Bakers Journal

Canada’s food industry an innovation laggard

January 15, 2013
By Conference Board of Canada

Jan. 15, 2013, Canada – The Canadian food industry has become an
innovation laggard, and does not appear to be very concerned about it,
according to a Conference Board of Canada report.

Jan. 15, 2013, Canada – The Canadian food industry has become an innovation laggard, and does
not appear to be very concerned about it, according to a Conference
Board of Canada report for its Centre for Food in Canada, Competing for the Bronze: Innovation Performance in the Canadian Food Industry. This is leading to Canada losing ground in global food and drink export markets. 

it comes to innovation, the Canadian food industry is content to
compete for a bronze medal. 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,” said Daniel
Munro, Principal Research Associate.

Canadian firms in the food industry don’t think innovation is a
priority. The Conference Board’s Centre for Food in Canada Industry
Survey asked firms what will determine their business success over the
next five years; one-third of respondents said that process (33.5 per
cent) or product (33.2 per cent) innovation would be very or extremely
important. And just one-quarter of respondents said that input
innovation would be very or extremely important. 

intensity in food manufacturing as a share of gross domestic product is
lower (0.72 per cent) than that of the business sector (1.38 per cent)
and much weaker than manufacturing generally (4.55 per cent). Public
spending in research and development (R&D) in the primary
agriculture subsector actually declined – from 1.61 to 1.1 per cent over
the past two decades – and private R&D spending is not making up the

This combination of low investment in research and a low
priority placed on innovation is contributing Canada’s shrinking global
presence. Between 2000 and 2010, Canada’s share of global food and drink
exports dropped from 4.2 per cent to 3.2 per cent, before recovering in
2011, when the share rose to 3.9 per cent.

In the meantime,
Brazil’s share nearly tripled and China’s share almost doubled – both
now have 6.3 per cent of global food exports apiece. And developed
countries are also gaining ground: in the past decade, the United States
increased its share of global food and drink exports from 11.1 per cent
to 12.2 per cent, and New Zealand’s share rose from 1.7 to 2.5 per

Turning Canada’s underperforming industry into a leading
global innovator will take concerted effort. The Conference Board study
recommends eight actions for business and government:

  • Food
    businesses should seize domestic and international market share by
    innovating to create new products for emerging and fast growing
  • Small and medium enterprises should innovate for
    niche markets to increase their profits – innovation is as much a
    survival strategy as a growth strategy.
  • Large retailers should
    increase their use of customer data collected from loyalty programs to
    ensure that their product innovations meet consumers’ demands.
  • Retailers
    and suppliers should strengthen their working relationships to clarify
    retailers’ expectations on product volumes, shelf fees, and food quality
    and safety to cut product innovation development wastage.
  • Governments
    should promote more competition and export market access. As food
    businesses that face higher competition have better innovation track
    records and outperform others, more innovation could be stimulated by
    transitioning sheltered subsectors to fair but competitive environments.
  • Governments
    should implement proposed changes to the Food and Drugs Act in a timely
    fashion to accelerate innovation in healthy food and food safety, and
    consider further changes to reduce regulatory barriers to food
    innovation while ensuring health and safety.
  • Government funding
    for food research and innovation should be better aligned with
    innovators’ financial needs. Currently, many firms with genuine
    financial need are failing to access public R&D funds for
    innovation. Savings could be redirected towards maintaining or improving
    R&D support for the primary agriculture sub-sector where innovation
    returns on public R&D spending have historically been strong.
  • Incent
    more food innovation with social value. Governments should adjust
    regulation and use financial incentives to support and stimulate
    healthier and more environmentally sustainable food innovation.

View the video commentary about the Canadian Food Strategy here.

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