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Conference Board of Canada releases industrial outlook


March 23, 2012
By Conference Board of Canada

March 23, 2012, Ottawa – The Conference Board of Canada has released its winter
2012 industrial outlook, determining that rising costs put pressure on
food services and food manufacturing industries.

March 23, 2012, Ottawa – The Conference Board of Canada has released its winter
2012 industrial outlook, determining that rising costs put pressure on
food services and food manufacturing industries. 

Canada’s food services industry

Rising food and labour costs are the top two challenges facing the food
services industry. Lower raw material prices expected for 2012 may
provide a short-term break for the industry, but over the longer term,
food prices are expected to continue their upward trend. The tight
labour market will also add pressure on wages. Even though food service
operators are hesitant to pass through the rising costs to customers,
they may have to do so to stay profitable. However, the competitive
nature of the industry will limit profit growth. Click here to read the entire abstract.
 
Canada’s food manufacturing industry
Increased cost pressures can be attributed to the high prices for
agriculture commodities and oil. Facing pressure from retailers and
price-conscious consumers, food manufacturers are having trouble passing
on their rising costs to consumers. As well, it usually takes about nine
to 12 months for an increase in raw food material prices to work its way
down to the grocery shelves. Therefore, higher production costs will
outpace revenue growth during this period, leading to a second
consecutive year of contraction in profitability in 2012. And while
industry profits will improve in 2013 and beyond, growth will be
limited. Click here to read the entire abstract.