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Success starts at home

Don’t forget the domestic market in building Canadian agri-food sales

A key ingredient in the recipe for success for the Canadian agri-food sector is going to be growing the domestic market.

According to a report from the Agri-Food Economic Strategy Table (AFEST), it would be a mistake ignoring this close-to-home opportunity and pursuing only growing overseas demand.

AFEST was set up by the federal government as part of its program to promote innovation and competitiveness in the economy. It’s headed by Murad al-Katib, president and CEO of Regina-based AGT Food and Ingredients.

While many of its recommendations build on the concepts proposed in the 2016 Barton Report, it also calls for the yardstick on food exports to be moved to $85 billion annually by 2025 from the $75 billion set in the 2017 budget. At the same time, the sector should aim for $140 billion in domestic sales by 2025 compared to the $110 billion in 2017.

It also wants the creation of a permanent and independent panel of industry experts to keep regulators focused on advancing the sector. While the Barton Report suggested a branch in the Privy Council Office to keep government departments thinking about the needs of the agri-food sector, the government hasn’t acted on that proposal.

The report said the panel would perform a “challenge function” by identifying efficiencies and enhancing opportunities for industry participation in decision-making. It would also work with regulators to regularly review all the regulations, technical guidance and associated government policies to ensure they are necessary, appropriate and effective in achieving intended objectives in the most cost-effective manner possible.

“The competitiveness of Canada’s agri-food sector is stymied by the ‘tonne of feathers’ dilemma, whereby hundreds of well-intentioned and seemingly unobtrusive regulations add up to weigh down our performance, productivity and growth,” the report said.

The panel would identify unintended impacts from government decisions and find ways to mitigate or eliminate them as quickly as possible and look for efficiencies, such as alternate service delivery opportunities, compliance strategies that recognize a key trading partner’s assessment of product safety, and third-party accreditation, the report said.

The panel could also point out cases where immediate action is needed “to address specific regulatory challenges hurting the agri-food sector’s competitiveness, overly prescriptive and process-driven regulations preventing companies from adopting innovative products and production systems, responding to shifting market opportunities and accessing the latest technologies used by competitors.”

Regulators need to work with industry, as well as the panel recommended above, to identify opportunities to achieve strict health and safety outcomes at the lowest cost to the economy, the report said.

Also on the panel’s watch list would be creation of “an agile regulatory system that promotes the competitiveness of the agri-food sector and moves at the speed of commerce, a diverse labour force with the right set of skills to help Canada’s agri-food sector achieve its maximum potential, a state-of-the-art innovation and transportation infrastructure network and better use of increased automation and digitization.”

There are huge opportunities with the global population projected to rise to 10 billion in 2050, the report said. “Cashing in on those opportunities won’t be easy without Canadian leadership in innovation as well as an agile regulatory system and enabling infrastructure to secure our position as a preferred supplier to high-value markets.

“By 2025, Canada will be one of the top five competitors in the agri-food sector, recognized as the most trusted, competitive and reliable supplier of safe, sustainable, high-quality agri-food products and an innovator in value-added products to feed the dynamic global consumer,” the report said. That will require a leading digital and technology-based supply chain and stand out as the world’s favoured protein provider.”

The higher export and domestic market targets “will position Canada as a global leader in high-value markets and reclaim previous lost domestic opportunities,” the report said.

Among the obstacles to be overcome are internal regulatory barriers hindering lagging investment that is lagging across all agri-food sectors, particularly food and beverage processing, a lack of strong Canadian firms to lead internationally, acute infrastructure bottlenecks that disrupt flow of goods within Canada and to export markets, inadequate broadband service that limits the ability of farmers and processors to take advantage of new technologies, tight labour markets, restricted access to foreign workers, and evolving skill sets for the sector all pose challenges.

Trade barriers are increasing and becoming more complex. The answer lies with an agile regulatory system that supports innovation, provides certainty to industry, and protects health and safety.

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