, integrate, streamline and publish data on:

Increasing data collection on infrastructure assets will better position the transportation sector to assess infrastructure uses and future needs, including how to incorporate smart technologies and automation.

Phase I (2023)

  • 95% coverage
  • 50 Mbps download
  • 10 Mbps upload

Phase II (2025)

  • 100% coverage
  • 100 Mbps download
  • 50 Mbps upload

Create "quick wins" for the National Infrastructure Plan by taking early action to address key bottlenecks, with consideration of innovative financing solutions for major projects

Several infrastructure funding programs have been announced, yet there remains a number of critical bottlenecks that industry has identified (see map on next page). The Table is calling for the National Infrastructure Plan to give early consideration to projects that will result in immediate economic opportunities and signal the commitment of the plan's permanent committee of government and industry representatives to help the sector achieve its growth targets. Potential quick wins could include:

In addition, to leverage public and private funding, mechanisms such as the Canada Infrastructure Bank should be explored. Institutional investors and pension funds may be entities for attracting and leveraging private investment in transportation infrastructure.

Canada was ranked 30th out of 36 OECD countries for mobile broadband subscriptions in 2017.

Allow full participation in digital transformation through 100% broadband coverage across Canada by 2025–with unlimited data and 100 Mbps download speeds and 50 Mbps upload speeds

We recommend the government commit sustained funding for the appropriate mix of technologies in order to achieve 100% coverage. Connecting the most difficult-to-reach rural and remote locations will require a mix of technologies. We strongly support Budget 2018's commitment to low Earth orbit (LEO) satellites as a good opportunity to bring reliable internet to rural parts of Canada, and echo the Digital Table's call for Canada to be a leader in development and adoption of this technology. LEO satellites are a lower-cost option for expanding low-latency broadband to sparsely populated areas where fibreoptic cable may not be feasible. Partnerships and funding from a range of sources will be critical to achieving these targets, particularly those for phase two.

Tracking success

Figure 5: Examples of Transportation Bottlenecks and Vulnerabilities

Examples of Transportation Bottlenecks and Vulnerabilities
Description of figure 5

Western Canada

  1. Fraser Canyon (rail vulnerabilities)
    • Lower Mainland rail access is vulnerable to weather events which can significantly affect the import and export of goods through the Port of Vancouver.
    • A 10-kilometre stretch of rail between Ashcroft and Basque is vulnerable to ground hazards, as there are more than 20 landslides, six of which are very active. Some are moving as much as 100 millimetres per year.
  2. Lower Mainland (rail, road, marine vulnerabilities)
    • Complex rail operations (e.g., interchanging, co-production) in Vancouver combined with large volumes of freight traffic of multiple commodities make accessing terminals on Vancouver's north and south shores a challenge and add a layer of complexity to supply chains.
    • Network fluidity is further reduced because the Second Narrows rail bridge to North Shore must be raised regularly for marine vessels, which have priority over rail.
    • The 100-year-old New Westminster Rail Bridge is a single-track swing bridge and a main link to the North Shore of the port.
    • Increasing roadway congestion, availability and cost of industrial land, drayage labour stability, and lack of public support for port activity are also putting pressure on the entire gateway.
  3. Trucking and Road Congestion and the Rocky Mountains
    • Highway capacity pressures are highest in and around Vancouver, Edmonton and Calgary as well as along the Trans-Canada Highway through the Rocky Mountains.
    • Approximately 50% of the total import and export containers handled by the Port of Vancouver marine terminals are moved by container trucks.
    • The cost of intermodal trucking drayage has increased in recent years. Congestion in the Lower Mainland affects productivity of the complex off-dock system that underpins the Gateway and in turn directly affects the cost of drayage.
    • Railways move through very high-grade and avalanche-prone terrain through the Rocky Mountains.

