Report calls food industry ‘innovation laggard’

All sectors of the Canadian food industry have been innovating to increase competitiveness but the industry is falling behind other countries, says a new Conference Board of Canada report.

The report, provocatively called Competing for the Bronze, calls the food industry “an innovation laggard.”

It targets supply management trade restrictions as part of the problem.

It also recommends an increase in public and private research and innovation funding, as well as Canadian regulatory reform, to improve industry prospects.

The Dec. 19 report is part of an ambitious plan by the Ottawa-based Conference Board Centre for Food in Canada to publish 20 reports on the industry as background to proposing a national food strategy.

“When it comes to innovation, the Canadian food industry is content to compete for a bronze metal,” research associate Daniel Munro said in a statement when releasing the report.

“Canada’s food processors are not increasing, in fact they are barely maintaining, global market share in the face of competition from established and new players.”

Food Processors of Canada did not immediately respond.

The report said a survey of Canadian food companies indicated most do not consider investment in innovation a priority.

It said research investment in food manufacturing as a share of gross domestic product is barely more than 50 percent of the overall business investment level and less than 20 percent of the level of the general manufacturing sector.

Meanwhile, public spending in basic agricultural research and development has declined by one-third in relative terms during the past two decades.

The result, according to the conference board report, is that Canada’s share of global food and drink sales declined during the past decade while countries such as Brazil and China saw significant market share increases.

It recommended that:

* The industry should invest more in innovation.

* Smaller companies should target more niche markets.

* Governments should increase research funding to assist companies that need help and review regulations to make sure they promote healthy and safe food while not unnecessarily tying the industry down.

The report also returned to an earlier conference Board theme: increased trade and open markets are a key requirement for the sector’s growth, and supply management restrictions are a problem.

“Given the importance of competitive intensity to innovative performance, more innovation could be stimulated by carefully transitioning supply managed subsectors — currently insulated from competition — to fair but competitive environments.”

It also said the government should continue its aggressive push to expand market access for Canadian food exports through efforts to “reduce the inconsistencies in rules and regulations that exporting and importing firms face.”

Days earlier, the conference board published a report that argued the federal government should aggressively pursue signing a broad trade deal with the European Union, despite sensitivities in some sectors including supply management, particularly dairy.

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