Ottawa-While the food and beverage manufacturing has become a major component of Canada’s economy and agri-food system, it could be contributing more with better government support, says a report from the Canadian Agri-Food Policy Institute (CAPI).

The sector already purchases more than half of Canadian agricultural production, supplies most processed food and beverages sold domestically and supports more than 300,000 jobs, the report said.

“Canada has a broad range of policies and programs affecting processing investment, but they do not yet operate as a connected system. Support is delivered through agricultural frameworks, industrial programs, tax measures, provincial incentives, workforce initiatives, regulatory services and trade tools.”

The sector has important vulnerabilities such as concentrated export dependence, uneven processing depth across products and regions, a limited number of facilities and governments have insufficient information on capacity, utilization, facility condition and closure risk.

Even when firms develop new products, they struggle to secure the equipment, technical capability, working capital and financing required for sustained commercial production.

Infrastructure, labour, regulatory approvals, transportation, inputs and access to customers are among their other challenges.

“Public support should therefore be assessed by whether it changes an investment decision, helps a project reach operation and results in capacity that remains commercially viable.”

The report says the current policy framework should be strengthened to improve the conditions for investment, help viable projects overcome constraints, provide a clearer route to commercial production and strengthen the evidence used to direct and evaluate public support.

The report recommended that the federal and provincial governments continue using tax policy, regulatory reform and investment-attraction measures to support the sector.

They should also maintain competitive capital-cost treatment for processing equipment and facilities, examine the uptake and effects of tax incentives by firm size and investment type and establish clearer regulatory service standards and approval timelines.

They should also reduce unnecessary duplication between federal and provincial requirements, improve coordination among investment-attraction agencies and target foreign and domestic investment toward opportunities that add productive capacity, technology, market access or supplier relationships in Canada.

Federal and provincial governments should avoid competing primarily to shift a planned facility from one province to another without increasing national processing capability.

Projects receiving substantial public support or identified as addressing an important economic, regional or supply-chain gap, should have a lead public organization responsible for coordinating the conditions required for the investment to proceed and operate.

The private sector should remain responsible for the business case, customers, private financing, project delivery and commercial risk. Public involvement should focus on constraints that individual firms cannot resolve alone or that require several public decisions to align.

Agriculture Canada should work with Economic Development Canada, regional development agencies, Farm Credit Canada and provincial organizations to create a clearer route from product development to first commercial production and later expansion.

Assessments of new projects should examine where new capacity, modernization or preservation would create material value and where proposed projects would duplicate underused capacity.

Projects with significant public support should be monitored from approval through commercial operation.

There should be a focus on whether firms are able to demonstrate credible demand, realistic production costs, capable management and a viable operating model, CAPI said.

Progress should be measured by whether firms reach commercial production, how long the transition takes and whether they sustain production and sales.

Acting on these recommendations would improve the likelihood that public and private investment reinforce one another. It would also reduce the risk that funding is committed without resolving the constraint preventing a project from reaching production or remaining viable.

This news report prepared for National Newswatch