Ottawa-Canada’s agri-food sector is not receiving the support it needs to reach its growth potential, says the RBC Thought Leadership.

The agri-food sector is currently undercapitalized by domestic growth funds and accounts for only two per cent of government-backed growth and brought in an estimated four per cent of total growth funds invested in Canada during the last five years.

“Venture and institutional funds have attempted to flow but fragmented governance across provinces and sector fit for funds have pushed agrifood to the sidelines of mainstream approaches to deploying growth capital,” RBC said.

Domestic agri-food companies got a piece of the growth capital boom of $10.5 billion between 2015 and 2021. Today, growth investment in Canadian agri-food is lower than it was a decade ago, with values down 32 per cent and deals by 29 per cent.

To align investment with Canada’s growth and sovereignty ambitions, funds like the $1B Venture and Growth Capital Initiative announced in the 2025 federal budget could establish agri-food lanes with tailored tools.

Other nations – including Finland, Japan, and the United Arab Emirates – are explicitly linking food security, productivity and industrial policy through coordinated growth capital strategies.

“The opportunity for Canadian investors and innovators – public and private – is to better calibrate and scale capital and businesses to anchor economic value domestically.”

“This starts at the idea stage, improving universities’ weakening role in innovation and reverse trends in business outsourced investments to universities for agri-food R&D, which have fallen 64 per cent during the last five years.”

Canada aims to attract $1 trillion in investment during the next five years to drive growth and to get the most from this investment it needs to put its existing infrastructure, growth and venture funds to work for potential high-growth sectors, such as agri-food.

While the 2025 federal budget identified agri-food as one of three sectors in which Canada enjoys a strategic global advantage, domestic agri-food accounts for less than two per cent of growth-oriented government backed funds.

Dur the last five years, agrifood companies have only captured four per cent of total growth capital investment in Canada, which agri-food investors characterize as a stark underinvestment in the sector, RBC said.

If Canada were to align its growth capital investment in agri-food with the industry’s contribution to GDP as a benchmark to build from, it would require an estimated $13 billion from now until 2030 – a 36 per cent boost in investment relative to the last five years.

“Global disruptions during the last five years highlight the need to advance Canada’s sovereign capacity in agriculture and food innovation, production and processing. And the rest of the world is not waiting for Canada to perfect its approach.”

Without immediate action, Canada risks capping agri-food sector’s growth potential by not hosting more value-add processing domestically.

The agri-food innovation ecosystem could be hollowed out as companies and talent look to other countries, including Australia, Japan and Germany, which are growing their investment in R&D and commercialization.

And it risks irrelevance in the era of disruptive technologies—including AI-driven decision tools, gene editing, biological inputs, automation, robotics and novel food processing—that will shape productivity gains in the decades ahead.

Transforming Canada into an agri-food superpower requires a targeted, nimble approach to capital and growth that navigates the sector’s restraints and fulfills its true potential.

This news report prepared for National Newswatch