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Comment: Death by regulation

Canadian companies are being hampered by too much government oversight

The regulation of food industries has always been necessary. In the western world, successive governments have successfully played the anti-business card by implementing regulations so that consumers and the public at large feel someone is looking out for them.

But at times, governments are known to flirt with populist measures in their attempt to gain popular support, and few will question whether regulatory programs can overburden an industry or hamper its ability to generate economic growth. But the delicate balance between protecting the public and supporting industrial growth of the sector in Canada may have reached a critical tipping point.

Over the years, our relentless pursuit for convenience as consumers has added more pressure on our 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. Both have received considerable consideration by our regulators, and rightly so. Plastics and chronic diseases abound. Action is needed, but some are starting to say that we may have already gone too far.

In the last decade, the food-processing sector in Canada has seen barely 20 new plants built in the country. During the same period, the United States has seen over 4,000 built, a steep contrast to what is happening in Canada. Some of these plants in the U.S. have been built by Canadian companies. And according to Food Consumer Products Canada, over 22,000 jobs have been lost in the last five years in food manufacturing.

Food crises will 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, malnutrition, and the lists go on. The overall intent in most cases is to ensure food quality and the safety of food products intended for human and animal consumption, with the aims of protecting consumers against fraudulent or deceptive commercial practices, as well as ensuring the health and well-being of animals, plants and the environment. Difficult to argue against this. But the piecemeal approach to regulations has generated some disjointed policies, which have in turn given way to silly, anachronistic rules.

There comes a time where both government and industry should assess whether things have been overdone. This may be an opportune time in Canada to do so, as the performance of our food-processing industry is simply anemic.

In the last year, more than 80 per cent of new products that Canadians saw were designed and manufactured outside of our country, and many of them are quite novel and incredibly nutritious. Most manufacturers in this space will look for openings 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 the country. Most importantly, many of these jobs are in remotely located regions across Canada, making many towns and smaller cities more vibrant. Many of these enterprises are at the epicentre of a crucial regionalized economic ecosystem. This cannot be emphasized enough.

What also needs to be underscored is the fact that food processing in Canada is characterized by a predominance of small- and medium-size enterprises, which makes it vulnerable to external competition and potentially cost — increasing regulatory policies.

These companies, often family companies, are the real innovators in agri-food these days. Recent measures like the carbon tax, enhanced labelling, and food safety rules have or will put more pressure on them, while many can hardly cope as it is. This exposure to external competition is expected to increase, following the ongoing globalization and the liberalization of food markets, triggered by recent trade deals with many parts of the world.

For the longest time, perhaps decades, industry has been ahead of policy on most fronts. While the government has always played the morality card, industry came up with the solutions. That has changed in recent years.

Policy is driving change more than ever, which is not necessarily objectionable. But this can come at a cost. The trust gap between industry and government has grown, and they are butting heads more frequently than ever. What both sides should acknowledge is that serving the public and offering highly nutritious food is not a popularity contest. Both sides have responsibilities, shared goals and aspirations.

The troublesome truth is that the U.S. economy is now carrying ours, especially in food, and this is not likely to change any time soon. Of course, such a call should not lead to an anti-regulatory movement – au contraire. But things are getting more complicated out there and both industry and government need to work together.

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