Central Canada

  1. Quebec-Windsor Corridor and Border Crossings
    • Transport-intensive goods production is concentrated along this corridor.
    • Heavy traffic congestion caused by large commuting volumes experienced on highways passing through Toronto and Montreal.
    • Truckers routinely need to allow 50% more travel time through Toronto to meet delivery schedules.
    • Cross-border traffic is significantly down from the 2001 peak with no anticipated need for additional border capacity in the medium term.
  2. Seaway and Port Capacity in Ontario
    • The St. Lawrence Seaway's locks and channels are operating at only 50 % of their total capacity.
    • The Port of Hamilton is the largest port in terms of cargo unloaded in Ontario. Its movement of cargo has been connected to $6 billion in economic activity. The Port has shifted from being a receiver of iron ore for the steel industry to a more diverse commodity mix, with critical gains in agricultural cargo.
    • The Port of Thunder Bay is the Western Canadian terminus of the St. Lawrence Seaway System. It serves primarily as an access point to European markets for Western Canadian grain producers and can be a critical port in times of west coast port congestion.
  3. First mile/Last mile linkages a challenge for local goods delivery in congested conditions around major metropolitan areas
    • Industry relies heavily on intermodal terminals/distribution centres located in the Peel Region west of Toronto and near Longueuil south of Montreal for local goods delivery.
    • Considerable trucking activity is generated accessing these areas with major challenges encountered with goods delivery on the congested local street networks in the big cities.
  4. Port Capacity–Intermodal Container Terminals at the Port of Montreal
    • Currently, there are truck and port congestion issues.
    • Beginning in 2015, the development of the Viau sector from a storage facility to a container terminal will increase the total capacity of the Viau terminal to 600,000 twenty-foot equivalent units (TEUs) by the early-2020s. Additional expansion projects at the Cast and Racine terminal will add another 250,000 TEUs in the upcoming five years.
    • Rail container traffic in Montreal at CN Taschereau and CP Lachine has increased 10% in 2017 versus 2016 and 9% versus the three-year average in terms of containers counts.

Atlantic Canada

  1. Chignecto Isthmus–Vulnerability
    • A narrow, 23 kilometre strip of land that joins Nova Scotia to New Brunswick and the rest of the country. The low-lying area is vulnerable to rising sea levels and storm surges as the Trans-Canada Highway, the CN Rail mainline and interprovincial hydro lines run immediately beside the southern dyke that holds back the Fundy tide. The corridor carries an estimated $50 million per day of trade with average daily traffic levels exceeding 14,000 vehicles, including 2,400 trucks (2015).
  2. Highway 185/Autoroute 85–Expansion to Four Lanes
    • Quebec Highway 185 is the only remaining section of untwinned highway running between Halifax and Windsor. MTQ has been expanding the highway to four lanes since 2002. Phase 1 (21 kilometres) was completed in 2011; Phase 2 (33 kilometres) was completed in 2015; and federal funding for Phase 3 (40 kilometres) was announced in 2015. Expected completion of the highway is 2025.

Proposal

Develop and diversify Canada's agri-food markets

Why this matters

Maintaining and expanding competitiveness in domestic and international markets is essential to sector growth. We need to create clear and well-informed strategies for where to play and how to win in key geographic and product markets if we are to achieve our growth targets.

Maximizing growth potential

Achieving our growth targets hinges on all sectors meeting their full potential. Right now this is not always the case. A key example is the Canadian aquaculture sector, which has the potential to nearly double production from 200,565 tonnes in 2016 to 381,900 tonnes in 2028 to meet rising demand.Footnote 2

However, there are significant barriers to achieving this growth:

  • There is not a strong economic development focus for this sector within the federal government
  • Licensing requirements do not facilitate long-term growth strategies
  • Canadian firms do not have access to animal health products as quickly as competitors in other countries

Working with the public and Indigenous communities is critical to building trust and buy-in for the sustainable growth of this sector.

With over half of the value of Canada's agriculture and seafood production exported, the competitiveness of the sector depends on maintaining and increasing access to key international markets. Maximizing our performance in each market will require a dedicated strategy rather than a one-size-fits-all approach.

To compete on a global scale, Canada's sector requires a level playing field. Canada engages in international standard-setting bodies (ISSBs) and plays an important role in developing global standards, guidance and recommendations essential to facilitating trade. The continued integrity and fairness of the international rules-based trading system is instrumental in achieving our growth targets

At the same time, Canadian firms produce many of the types of foods enjoyed by domestic consumers and sold $110 billion worth of goods in Canada in 2017. The domestic market has been growing at a faster rate than Canadian firms' share of it, leading to lost opportunity. Last year, for example, imports accounted for nearly 30% of the processed food market, up from 22% 10 years previous. With imports taking the place of high-quality Canadian products on the shelves at home, the Canadian agriculture and agri-food sector must rise to the challenge.

