Food and beverage sector misunderstood by regulators

Food-processing plants were designed with food safety in mind, not social distancing

Officials from Food and Beverage Canada told a parliamentary committee that the COVID-19 pandemic shows there is a “fundamental misunderstanding of how Canada’s food system operates” among senior policy-makers.

The comments were made during a digital meeting of the Standing Committee on Agriculture and Agri-Food on May 8.

James Donaldson, who sits on the board of the organization that represents more than 1,500 food and beverage manufacturing businesses, says the companies he represents have seen their costs increase $800 million as a result of COVID-19 and these costs cannot easily be passed on to consumers.

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Food and Beverage Canada chief executive officer Kathleen Sullivan said the pandemic has created a huge problem for the industry.

“We are facing a new normal of extraordinary cost pressures that we need to address somehow either by means of government support or by food price increases,” she said, telling the committee there is currently no relief being offered.

She said most food companies do not qualify for existing COVID-19 emergency relief measures – such as the Canada Emergency Wage Subsidy (CEWS) – because they are targeted at businesses experiencing lost incomes.

Because people continue to purchase food and drinks, Sullivan said the companies she represents have not seen significant drops in revenue.

Instead, business expenses have increased due to the pandemic, largely because of mitigation efforts put in place to prevent the spread of COVID-19.

While noting the federal government’s commitment of $77.5 million to assist processors in managing COVID-19 mitigation costs, Sullivan said the costs of adapting are estimated to be around $800 million.

“We didn’t build our food plants to accommodate social distancing, we built them to accommodate food safety,” she said, noting to accommodate the former, more capital investments will be needed.

Telling the committee that cost was “impossible” to pass on to consumers, especially given its magnitude, she called for policy changes to assist her membership.

“The ongoing pressures that we’re facing are undoubtedly going to destroy some companies and drive them into bankruptcy,” she said.

“Food availability, food affordability, food sovereignty are all going to be impacted. If we do nothing Canadians will still eat, and what we will see is more and more of our grocery shelf will be filled with products that come from offshore.”

Sullivan said the federal government should be expanding its emergency relief efforts to consider loss of income, not just revenue, and contemplate putting in place tax credits for the industry to offset pandemic adaptation costs.

On May 15, the federal government announced it will be consulting with key businesses and be considering adjustments to its programs, including a review of the revenue-decline threshold.

She told committee members a reflection of the entire food system – from farm to retail – is required to identify weak links.

Because Canada’s food system is managed by both the provinces and Ottawa, Sullivan said there needs to be better co-operation among federal and provincial officials.

“If we understand what we look like, I think that will help us,” she said, noting one of the things she noticed when the pandemic started was that Canada “had absolutely no plan for the food system.”

During her remarks, Sullivan also recognized the commitment of food and beverage workers across the country.

“For two months as a pandemic has ravaged the globe, food workers have continued to go to work so we can have food. Our workers are heroes, but they are not superheroes,” she said, noting three of those workers died after contracting the disease.

Citing a drop in demand in schools, restaurants and hotels, the Retail Council of Canada’s Jason McLinton told committee members that proactive measures to allow for greater sourcing flexibility need to be adopted on a temporary basis immediately.

He specifically pointed out the need for CFIA to ease restrictions on labelling to better allow retailers to sell products labelled for other markets.

About the author

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D.C. Fraser

D.C. Fraser is Glacier FarmMedia’s Ottawa-based reporter. Growing up mostly in Alberta, Fraser also lived in Saskatchewan for ten years where he covered politics, including a stint teaching at the University of Regina’s School of Journalism. He is an avid fan of the outdoors and a pretty good beer league hockey player. His passion for agriculture and agri-food policy comes naturally: Six consecutive generations of his family have worked in the industry.

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