OTTAWA – Canada’s food processing industry is growing, concentrating and diversifying, says a government-compiled profile of the sector.
It is Canada’s third largest economic sector, recently displaced as number two. Its growth depends on increased exports, with commodities like canola oil leading the way in increased sales.
It is largely Canadian owned but the foreign owned 20 percent makes most of the profits. And it spends little of its revenues on research and development.
These are glimpses of the sector that emerge from a Statistics Canada profile of the food processing sector, published this month.
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“The Canadian food processing industry is large by any measure,” said the report. “In 1995, it employed 184,000 people, accounting for 10 percent of total manufacturing sector employment and value added. It is Canada’s third largest manufacturing industry.”
Until 1993, it was the second largest sector, next only to transportation and the dominant auto manufacturing industry.
In 1994, the value of food processing was surpassed by the electrical and electronics products industry.
Still, food processing is an important industry in all regions of the country.
And since the Canada-United States free trade deal took effect, the portion of pro-cessed food production exported has increased from 14 to 19 percent.
Exports in 1995 were worth $8.2 billion, almost half the agriculture and food export total.
The largest foreign market was the United States, accounting for more than $5 billion in purchases.
The single largest increase in sales during the past five years has been in canola oil, with sales of $1.2 billion last year.
“Canola oil has become the oil preferred by restaurants, caterers and food processors,” said the report.
Sales of dairy products, by contrast, have been falling.
The report also exposed a few weak spots.
Despite the strength of food processing in all regions, it is being increasingly concentrated in Ontario, which has 42 percent of all processed food shipments. The region with the least industry compared to population, British Columbia, which has 13 percent of the population but last year produced just eight percent of the processed food, by value.
And despite the higher value of shipments overall, the food processing industry actually has been losing jobs. Employment in the sector fell seven percent during the past five years, with Atlantic Canada being hardest hit.
The government study revealed that while foreigners own just 20 percent of the assets of the Canadian food processing industry, foreign-owned firms made 56 percent of the pre-tax net profits.
Despite growth in revenue and sales, the industry last year invested only $71 million in research and development – just .2 percent of revenues.
