Food imports increased in 2021, albeit growth was at a more modest pace of 3.6 per cent. Most imports came from U.S. suppliers, but also from a diversity of other countries, led by China, Brazil and Italy.
The share of domestic consumption of Canadian manufactured food also climbed by almost two per cent in 2021, after declining the two previous years. This increase was largely due to a combination of a “buy local” approach by many, as well as increased investments in marketing and operational efficiency by manufacturers.
“The strong growth we’ve seen in Canada’s food sector is largely a reflection of innovation, resiliency and the ability to quickly adapt to the changing economic environment,” Gervais said. “This has enabled most food manufacturers to overcome significant challenges posed by the pandemic, such as higher input costs, amplified labour shortages and shifting consumer consumption trends.
The report notes that although gross margins improved slightly in 2021, food manufacturers continue to struggle to fully pass on higher labour and material costs. Inflation is also expected to be above the Bank of Canada’s target rate for most of 2022, which will drive interest rate increases.
“Inflation is beginning to diminish the purchasing power of many households and the growth in 2022 will depend on several other factors, such as the evolution of the pandemic and how businesses adapt to interest rate increases and elevated input costs,” Gervais said. “But if the past is any indication of the future, Canada’s food processors will continue to take advantage of the many opportunities that exist amid the many challenges.”
The FCC Annual Food Report features insights and analysis on grain and oilseed milling; dairy, meat, sugar, confectionery, bakery and tortilla products; seafood preparation; and fruit, vegetable and specialty foods. FCC Economics will be releasing a separate report on Canada’s beverage manufacturing sector later this year.
Source : FCC