By Jonathan DeHart
Canada is an agri-food giant, both in terms of production and innovation. From grains and oilseed to functional foods and niche products like kimchi and foies gras, Canada is not only one of the world great bread baskets but also one of its most diverse salad bowls. This comes as no surprise. Canada is renowned for its strict adherence to quality, as well as its integration with North American and global markets and its highly educated workforce.
According to the OECD FAO Agricultural Outlook, Summary 2012 edition, the growth of global agricultural production is expected to grow annually by 1.2 percent through 2021. During that period, population will swell by more than two billion. Further, Global Industry Analysts Inc. has estimated that the global market for functional foods and drinks could be more than US$130 billion by 2015.
This is great news for Canada, where the food and beverage processing industry is the second largest manufacturing sector, employing 297,000 people in 2012. Further, it accounts for a whopping 16 percent of its total manufacturing shipments and two percent of GDP. That amounts to $24.6 billion in exports of processed food and beverage to 185 countries. As of 2012, the industry production and shipment value totaled $97.3 billion. Canada counts the United States, China, Japan, South Korea, Mexico, and Russia as its major export markets.
All of this is bolstered by geography and abundant natural resources. According to Natural Resources Canada, the country boasts 46 percent of the world potash reserves not to mention its position as a global leader in nitrogen-fertilizer projects and its substantial natural-gas reserves.
Cutting edge research and development also play a major role in this flourishing industry. A number of leading universities are deeply engaged in the food sciences, including the University of Alberta, University of British Columbia, University of Manitoba, University of Toronto, McGill University, and University of Guelph. Canadian researchers have directed their ingenuity to brilliant ends, developing and producing a variety of dietary supplements and natural products for the health conscious, including omega-3 fatty acids from sources found in our oceans, forms of soy protein, canola oil-based unsaturated fatty acid, plant sterols, vegetable oil stanols and probiotics. Easing the process along is Canada knack for conducting speedy clinical trials, in which, according to KPMG Competitive Alternatives 2010 study, Canada outpaces Germany, Italy, Japan, the UK and the US.
These impressive numbers and capabilities have not escaped the notice of almost 100 foreign enterprises that have launched Canada-based greenfield projects in the sector. As of 2010, FDI in Canada food and beverage sector totaled $22.7 billion, according to Foreign Affairs and International Trade Canada, Trade and Economic Statistics. Now is the perfect time to become part of this thriving business community.
Functional and Natural Foods and Health Products
In today world, agri-food encompasses both growing traditional staples and developing new ingredients and sources of nutrition for various products and supplements. In Canada, almost 700 companies are doing just that and generating $3.5 billion in annual revenue in the process.
Any discussion of the agri-food business today necessitates a more sophisticated view of what constitutes food and nutrition. Two major categories within the industry are functional foods and natural health products. Canada excels in producing and designing both of these.
According to Health Canada, functional food is similar in appearance to (or may be) a conventional food that is consumed as part of a usual diet, and is demonstrated to have physiological benefits and/or reduce the risk of chronic disease beyond basic nutritional functions, i.e. they contain bioactive compounds.br />
Health Canada describes that natural health product is a product isolated or purified from foods that is generally sold in medicinal forms not usually associated with foods. A natural health product is demonstrated to have a physiological benefit or provide protection against chronic disease.br />
Alongside manufacturing products like omega-3 fatty acids, probiotics and fermented beverages, Canada has brought new products into being, from flax bio-actives and fibre-based prebiotics to berry-based polyphenolic antioxidants. Canada is also a leading combatant in the fight against diseases plaguing the food industry, including the devastating poultry illness known as necrotic enteritis. But perhaps the most notable achievement on Canada list of achievements in the natural health sector is its creation of canola oil (the shortened name for anadian oil, low acid.