Yet as much as we see barriers being erected abroad, they exist at home, too. Canadian firms often report that it is easier doing business internationally than within Canada. Canada has many rules and regulations at federal and provincial levels that have unintended consequences, namely stifling the movement of goods within Canada, creating additional costs, making the playing field uneven and inhibiting companies from scaling in Canada. As Canada looks to compete against agri-food powerhouses with larger populations, lower production costs and longer growing seasons, we cannot afford to balkanize our country into separate jurisdictions that impede the scaling up of companies and the free-flow of goods and services.

While the Agri-Food Table fully recognizes the need to compete on price, we also need to differentiate ourselves. Canadians are increasingly choosing to buy and support local and Canadian-made products. For producers to reach this important market and be able to convey the benefits of buying Canadian, buyers need to be able to easily identify Canadian food. Consumers abroad, too, are looking for high-quality food products that are safe and innovative. Canada should aim to be a supplier of choice in all these respects.

Finally, if Canada is going to compete on the international stage, we will need companies that have the scale to go up against global giants. An ambitious strategy is needed to ensure our highest-potential companies obtain the support they need to scale up and be world-leading firms.

What we recommend

Advance a coordinated and strategic approach to winning in key markets by developing priority market strategies for Canada and key export markets

We recommend an Agri-Food Market Advisory Council of business leaders to work with federal, provincial and territorial governments on developing and implementing strategies to determine where to play and how to win in key markets, particularly in Canada, North America, Europe and Asia. Strategies would be based on market analysis of future growth opportunities and supply chain capacity in Canada.

Bolster an open and rules-based approach to trade by demonstrating strong international leadership

International standards like those developed by Codex Alimentarius are a very important part of the rules-based international trading system. The Government of Canada should provide additional resources to ISSBs to develop science-based international standards and to Canadian government agencies and departments to enhance their participation in the work of the ISSBs. The government should continue to address non-tariff barriers through the negotiation of dedicated chapters in areas including technical barriers to trade as well as sanitary and phytosanitary measures (SPS) in bilateral and multilateral trade agreements. These robust rules should build on well-established, existing World Trade Organization commitments.

Government and industry must continue to work together to identify measures that significantly harm Canada's food export interests, especially those that may run counter to trade obligations, and address these measures through all available channels, including formal dispute settlement where appropriate.

Break down Canada's own barriers to trade by leveraging the Canadian Free Trade Agreement to create a path to free trade in food products between provinces and territories by 2020

The Canadian Free Trade Agreement (CFTA)–which came into force on July 1, 2017–commits FPT governments to reduce and eliminate barriers that restrict the movement of goods, services, investment and persons within Canada. A Regulatory Reconciliation and Cooperation Table (RCT) of senior government officials was created to oversee work on resolving barriers and developing common regulatory measures for emerging issues.

Breaking down interprovincial trade barriers helps Canadian firms capture a greater percentage of the domestic market, which is an important market in its own right. Removing barriers to growth within our borders will also allow more companies to scale up production and make the leap to international markets on a stronger footing.

As a first step, FPT governments should focus their attention on addressing the top three or four barriers to interprovincial commerce per year. We would like to highlight the following priorities requiring immediate action:

Canada struggles to compete at scale

Large firms (500 or more employees) on average invest more in R&D and technology adoption, and export more compared to smaller firms.

