OTTAWA, Dec. 19, 2012 /CNW/ - 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
"When 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.
Most 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.
Research 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 gap.
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 cent.
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
Large retailers should increase their use of customer data collected
from loyalty programs to ensure that their product innovations meet
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
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
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.
The report is one of 20 being prepared by the Conference Board's Centre for Food in Canada. The principal goal of the Centre is to engage stakeholders from
business, government, academia, associations, and communities in
creating a Canadian Food Strategy —one that will meet the country's need for a coordinated, long-term
strategy on industry prosperity, healthy and safe food, consumer
security, and environmental sustainability. View video commentary about the Canadian Food Strategy.
Link to publication: http://www.conferenceboard.ca/e-library/abstract.aspx?did=5255
SOURCE: Conference Board of Canada
For further information:
Brent Dowdall, Media Relations, Tel.: 613- 526-3090 ext. 448