FCPC report

A new report by Food & Consumer Products of Canada (FCPC) is drawing attention to the growing competitiveness challenges of Canada’s largest manufacturing industry. Findings reveal the food, beverage and consumer products (FCP) industry has been underperforming due to a number of key challenges, which could lead to job losses and higher food, beverage and consumer good prices for Canadians.

Those challenges include high costs for farm products and logistics that are outpacing sales growth, making the industry less attractive for investment. The FCPC report, titled “FCPC Industry Sustainability & Competitiveness Study,” says the cost of placing a product on store shelves in Canada rose 22 per cent from 2013 to 2017, while it remained flat in the U.S. Companies in the industry expect that trend to continue due to the high level of consolidation among retailers, which is having a negative impact on the cost of placing and maintaining products on store shelves.

Another problem is that most product innovation currently takes place outside of Canada. The FCPC report says 83 per cent of branded products sold on Canadian shelves were neither developed nor manufactured domestically.

Also, compared to other manufacturing sectors in Canada, food manufacturing has one of the least competitive operating environment. And manufacturing capacity has stayed flat in Canada, with little to no change in the total number of plants.

The report notes that between 2013 and 2017, FCPC members’ gross sales grew at an average annual rate of 1.45 per cent, compared to 2.12 per cent in Canada’s real GDP.

“These ongoing challenges are having a negative impact on the future sustainability of our sector,” said FCPC CEO Michael Graydon. “Coupled with the unpredictability with our most important trading partner, retaliatory tariffs on our industry and labour shortages, I’m concerned that manufacturers may look to more attractive markets to invest – putting Canadian jobs, rural communities and the economy at risk.”

In a Globe and Mail story, Graydon noted the delays and disputes that are impeding the ratification of the USMC Agreement are a “worrying” factor to add to the mix. He also said that grocery retailers are using their dominant market position to cut the prices they pay to food suppliers, and to raise the costs of shelf access by 22 per cent over the past four years.

Still, the FCPC report says the sector offers a lot of opportunity and believes it can work with federal and provincial governments to overcome the challenges.

“We are pleased that the federal government has recognized the strategic importance and potential of our sector and is committed to working toward making our industry more competitive,” said Graydon. “Steps are being taken in the right direction such as incentives to accelerate business investment, commitment to regulatory reform, targeted investments for our industry and support for skills development. We strongly support the government’s Economic Strategy Tables that support competitiveness, and urge the implementation of all of the reports’ recommendations.”

The FCP industry employs more than 300,000 Canadians, accounting for 16.7 per cent of all manufacturing jobs in Canada and contributing about $29 billion to Canada’s GDP every year.

Read the full FCPC report.

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