  • Of our 11,499 food and beverage processing establishments, 94.4% are small operations with fewer than 99 employees
  • Just 0.4% of Canadian agri-food companies are large firms
  • Only four Canadian seafood companies crack the top 150 in the world in terms of sales and none are in the top 10Footnote 3

Canadian companies need a level playing field to compete. The government roles out the red carpet to attract investment from foreign firms, but domestic companies creating the same number of jobs and growth don't receive the same level of support

Increase the profile of Canadian agri-food products by advancing a strong and coordinated brand

Currently, FPT market development initiatives are not consistent and do not support a unified Canadian brand. Canada needs a One Brand–One Voice approach to give Canadian food products a strong competitive edge and make them more "visible" to consumers at home and abroad. FPT governments should work with the Agri-Food Market Advisory Council to establish a comprehensive approach that will strengthen Canada's position in key markets. This must include increasing the sector's online presence in growth markets as well as a strong on-the-ground presence to maximize the sector's influence on consumers, wholesale buyers/distributors, and food and lifestyle promoters.

Additionally, "Product of Canada" and "Made in Canada" claims are seen as too restrictive to be useful. As a result, companies tend to use provincial claims rather than adopt a national approach. To make it easier for consumers to quickly identify Canadian products at a national level, Product of Canada and Made in Canada requirements should be reviewed in collaboration with industry and provinces.

Create an "Own the Podium" strategy to scale up Canada's most promising and innovative agri-food businesses to become world-leading anchor firms

Canadian agri-food companies are not exempt from the historical challenge of scaling beyond our country's borders to become world-leading anchor firms. We need to support promising agri-food companies so they can become world leaders and ultimately develop into anchor firms that help the sector grow as a whole. However, we need a new approach to close this "scaling gap." We support the "Own the Podium" signature initiative as a way to focus efforts on high-potential companies with proven track records and strong continued prospects of success.

Tracking success

Canada will achieve $85 billion in exports by 2025 and $140 billion in domestic sales by 2025.

Innovation is not an opportunity. It is a deliberate process we build into every aspect of our company's operations.

Proposal

Invest in innovation and boost competitiveness through increased automation and digitization

Figure 6: Food manufacturing investment in machinery and equipment as a percentage of sales is trending downward, from 2.3% in 1998 to 1.2% in 2016.

Food manufacturing investment in machinery and equipment as a percentage of sales is trending downward, from 2.3% in 1998 to 1.2% in 2016.
Description of figure 6

This line graph shows the food manufacturing sector’s investment in machinery and equipment as a percentage of sales. The vertical axis lists percentages from 0.0% to 2.5%. The horizontal axis lists the years from 1992 to 2016.

There are two lines on the graph.

A solid green line tracks the year-to-year fluctuation in investment, starting at 2.1% in 1992, rising to a high of 2.3% in 1998, and then falling and rising several times until reaching 1.2% in 2016.

A dotted grey line shows the overall downward investment trend, forming a straight line going from 2.1% in 1992 down to 1.2% in 2016.

Why this matters

In order to reach our growth targets, Canada needs to increase investment and technology adoption. The Canadian agri-food sector's expenditures on R&D as a percentage of sales has fallen by 24% since 2008, and lags behind other countries (the U.S. and France each devote 0.6% of sales to R&D while Canada's spend is just 0.2%). Investment in machinery and equipment has also been on a steady long-term decline. In addition, the U.S. recently passed a capital cost allowance that allows businesses to deduct the cost of depreciable assets in one year instead of amortizing them over several years, further chilling Canadian and international business leaders' appetite to make their next North American investment north of the border.

The relatively small amounts of Canadian investment in food processing innovation is fragmented across a collection of universities, food technology centres, research centres and incubators that collaborate locally and have a limited capacity (i.e., personnel or infrastructure) to develop advanced technologies for the industry, commercialize new products at significant scale, or help firms of all sizes access national and international markets.

Agri-food businesses are adopting digital technologies that collect large amounts of data. This data is being collected, but stored in different formats and different platforms. This lack of interoperability inhibits the use of shared open-data platforms that provide important insights and enable new innovations to sprout up.

What we recommend

Encourage investment and technology adoption through significant incentives including an accelerated capital cost allowance for machinery, equipment and digital automation tools

We recommend the Government of Canada introduce an accelerated capital cost allowance (ACCA) to help accelerate the adoption of machinery, equipment and digital automation tools by allowing companies to recover the costs of these investments more quickly and improve cash flow and rates of investment returns, thereby lowering their investment risk.

