Higher food prices have many causes.
Ottawa-Ways to tame food price inflation can be found in a couple of reports made to the federal government in recent years, says James Donaldson, vice chair of Food and Beverage Canada.
The report of the Agri-Food Economic Strategy Table in 2018 and last year’s Supply Chain Task Force report contained a lot of important ideas that should be implemented to make Canada more competitive, Donaldson told the Commons agriculture committee.
The committee needs to focus on industry competitiveness, capacity and resiliency in its review of the causes of recent food price inflation, he said. The government also needs to help the agrifood industry resolve its labour challenges.
That would include continuing to support the national workforce strategy for agriculture and food and beverage manufacturing and developing a clearer and faster track to permanent residency for foreign workers, he said.
As well, further investment and funding for technology and automation for food and beverage manufacturers is needed. The Canadian Agri-Food Policy Institute has found domestic food and beverage manufacturers trail other sectors in advanced manufacturing, he said.
“We’re falling behind. Investment in automation and technology modernization is critical for our industry to control costs, to mitigate labour risk and to scale and grow.
“Most of the innovation and technology grants provided by government are not applicable to food and beverage companies. We need to revisit a broader definition of innovation to allow our industry better access to grant funding and dedicated funding programs.”
There are almost 8,000 food and beverage manufacturing establishments in Canada, the majority of which are small and medium-sized businesses. Processors are the largest purchasers of Canadian agricultural products making these two sectors dependent on each other for long-term success.
Soaring food prices has brought a lot of media attention to grocery retail business practices, Donaldson said. “However, the causes of food inflation are a lot broader than that. There are labour challenges, transportation costs, ingredient costs, packaging material costs, pallet costs, the cost of feed, and the cost of manure and fertilizer.
“In exploring solutions to these challenges, we need to start to look at the entire food system, which is especially critical in a country with such a large land mass and a small population. A food system is like an ecosystem: It works seamlessly when it’s in balance. Right now, it’s out of balance, and that is putting our industry at risk.
Processors have little ability to pass on their increased costs and also face excessive fees and fines administered by retailers, he said. Their “inability to even negotiate with retailers are all impacting our industry’s ability to compete.
“Essentially, Canada’s processors are getting squeezed from both sides, and it’s not sustainable. Small to mid-sized processors, which comprise most of the industry, don’t have the resources and cash flow to withstand these challenges on a continuous basis.”
Retailers “try to shift focus from their record profits to their low margin percentages. Sadly, I can tell you that of the processors we have spoken to, even those with the good fortune of experiencing top-line growth, have struggled with eroding margins. The average processor does not have the luxury of rejecting price increases from their suppliers or charging them fees and levies with no backup or prior notice,” Donaldson said.