By Alice McFarlane

Canadian food production sales increase during the pandemic

Mar 31, 2022 | 2:24 PM

MELFORT, Sask. – Canada’s food manufacturers managed to grow sales, buoyed by pent-up demand and higher prices.

The 2021 Farm Credit Canada (FCC) Food Report indicated food manufacturing sales increased 14.8 per cent to more than $125 billion making it the strongest year-over-year sales growth recorded since 1992. FCC’s chief economist J.P. Gervais said along with that, sales are expected to increase 7.4 per cent this year.

“Consumers appeared to unleash strong disposable incomes and accumulated savings during the pandemic in 2021,” Gervais said. “This resulted in increased food service volumes that more than offset volume declines at grocery stores.”

The export market contributed 36.8 per cent of sales while overall Canadian food manufacturing exports grew by 16.9 per cent in 2021.

Export growth came from the United States, Mexico, Philippines, and South Korea. Conversely, exports to China declined over 16 per cent on lower pork demand.

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Food imports increased in 2021, but growth was just 3.6 per cent. Most imports came from U.S. suppliers, but also from several other countries, including China, Brazil, and Italy.

Gervais said domestic consumption of Canadian manufactured food also climbed by almost two per cent in 2021, after declining the two previous years with the increase due to a combination of the “buy local” philosophy as well as increased investments in marketing and operational efficiency by manufacturers.

“The strong growth we’ve seen in Canada’s food sector is largely a reflection of innovation, resiliency and the ability to quickly adapt to the changing economic environment,” Gervais said. “This has enabled most food manufacturers to overcome significant challenges posed by the pandemic, such as higher input costs, amplified labour shortages and shifting consumer consumption trends.

Gervais said food manufacturers are struggling to fully pass on higher labour and material costs. Inflation is also expected to be above the Bank of Canada’s target rate for most of 2022, which will drive interest rate increases.

“Inflation is beginning to diminish the purchasing power of many households and the growth in 2022 will depend on several other factors, such as the evolution of the pandemic and how businesses adapt to interest rate increases and elevated input costs,” Gervais said.

The report features insights and analysis on grain and oilseed milling as well as dairy, meat, sugar, fruit, vegetable, and specialty foods.

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alice.mcfarlane@pattisonmedia.com

On Twitter: @farmnewsNOW