The organic food-processing sector is on solid ground in Canada, according to a broad-based report showing most firms experiencing year-over-year growth in excess of 10 per cent.
But that growth continues to create its own set of challenges, most significantly an ongoing shortage of raw ingredient supply.
Sourcing ingredients remains this sector’s key challenge, says Laura Telford, Manitoba’s provincial organic specialist, who is doing an in-depth analysis of Canada’s organic food-processing sector.
Prepared with funding from the federal Organic Science Cluster II, the report when completed next year will be a first-ever attempt to shine a spotlight on the Canadian organic food-processing industry specifically.
Virtually all organic research to date has been related to primary production, notes Telford who began the work in 2015.
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Yet what ultimately drives production is market demand, and organic processors, like their conventional counterparts, want ingredients sourced as close to home as possible, she said.
That in turn provides the markets for existing and new farm entrants wanting alternatives to the export commodity market.
Telford said as she began this project what struck her initially were the considerable policy barriers and technical restraints facing organic processors, leading her to wonder if they were a holdback on product development. There are fewer restrictions in the U.S.
But her research to date, which has identified 884 companies producing value-added products for human consumption, has revealed otherwise. The report also includes data from interviews with 38 leading firms across Canada.
Canada’s organic standard, with its strict limitations on use of things like colourants or preservatives isn’t the barrier it was believed to be, Telford said.
“We thought that it would be difficult to actually bring new processed foods to market in Canada because of rules and regs in organic,” she said. “That doesn’t seem to be the major barrier. In fact, almost everyone I interviewed said standards haven’t been that big of a deal. They said they just want to know what the rules are and they’ll make it happen… they are innovative in finding new substances to stand in for things you’d traditionally use for food processing.”
Rather, the ongoing challenge — and the signal this research ultimately aims to send to farmers — is finding steady Canadian supplies.
Canada has a relatively small land base of organically managed land — as of 2015 just 1.5 per cent of total agricultural land, according to the Canadian Organic Trade Association.
“It’s the major challenge,” she said, noting both large and small companies prefer to buy from producers as close to home as possible, she said. Transportation costs are an additional challenge, on top of the high prices they’re paying for these supplies.
The report points to multiple initiatives underway to address that challenge, from investments by major breakfast cereal companies to boost acreage to companies making farmland purchases.
The Prairie Organic Grain Initiative, supported by large organic grain buyers and the federal government, is a large collaborative initiative developed by the three Prairie provinces to enhance supply.
“Processors are sending out signals that they’re open for business and farmers are responding,” said Telford, noting other efforts such as firms’ hiring of agronomists to work with farmers on end-use quality.
“We’re also seeing some gains in yields and we’re also seeing the interventions are improving grain quality,” she said.
“Organic producers are starting to understand that they’re not growing a commodity but growing a food for a food processor.”
The report also looks at how organic processors approach marketing.
Few actually rely on the organic stamp alone, Telford said, noting many packaged organic foods will regularly carry multiple claims such as Fair Trade.
Organic processed foods are primarily consumed in British Columbia and Ontario with packaged food sales concentrating primarily in Vancouver, Toronto, Montreal and Ottawa.
The final report is expected to be released in 2018 through the Canadian Organic Trade Association.