OTTAWA, Sept. 20, 2012 /CNW/ - The Canadian food manufacturing industry
is struggling through a tough 2012. A slow recovery in Canada's key
export market of the United States, a significant increase in
commodities prices due to drought, and a slowing Canadian job market
mean that the industry will generate meagre growth this year, according
to The Conference Board of Canada's Canadian Industrial Outlook: Canada's Food Manufacturing Industry-Summer
"Food manufacturers are being squeezed by both costs and prices. Input
costs are rising due to a run-up in commodity prices, and demands from
retailers and consumers are limiting the ability of manufacturers to
increase their own prices. The result is pressure on the industry's
profit margins," said Michael Burt, Director, Industrial Economic Trends.
The worst drought in decades continues to punish key farm states in the
United States, and predictions are that 2012 could see the lowest
average corn yield in more than 15 years. The U.S. accounts for nearly
40 per cent of global corn production and 35 per cent of soybean
production. Plummeting yields have major implications for world food
prices. Corn is used in everything from cosmetics and cereals to cake
mixes and candy bars, so consumers are likely to see increases in their
grocery bills as high corn prices make their way through the food
product supply chain.
The industry's output is forecast to advance by only 0.5 per cent this
year. Industry profits will inch up from $4.6 billion in 2011 to $4.7
billion in 2012, and pre-tax profits will gradually improve beyond
2012. However, manufacturers will not likely see the kind of profit
growth they enjoyed between 2006 and 2009.
Food manufacturing is one of Canada's largest industries, employing more
than 275,000 workers, and consumer tastes will largely dictate the
direction of the industry. Conveniences (such as the increasing
popularity of snack foods) and healthfulness are two leading drivers
for manufacturers. The trend among consumers toward more healthful
eating is exerting considerable influence over food manufacturers'
"Introducing innovative organic and natural products with higher profit
margins and opening up new markets are likely to be the twin engines
that drive growth in the future," said Burt.
As well, catering to consumers in emerging countries such as Brazil,
India, China, Mexico, Poland, and South Korea creates opportunities for
Canadian food manufacturers looking to export their products.
SOURCE: CONFERENCE BOARD OF CANADA
For further information:
Francoise Makanda, Media Relations, Tel.: 613- 526-3090 ext. 389