Canola oil, found in pantries across the globe, was created in the 1970s by Canadian plant breeders who were using it for industrial purposes. By gradually changing the fatty-acid profile of what was initially an industrial product, researchers gradually turned it into an edible substance for both humans and animal livestock. Today, this wonder-oil accounts for $15 billion of Canada annual economy and acts as a magnet for foreign investment. Among the investors in this lucrative oil are Bayer CropScience and BASF.
These two companies are part of a much larger group of heavy-hitting foreign investors pouring money into Canada natural health products industry now thriving across the country. One recent example includes Ocean Spray Cranberries, which in 2012 opened a $26 million receiving station in Richmond, British Columbia -- one of the world largest region for growing the coveted berry. Meanwhile, another example can be seen on the far eastern side of the country in Prince Edward Island, where specialty crops giant Technology Crops International built an oilseed-processing facility in 2011 where it produces custom refined oils.
Fine Foods and Other Specialties
Riding the wave of health-conscious trends, Canada is on the leading edge of refining snack foods to include healthier and organic options. Today, snacks are not limited to what we traditionally think of as unk food Snacks made with hemp seeds and root vegetables -- beets, parsnips, carrots and sweet potatoes to name a few -- provide healthy alternatives.
Confectionary companies, in particular chocolate manufacturers, are also doing a brisk trade around the globe today. Canada is no exception, with its confectionary exports growing by three percent on average annually for the past five years. Since 2004, major European chocolate producers Ferrero of Italy, Swiss-based Barry-Callebaut and ChocMod of France have poured $475 million into chocolate production facilities in Canada since 2004.
Another intriguing area for new foreign investors in Canada can be seen in the specialty foods sector. Facilities to produce more exotic edibles like kimchi, foie gras, prosciutto, and soybeans used to make tofu are being opened and supported by both locals and enterprising immigrants.
Other major investors are setting up shop across the country. Since January 2012, French yogurt producer Yoplait subsidiary Liberte has announced it will spend $45 million to modernize its plant in Quebec, the American firm Cargill announced it will add a refinery facility to its canola-processing plant in Saskatchewan, SPF Canada, a unit of the French Group Diana SAS, will build a new $4 million plant in Quebec to make pet food flavourings, and the American DuPont Pioneer has opened a $15 million facility for the breeding and production of canola and soybeans in Ontario, just to name a few examples.
Meanwhile, the French firm Bonduelle said it will spend $13 million to expand its Quebec plant, a move that will help the canned and frozen vegetable giant ramp up production and create new products. And in the eastern province of Prince Edward Island, Indian nutritional ingredients giant OmniActive Health Technologies has opened an R&D center. Foreign investors Kellogg, Danone, MonaVie, RFI Ingredients and Bunge all have significant operations in Canada as well.
Speaking at the Financial TimesGlobal Investment Series: Focus on Canada forum in Chicago, Ferrero President and CEO Allan Cosman summed up the chocolatier company reasons for choosing Canada over other NAFTA member countries for its new North American facility:
olitical and societal context were very important (location factors). Our advantage in Canada, around a multicultural, business-friendly, and multilingual environment, was particularly attractive to Ferrero,Cosman said. Canada) parliamentary system, with a federal and provincial structure, was understood by Europeans and considered successful and stable.
Alongside these practicalities, Cosman also pointed towards some of Canada softer yet equally compelling selling points. The combined effect of these factors led Ferrero to select Brantford, Ontario as the site of the facility, in which the company initially invested $400 million, before carrying out later expansions in 2010 and 2012.
he country was viewed as modern and progressive,Cosman said. everal third-party studies reinforced quality-of-life ratings as amongst the highest worldwide. These factors, combined with a strong financial argument, made Canada the preferred location for the North American plant investment.?
Canada has a lot to offer and welcomes investment and offers a great base to North American markets. To learn more, speak with an advisor in Canada Trade Commissioner Service in your market for comprehensive, confidential and free of charge services for investors, including: help in making the right government contacts in Canada; referrals to independent investment professionals such as lawyers, bankers and accounting firms; help in arranging site selection visits; as well as information and advice about doing business in Canada.