Posted Tuesday May 13, 2019

Regulations & Business

Does Canada’s food processing industry face death by regulation?

The food sector has claimed for years that overregulation is killing jobs and overwhelming innovation in Canada - By Sylvain Charlebois687 words

Food industries need to be regulated. But the delicate balance between protecting the public and supporting industrial growth may have reached a tipping point in Canada.

In the Western world, governments successfully play the anti-business card by implementing regulations so consumers feel someone is looking out for them.

But governments are also flirting with populist measures to gain public support.

And regulatory programs can overburden industry or hamper its ability to generate economic growth.

Over the years, the relentless pursuit of consumer convenience has added pressure on regulators to act. Fast food, quick portable meals, ready-to-eat and ready-to-cook solutions are invading the market.

And convenience often trumps two very important aspects of our lives: the environment and health. So both have received considerable consideration by regulators, and rightly so. Plastics and chronic diseases abound.

So action is needed. But have we already gone too far?

In the last decade, barely 20 new food processing plants have been built in Canada. During the same period, more than 4,000 have been built in the United States. And some of these American plants have been built by Canadian companies. According to Food and Consumer Products of Canada, more than 22,000 food manufacturing jobs have been lost in the last five years.

Food crises compel governments to act and quickly, especially when lives are at stake. We’ve seen this in the face of mad cow disease, epidemics, biosecurity threats, recalls, food fraud and malnutrition, among other things. The intent in most cases is to ensure food quality and the safety of food products for both human and animal consumption.

Action is also taken to protect consumers against fraudulent or deceptive commercial practices, as well as ensuring the health and well-being of animals, plants and the environment.

And it's difficult to argue against these practices. But the piecemeal approach to regulations has generated some disjointed policies, which have in turn given way to silly, anachronistic rules.

It’s time for government and industry to assess if things have been overdone in Canada, where our food processing industry’s performance is simply anemic. In the last year, more than 80 per cent of new products introduced here were not designed and manufactured in our country.

Manufacturers look to cut costs and increase efficiency instead of looking for and capitalizing on opportunities, such as the need for healthier products.

The food processing industry employs more than a quarter of a million people in Canada. Many of these jobs are in remote regions, and bring vibrancy to many towns and smaller cities. Many of these enterprises are at the epicentre of a crucial regionalized economic ecosystem. This can’t be emphasized enough.

What also needs to be underscored is that Canadian food processing is dominated by small and medium-sized enterprises. These companies, often family owned, are the real innovators in modern agri-food. But their modest size makes them particularly vulnerable to external competition and potentially cost-increasing regulatory policies.

Recent measures like the carbon tax, and enhanced labelling and food safety rules have or will put more pressure on these companies, even though many hardly cope now. And exposure to external competition is expected to increase, triggered by Canada’s recent trade deals around the world.

For decades, industry has been ahead of policy on most fronts. While government played the morality card, industry came up with solutions. But now, policy is driving change – and that comes at a cost. The trust gap between industry and government has grown, and they’re butting heads more frequently.

Both sides need to acknowledge that serving the public and offering nutritious food is not a popularity contest. Both sides have responsibilities, and they share goals and aspirations.

The troublesome truth is that the U.S. economy is carrying ours, especially in the food sector, and this isn’t likely to change soon.

We don’t need an anti-regulatory movement. But things are getting more complicated and industry and government need to work together.

Dr. Sylvain Charlebois is senior director of the agri-food analytics lab and a professor in food distribution and policy at at Dalhousie University, and a senior fellow with the Atlantic Institute for Market Studies .
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ISSN 0824-45
Copyright, 2019

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