An Ernst and Young report for Protein Industries Canada urges expanding domestic value-added processing: today processing GDP exceeds primary production GDP by only 10%, compared with 70% in Germany and the United States.
Canada's food and beverage sector is the country's largest manufacturing sector, with production of more than $173 billion, made up primarily of meat and dairy product manufacturing, followed by grain and oilseed milling. However, more than 70 percent of processed products remain in Canada and are consumed by Canadians, while primary exports continue to be unprocessed raw commodities.
That scenario supports the conclusion of an Ernst and Young report prepared for Protein Industries Canada and published in April 2026: the country must expand domestic value-added processing instead of relying on raw commodity exports.
"Canada's agriculture advantage is already established," said Mauricio Zelaya, national economics leader at Ernst and Young Economic Advisory, during the recent Plant Forward on the Prairies conference in Saskatoon. "The next opportunity is to make more here, capture more value here and compete globally from a stronger domestic platform."
The Canadian agri-food sector, which spans everything from primary agricultural production to retailers and food services, generates $158 billion in gross domestic product. Today, the GDP of the food processing industry is only 10 percent higher than the GDP of primary agriculture, well behind France at 30 percent and Germany and the United States at 70 percent.
Protein Industries Canada aims to change that picture. Ernst and Young has been working with the association since 2019, when the industry group sought to strengthen its original strategy focused on the plant-based protein industry. With the new report, the organization has broadened its horizon to the entire agri-food industry in order to make Canada a more relevant player in processing, exports and trade.
The Canadian opportunity rests on what the country already possesses —processing capabilities, expertise and raw materials— combined with shifts in the global economy stemming from geopolitical tensions and conflicts that altered trade relationships and renewed inflation risks.
Diedrah Kelly, executive director of Canada's Indo-Pacific Agriculture and Agri-Food Office, agreed with that diagnosis. "Canada's reputation as a stable trading partner has never been more valuable," she said at the conference. "And it's up to us to figure out how we can take advantage of and grow those relationships to create more mutually beneficial opportunities."
According to Zelaya and the report, traditional globalization frameworks have evolved into "asymmetric globalization," and value-added agriculture and food will face pressure because of their link to food security, supply chain resilience and economic sovereignty. "Demographic, policy choice and geopolitical exposure increasingly determine where demand grows and where investment grows," he noted.
In that context of trade diversification, fragmented growth offers Canada a "clear strategic choice," Zelaya added: to produce more value-added products and export them to higher-value markets.
Ernst and Young identified four priority areas for processing manufacturing. In the strategic gains category is ingredient processing, which makes it possible to capture greater value from crops already produced and includes food additives, emulsifiers, stabilizers, modifiers, pharmaceutical ingredients, nutraceuticals and other functional ingredients. Alongside this area are bio-based intermediate products, which serve as alternatives to petroleum derivatives: paints, coatings, inks, dyes, fertilizers, pesticides and sustainable packaging.
"The value of Canadian agriculture extends well beyond food products," Zelaya explained. "Canadian crops can become inputs for pharmaceuticals, manufacturing, packaging, construction materials and other industrial applications."
In the market-ready expansion category, the biggest opportunity is processed foods and beverages: confectionery, beverages, ready-made and convenience foods, processed grains, fruits and vegetables.
The livestock and pet food sector is also part of the market-ready expansion category. The livestock feed market, which includes energy and protein concentrates and animal supplements, would grow to $24 billion by 2040. Kelly described it as the largest near-term opportunity for Canada and pointed to Southeast and South Asia as key expanding markets, driven by growing livestock sectors such as poultry, swine and aquaculture.
"They continue to expand to meet rising protein consumption demands in those markets," she said. "Producers are looking for sustainable and cost-effective protein sources to supplement and replace traditional feed ingredients."
Pet food is an area expanding just as quickly, though it often goes unnoticed. Pet owners are looking for premium ingredients so they can feed their pets well. "Canadian plant ingredients can play an important role in the premium pet food formulation by providing high protein functionality and traceability," Kelly said.
The industry's goal is not to replace raw commodity exports, but to complement them with quality products and boost Canadian GDP.