We propose the ACCA should be provided over an extended period to boost the competitiveness of our tax environment and give businesses some planning certainty, especially for larger and more complex projects that require investments spread out over several years. To maximize industry impact, the ACCA would allow eligible machinery and equipment assets to be written off in one year.

Meet consumers' evolving desire for innovative products and advance industry development, demonstration and adoption by creating a Canada Agri-Food Innovation Centre

We propose creating a networked centre or hub for agri-food innovation that would connect existing agri-food innovation centres to help firms of all sizes test new products and production techniques as well as make better use of technologies and applied research so they can scale up, develop new products and processes, and sell to new consumers. The centre would support applied research and provide advanced technology platforms, pilot facilities, industry advisors and events focused on practical solutions, technology adoption and expanding market opportunities.

The centre would provide physical and virtual space for firms of all sizes and would work in partnership with major private sector sponsors, post-secondary institutions with strong agri-food R&D facilities and all levels of government. It would draw on the best practices of world-leading non-governmental organizations such as the German Institute of Food Technologies, Australia's Food Innovation Centre at Monash University, the Netherlands' Food Valley innovation ecosystem and the recently announced Unilever Global Foods Innovation Centre at Wageningen University & Research.

Areas of focus might include the development of innovative food products and processes, activities to accelerate the adoption of robotics, augmented reality tools, artificial intelligence (AI), blockchain and knowledge exchange in a low-risk environment to demonstrate proof of concept and de-risk adoption.

Industry would work with regulators to understand how these technologies could be applied to streamline data and speed up regulatory compliance so entrepreneurs can take advantage of new production systems and market opportunities as they arise. For example, a blockchain pilot could be pursued to develop full product traceability systems and increase efficiency of regulatory compliance spanning the entire "farm to fork" supply chain.

Develop open data standards to promote data sharing and utilization.

We recommend the Standards Council of Canada (SCC), in collaboration with industry and global partners, create guidelines on shared data definitions and standards for Canada so private-sector players can share their data, reveal opportunities to lower costs and manage resources more effectively while strengthening food safety and reducing environmental impacts.

The Canada Agri-Food Innovation Centre (proposed above) could provide a venue for partners to develop open data standards that address risks and concerns associated with security, privacy and intellectual property. Together they could also ensure that the new Canadian data standards are consistent with international ones.

Definitions and standards should be based on principles outlined under Canada's Open Data Initiative and related data innovation strategies, and facilitate an open operating system or multiple, interconnected open operating systems so data can be shared among and analyzed by farmers, food processors, distributors, software vendors, equipment manufacturers and data analytics companies.

Tracking success

Proposal

Foster a diverse labour force with the right set of skills to help the sector achieve its maximum potential

Why this matters

The agri-food sector is eager to leap into the knowledge economy but faces talent shortages:

  • There are currently four jobs for every graduate of the University of Guelph's Ontario Agricultural College

Primary agriculture, food processing companies and related input and service providers employ approximately 3.5% of Canadians, yet the sector continues to report critical and ongoing labour shortages across all skill levels. The cause of this is complex, but top reasons cited by industry include a lack of skilled talent both in STEM and other high-skilled occupations (e.g., machine technicians), lack of awareness about career opportunities in the agri-food sector for general occupations (e.g., electricians, plumbers) and perceptions about working in the sector. Primary agriculture and food, beverage and seafood processors also experience chronic under capacity of general labour, which has forced these industries to rely on temporary foreign workers (TFWs). Despite being one of the top users of the TFW program, the agri-food sector is still operating under full capacity.

As we plan for the workforce the agri-food sector needs by 2025, there is an opportunity to increase participation of underrepresented groups including young people, women and Indigenous peoples. The 2016 Census of Agriculture showed that 81% of farm operators are over the age of 35, and only 3.0% of Indigenous firms are agriculture businesses even though a disproportionate number of Indigenous peoples live in rural areas largely associated with agriculture. These underrepresented groups bring new experiences and ideas to their jobs and represent untapped potential for the sector.

What we recommend

Prepare for the workforce of the future by supporting the sector's capacity to plan for, train, attract and retain human capital

The Government of Canada should create a skills and talent collaboration hub empowered to develop a skills and talent roadmap for the future involving the participation of existing bodies and in partnership with educational institutions, industry and labour groups.

