Canada's food and beverage industry contributes $35.1 billion to GDP and says it could reach $56.2 billion by 2035 with more investment, less redundant regulation and immigration programs tailored to its labour needs.
Canada's food and beverage industry, which currently contributes $35.1 billion to national GDP, says it could lift that figure to $56.2 billion by 2035 if the right investment, regulatory and labour conditions are in place. The sector grew 1.4 per cent a year between 2011 and 2018, but stalled between 2019 and 2025 because of trade uncertainty, rising input costs and the pandemic.
Sylvain Charlebois, director of the Agri-Food Analytics Lab at Dalhousie University, believes the situation is even worse: he estimates the sector's productivity fell 5.8 per cent over the past 18 months. «It's not just that it's flat, it's much less productive», he said. By contrast, he noted that productivity in the U.S. food sector has been improving rapidly since President Donald Trump returned to the White House.
Canada's food and beverage manufacturers buy about half of the country's annual agricultural production. The federal government's National Food Security Strategy set a target of 2.75 per cent annual GDP growth in the food processing sector between 2027 and 2035.
Kristina Farrell, chief executive officer of Food and Beverage Canada, explained that its member companies have plans to build plants, expand existing ones and add production lines, but they face too much uncertainty in the markets. The sector recently asked for a $2 billion federal domestic processing fund, but received a $500 million Strategic Response Fund that was later cut to $350 million in the National Food Security Strategy.
«From what we understand, that fund was already oversubscribed even in its first callout», Farrell said. «That shows companies want to make these investments». Charlebois recalled that in September the government announced a $1 billion Agri-Food Project Finance fund to boost projects that expand processing capacity, and that manufacturers can use the Government of Canada's new Productivity Mega Deduction tax measure to write off eligible capital property and development expenses.
On the regulatory front, Farrell said there is a good process for identifying and developing new food health and safety rules. «We don't have an equally good process for identifying those regulations that are outdated, that no longer add value, that are redundant and that aren't keeping pace with international jurisdictions», she said.
The industry considers, for example, that the federal plastics registry is redundant because provincial reporting requirements already exist. Farrell said some processing companies have identified a list of 100 redundant regulations that affect their operations and generate hundreds of millions of dollars in unnecessary costs. Charlebois agreed: «This is probably the most important point, because with too much bureaucracy it's hard to build an efficient and productive sector».
Treasury Board President Shafqat Ali recently announced a new cabinet directive requiring departments to cut the cost of regulation by $2 for every $1 added. The measure takes effect Dec. 31, 2026, and will run for three years.
«It's difficult for companies to talk about their growth plans if they don't know whether they'll have enough workers», Farrell said. Manufacturers rely heavily on foreign workers, but current immigration programs don't fit their needs: the Seasonal Agricultural Worker Program does not recognize the permanent nature of jobs in the sector, and more than 20 per cent of the workforce at many companies are foreign workers with no pathway to permanent residency. The cancellation of the Agri-Food Pilot, falling immigration levels and the reduction of the Provincial Nominee Program are worsening the shortage.
Charlebois offered an alternative to the labour problem: «It can be addressed with automation and robotics, and that is exactly what is happening in the United States».
The report by the Canadian Agri-Food Policy Institute (CAPI) commissioned by Food and Beverage Canada outlined five scenarios for real GDP growth in the sector. The results range from a business-as-usual approach, with GDP of $41.2 billion by 2035, to the best-case scenario, with growth of 4.8 per cent a year that would allow it to reach $56.2 billion by 2035. That scenario combines significant regulatory reform with high government investment and funding.
Farrell considers the best-case scenario feasible if the industry can make progress on its list of requests, and she expects good news in the Nov. 5 budget. «We're quite optimistic, but we'll have to wait and see», she said.
According to the CAPI report, federal funding accounts for 5 per cent of the sector's annual contribution to GDP, compared with 13.4 per cent for the critical minerals sector, 22.4 per cent for aerospace and 19.7 per cent for the automotive and auto parts sector. Farrell acknowledged that it is understandable those sectors receive additional help because of the tariffs they face in the U.S. market, but she noted that the food and beverage industry is Canada's largest manufacturing sector, with more than 9,000 companies and more than 318,000 direct jobs. «If the objective is to strengthen Canada's industrial capacity and our economic resilience, overlooking food and beverage manufacturing doesn't make much sense», she concluded.
