How to Strengthen Canadian Food and Beverage Manufacturing

Canada’s food and beverage manufacturing sector is crucial to our nation’s economy, employment, and food security. Found in every province, the industry includes nearly 8,000 manufacturers and employs almost 300,000 workers, making it one of Canada’s largest manufacturing sectors. This sector is the backbone of our food supply chain, taking raw agricultural products from across the country and turning them into the foods you find in your grocery store, from bread to cold cuts, yogurt to canned vegetables, and bacon to butter.  

The Challenges Faced by Canada’s Food and Beverage Manufacturing Sector

“We must address key issues of labour shortages, infrastructure, supply chains, and market power to ensure a vibrant future for this critical sector.”

However, the industry faces significant challenges threatening its stability and growth. The reasons are complex and include disruptions in global supply chains resulting from the pandemic, price inflation, natural disasters, and transportation infrastructure disruptions. As we look towards recovery and resilience in the post-pandemic era, we must address key issues of labour shortages, infrastructure, supply chains, and market power to ensure a vibrant future for this critical sector.

1. Overcoming the Labour Shortage in F&B

First and foremost, labour shortages pose a significant obstacle to the growth and sustainability of the food and beverage manufacturing sector. With an estimated 20% workforce gap, attracting skilled workers has become increasingly challenging – and we anticipate these shortages will only get worse, with a quarter of the industry’s workforce reaching the age of 65 in the next five years. While our sector is not alone in facing this challenge, chronic labour shortages and skills gaps hinder the industry’s ability to maintain current production levels, jeopardize local food security, and impede future economic development and trade growth. 

The industry is already stepping up to address this, with more than 100 industry participants involved in developing a National Workforce Strategic Framework for Agriculture and Food & Beverage Manufacturing.

The framework is focused on five key themes:

• Perception and Awareness of Industry and Careers
• People and Workplace Culture
• Immigration and Foreign Workers
• Skills Development
• Automation and Technology

Players in the industry are actively working together to identify the root causes of labour shortages and skills gaps, identifying concrete actions to address these shortfalls and setting meaningful goals and timelines to measure our progress and success.

“The federal government should build on recent positive steps, such as making permanent the 30% Temporary Foreign Worker Program cap increase announced in 2022.”

In addition to labour, access to foreign workers is vital for the food and beverage manufacturing industry. While the Temporary Foreign Worker Program provides some relief, it remains complex and has limitations in securing workers for year-round and permanent jobs. The federal government should build on recent positive steps, such as making permanent the 30% Temporary Foreign Worker Program cap increase announced in 2022, simplifying the application process, addressing processing delays, and establishing pathways to permanent residency for temporary foreign workers in critical sectors, including food and beverage manufacturing. This will further support the industry’s labour needs.

2. Building Robust Infrastructure and Supply Chains

Infrastructure and supply chains are critical for the industry’s success. Robust transportation infrastructure, affordable housing, public transportation, and childcare are essential to attract and retain a local workforce. The federal government should adopt the recommendations of the National Supply Chain Task Force, which emphasize the need for a more agile, flexible, resilient, competitive, and efficient supply chain system. Investing in infrastructure, including transportation, and coordinating efforts with provincial, territorial, and municipal governments will strengthen the sector’s foundation.

Recognizing food and beverage manufacturing as a critical infrastructure sector, essential to the well-being of Canadians, is a step in the right direction. However, more needs to be done to protect and enhance the sector’s resilience, as there are few measures in place today to insulate it from external pressures. Implementing the National Supply Chain Task Force’s recommendations and investing in monitoring, intelligence gathering, and risk assessment of the food supply chain is essential. 

“Establishing protocols for engaging stakeholders during disruptions and ensuring a coherent approach to emergency management will safeguard Canada’s food system.”

Furthermore, establishing protocols for engaging stakeholders during disruptions and ensuring a coherent approach to emergency management will safeguard Canada’s food system. Responsible for 16% of the country’s total traded goods, the strike at the Port of Vancouver is only the latest example of a supply chain disruption that will be felt by food and beverage manufacturing businesses across the country. If better protocols for engaging stakeholders were in place, government and industry might have the ability to work together to mitigate the impact of disruptions such as these on Canada’s food supply.

3. Ensuring Competitive Markets for Food and Beverage Manufacturing

Another area requiring attention is the power imbalance in supply chain relationships, specifically between small and mid-sized food and beverage manufacturers and large retailers. A mandatory and enforceable Canadian grocery industry Code of Conduct is necessary to address the power imbalance and protect the interests of smaller manufacturers by placing reasonable limits on the action’s of Canada’s largeretailers.

“A mandatory and enforceable Canadian grocery industry Code of Conduct is necessary to address the power imbalance and protect the interests of smaller manufacturers.”

To further ensure competitive markets, the federal government should heed the advice of the Competition Bureau and implement the recommendations of the Bureau’s most recent study on competition in Canada’s grocery sector, including the development of a Grocery Innovation Strategy. Although the reasons behind increased food prices in Canada are complex and it has been hard to quantify the impact of supply chain disruptions like Russia’s invasion of Ukraine, more competition could serve as one part of the solution.

How to Increase Innovation and Resilience in Food and Beverage Manufacturing

As Canada navigates the path to recovery, it is crucial to strengthen the foundations of our food and beverage manufacturing sector. By investing in workforce development, improving access to foreign workers, enhancing infrastructure and supply chains, and addressing market power imbalances, we can ensure a vibrant and resilient future for this critical sector. 

These are FBC-ABC’s recommendations to government:

• On Labour: 
  • Allocate funding to support the development and implementation of a National Workforce Strategic Plan for Agriculture and Food & Beverage Manufacturing, which seeks to complement the efforts of the federal government, including the development of a National Agricultural Labour Strategy.
  • Improve access to foreign workers for food and beverage manufacturing by making permanent the 30% Temporary Foreign Worker Program cap increase announced in 2022, a change which was welcome by industry.
  • Simplify the application process for the Temporary Foreign Worker Program, and identify measures to address processing delays, particularly for applications originating in Quebec.
  • Speed up efforts to introduce a Trusted Employer Model within the Temporary Foreign Worker Program.
  • Establish programs to secure foreign workers for permanent and year-round jobs, including establishing pathways to permanent residency. 

• On Infrastructure:
  • Adopt the recommendations of the National Supply Chain Task Force.
  • Work with the provinces, territories, and municipalities to ensure a coordinated approach to affordable housing, public transportation, and other infrastructure needed to support a local workforce.

• On supply chains:
  • Ensure a consistent and coordinated approach to support supply chain resilience for Canada’s food system, including by investing in measures to buffer Canada’s food system from external shocks and establishing protocols for engaging stakeholders in the event of a serious national or regional food supply chain disruption.
  • Ensure measures are in place to protect Canada’s small and mid-sized food and beverage manufacturing companies from the effects of market power imbalance from the high concentration in Canada’s grocery retail sector. 
  • Implement the recommendations of the Competion Bureau in its report on retail grocery market study.