We recommend this collaboration hub:

Mentorship as a pathway into the sector

The Cattlemen's Young Leaders (CYL) Program pairs participants with a mentor for nine months. Through attendance at industry events, meetings with their mentors and the completion of the Beef Advocacy Canada program, the CYL participants learn about the industry, national and provincial producer organizations, and the business acumen needed to succeed. As a result of this Canadian Cattlemen's Association program, young people begin their careers supported by an expanded network.

Employee shortages are preventing the agri-food sector from operating at full capacity:

  • The Canadian Agricultural Human Resource Council (CAHRC) estimates that, even with 45,600 TFWs, there were still 26,400 jobs that went unfilled in Canada's primary agriculture sector in 2014, which cost the sector $1.5 billion in lost revenues, or 2.7% of product sales.Footnote 4
  • More than 85% of industrial butcher and meat cutter job vacancies reported to Statistics Canada for the fourth quarter of 2017 remained unfilled for more than 90 days.Footnote 5

To address immediate labour shortages facing the sector today, modernize Canada's immigration and temporary foreign worker programs to access the global labour force across all skill levels

Canada needs access to the global labour pool to fill jobs that cannot be met domestically. Despite nearly 64,000 TFW positions approved in 2017 the sector still faces huge labour shortages and reliable access is an ongoing source of frustration for industry.

To address these issues, immediate changes to existing programs need to be made. As such, the Table supports resolution of the following issues identified by the Value Chain Roundtables:

In addition, new program elements will be needed to allow the Canadian agri-food sector to access the capacity of the global labour force. For example, a "trusted employer" model should be piloted to stream-line processing for employers who have demonstrated integrity and a proven record of trustworthiness. Labour gaps can also be better filled by adopting best practices and service standards from the Global Skills Strategy, such as fast-tracking visa applications for high-skilled workers.

The next generation entering the labour force needs to know they can have an exciting technology job without having to work in the IT sector.

Opportunities for Indigenous peoples

Indigenous communities are in a unique position to benefit from, and contribute to, sustainable aquaculture development due to their aquatic resources, rights and special access to aquaculture development sites. Building upon the success of the Aboriginal Aquaculture in Canada Initiative, an increasing number of Indigenous communities and entrepreneurs are expressing interest to explore further aquaculture opportunities. However, limited financing for Indigenous aquaculture remains a challenge.

For year-round, permanent labour capacity needs, several federal programming options are available to high-skilled workers seeking permanent residence. Fewer options exist for medium- and lower-skilled workers. We recommend implementing a national food production and processing immigration pilot that offers improved pathways to permanent resident status for year-round workers at all skill levels needed in the sector. The pilot could build on the lessons learned from the Atlantic Immigration Pilot, which offers permanent resident status to full-time foreign workers through high-skilled, intermediate-skilled and international graduate programs.

Ensure inclusive growth of the sector by taking concrete actions to support greater participation of underrepresented groups

We recognize the need for a sustained effort to bridge the diversity gap in the sector and the Table calls on industry to set targets for representation that is more reflective of the Canadian workforce. To enable the development of a diverse talent pipeline, industry will need to support youth, women, Indigenous peoples and new Canadians in attaining the skills needed to participate meaningfully, ensure greater awareness and communication of leadership opportunities, and foster a culture that welcomes greater diversity.

As a first step, industry should focus on mentorship opportunities to encourage and support greater participation of underrepresented groups in the agriculture sector and build sector competitiveness.

There is strong growth potential in the aquaculture sector, and Indigenous communities are in a unique position to contribute to its sustainable development and explore new opportunities. Building upon the success of the Aboriginal Aquaculture in Canada Initiative, which supported Aquaculture Business Development Teams to work with regional stakeholders and provide Indigenous aquaculture business planning support services, the Table calls on the agri-food sector to work with Indigenous partners to jointly develop new approaches that will support positive outcomes aligned with the needs and aspirations of Indigenous communities

Tracking success

Conclusion

The global agri-food market in 2025 will be highly competitive and filled with new challenges. As one of the few net exporters of agri-food products, Canada has both an opportunity and a duty to set aspirational goals and achieve new levels of innovation. Canada has the entrepreneurial legacy and grit to seize a significant share of the global agri-food market and grow domestic sales as well, achieving multi-billion-dollar targets by 2025. What we need are the right conditions to make that happen–starting with urgently needed regulatory reforms and infrastructure upgrades, and supported by considered strategies for market diversification, technology adoption and the development of skills, talent and labour capacity to meet the sector's competitiveness.

