As the “powerhouse” sector of Canada’s economy, there should be more conversation around improving productivity in the food and beverage manufacturing sector, according to one leading expert.

“Eighteen per cent of Canadian manufacturing GDP is coming from the food and beverage sector. It’s employing over 318,000 Canadians,” Craig Klemmer, agricultural economist and manager, thought leadership with Farm Credit Canada (FCC) told FoodNX in an interview.

The farm financing organization has just released a new report that highlights how the industry could be grown even more, which would benefit all Canadians, the report said.

“If we can increase sales by three per cent per year, those increases in GDP can contribute $40 billion to our national GDP; create up to 217,000 new jobs, and about $16 billion in wages and benefits for Canadians. These are really big numbers — not to mention what kind of tax revenue that it’s going to generate for the country: over a billion dollars,” Klemmer said.

FCC says last year it managed 163,503 loans for 103,781 customers for a total loan portfolio of $55.5 billion. The average amount per loan was $339,566 and this includes primary agriculture and agri-food production farms and companies.

Bringing forward important conversations

Klemmer referred to a report, entitled Prospects for future productivity growth in Canadian food and beverage manufacturing that highlighted some of the challenges and opportunities to grow this sector.

“It’s about bringing the conversation of what we need to be doing, or opportunities in Canada to continue to grow this sector and continue to have it be the powerhouse of the Canadian economy,” he said.

The report pointed to four ways to boost productivity growth:

• Invest more capital for upgrades and expansion of plants and equipment;
• Boost skills training as technology evolves;
• Streamline regulations; and
• Encourage trade diversity.

The report highlighted some of the bright spots for the industry including its current trade surplus of $6.3 billion and $60 billion in exports from last year.

But it also pointed to some structural weaknesses that need to be addressed.

“First and foremost, would be looking at skills gaps and making sure that we have the right skills for the future, when we think about digitalization and automation of production systems and robotics, etc.”

Labour shortage looms

An estimated 142,000 new workers will be required to replace retiring workers and meet the industry’s demand for skilled labour by 2030, according to the report. This includes technologically advanced skills, he said.

“We have a lot more automation and AI-type solutions to help drive productivity and efficiency through these operations. We need to make sure that we have sufficient people that are drawn to the food and beverage manufacturing sector with these skill sets.”

While these issues are known within the industry, it’s the wider public that needs to hear more about this, Klemmer argues.

“Understanding that if we look at how innovation, how increasing productivity, how increasing overall sales can help drive Canada’s economy, and how important the food manufacturing sector is in Canada.”

“I’m not sure that that conversation is as loud as it should be,” he said.

Despite some of these challenges, the industry represents a “a bit of a bright light,” according to Klemmer.

“The food and beverage manufacturing sector has been outpacing and outgrowing many other parts of the Canadian economy. But there’s even greener pastures if we keep moving forward and investing and focusing on some of these productivity measures to add even more value.”

More money into sector

To move the industry forward, more investment in businesses through lending practices is required. To achieve this, the FCC recently partnered with a coalition of 20 investors that has committed $5 billion in new investments by 2030.

“What we have seen is an under-investment or a lack of investment in Canada, as compared to some of our peers in other parts of the world and so FCC has committed $2 billion to help create a more robust and thriving ag-tech ecosystem, or venture-capital ecosystem,” Klemmer said.

In total, the FCC and the investors hope to see $7 billion in new investment by the end of this decade.

Chatham, Ont.-based Farm Lending Canada (FLC) recently announced an investment from FCC that will help expand access to financing for Canadian farmers. The agriculture lending organization also plans to pour an additional $200 million in funding for the industry over the next 18 months, FLC said.

While this and other funding initiatives will continue, the industry needs more to grow, Klemmer said.

“Driving productivity isn’t going to be something that happens on its own, and it doesn’t happen in isolation. It’s going to require investment, it’s going to require skilled labour, it’s going to require innovation and really making sure that we have strong access to global markets and ensuring that our trade relations are really strong.”