The government’s policy of attracting more foreign money to help build food processing faces some tough resistance and skepticism from potential investors, says a report prepared for Agriculture Canada.
Direct foreign investment in the Canadian food processing sector more than doubled from $6 billion in 1985 to $16 billion in 1995, according to government figures.
But there are problems and roadblocks to increased direct foreign investment.
The report said foreign multinationals looking to invest and expand are more likely to put their money into the United States or Mexico than into Canada.
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A survey of business executives conducted for Agriculture Canada by Deloitte and Touche Consulting Group last year suggested the reasons are substantive, even though Canada also has some attractions for potential foreign investors.
“The perception of (multinationals) outside of Canada show that they consider Canada to be a safe country with abundant and high quality raw materials and access to NAFTA (North American Free Trade Agreement), but that Canada is hampered by its small market size and growth potential, national unity and language concerns and its tax, environment and regulatory policies of government,” said the 1998 report.
One of the most frequently cited problems in Canada for food processors already located here was “a limited supply of raw material.” While it was most commonly a complaint in the supply managed sectors, it also was cited by companies in beef, hog and horticultural areas as well.
There were also complaints about Canadian labor costs.