The companies in our sector are willing and ready to do their part. We need government to buy into our vision and use public policy and investment in ways that help us act swiftly and seize opportunities to show Canadians and the world what we're made of. Ensuring we reach our growth targets of $85 billion in exports and $140 billion in domestic sales by 2025 will require nothing short of sustained commitment from both industry and government.

Agri-food key performance indicators for 2025
Proposed target Background Rationale
Canada will rank in the top 10 among OECD countries for ease of regulatory burden by 2025. The World Economic Forum ranked Canada 14 out of 36 OECD countries on its burden of government regulation index component of the Global Competitiveness Index in 2017–2018.
  • Undue regulatory burden harms Canadian firms' competitiveness and ability to scale up in Canada, especially when they are competing against firms situated in countries where the burden is lower.
Canada will rank in the top 10 among OECD countries on the World Bank's Logistics Performance Index infrastructure category by 2025. The World Bank ranked Canada 17 out of 36 OECD countries in the infrastructure category of its Logistics Performance Index in 2018.
  • A robust transportation system with the necessary infrastructure for current and future growth is critical to be able to make products and sell to domestic and global consumers. Delays in transit can result in significant costs and harm Canada's reputation as a trusted supplier.
Canada will have 100% broadband coverage with 100 Mbps download and 50 Mbps upload speeds by 2025. Approximately only 74% of Canada's agricultural land is served by broadband (defined as download speeds of at least 5 Mbps and upload speeds of at least 1 Mbps).
  • Lack of high-speed internet in rural areas is a key barrier to adoption of digital technologies for primary producers, as well as other service providers and companies in the agri-food value chain
Canada will achieve $85 billion in exports and $140 billion in domestic sales by 2025 This would represent a 32% increase from $64.6 billion in exports in 2017 and a 27% increase from $110 billion in domestic sales in 2017.
  • These growth targets will position Canada as a global leader in high-value markets and reclaim previous lost domestic opportunities.
Canada will increase its food industry capital expenditures per dollar of sales by 50% by 2025. Capital investment in the food processing industry (i.e. machinery and equipment) as a percentage of sales has decreased by almost half, from 2.3% in 1998 to less than 1.2% in 2016.
  • Industry needs to increase its level of capital investment to boost productivity and scale through increased automation
Canada will double private-sector R&D expenditures by 2025. Canadian food processing expenditures on R&D have been declining, and were down 24% in 2017 compared to 2008. Canada is lagging behind global competitors in R&D investment: Canada spends less than 0.2% of sales on R&D, compared to 0.6% by the United States and the Netherlands (2014 data).
  • Going forward, it is crucial to build a stronger culture of innovation in the Canadian food processing industry that recognizes the importance of R&D investment to the growth and competitiveness of the sector.
Canada will reduce the average job vacancy rate in primary agriculture to 4% by 2025, and in food manufacturing to the economy-wide manufacturing average of 2.2% by that same year. The average job vacancy rate in primary agriculture was 5% in 2017

The average job vacancy rate in food manufacturing was 3.4% percent in 2017
  • Labour shortages, which can be measured in terms of job vacancy rates, are causing significant economic loss in certain agri-food sub-sectors, such as plants are not running at full capacity, despite significant supply of inputs and product demand. Addressing labour shortages will ensure that the sector is able to fulfill its full potential and not lose out on key opportunities to increase economic activity.
Canada will increase female representation in food processing industry management to 50% by 2025. Female representation in food processing industry management was 36% in 2017
  • Robust and inclusive growth means ensuring that all have the opportunity to participate. Encouraging female participation in the sector also ensures a diverse set of viewpoints to help the sector develop innovative strategies and connect with diverse markets.
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