They are attracted by a wide variety of agricultural products, a robust inspection regime that meets or exceeds most global standards, currency valued more than 20 percent below the U.S. dollar, a strong talent base, and forward-thinking provincial and federal governments. Due to the North American Free Trade Agreement (NAFTA), Canada enjoys access to over 460 million consumers and a combined GDP of $18.7 trillion across Canada, Mexico, and the U.S. When the historic Canada and European Union Comprehensive Economic and Trade Agreement (CETA) comes into force in 2016, almost 94 percent of EU agricultural tariff lines will be duty-free for Canadian agri-food companies.
In an era of climate change and drought that is dramatically impacting many agricultural regions of the world, it is well worth noting that Canada contains the world’s largest renewable fresh water resources to support its nearly 70 million hectares (170 million acres) of farmland.
Additionally, successive reductions in the U.S. cattle herd over a prolonged period due to drought and high feed prices resulted in extremely tight supplies and record prices in 2014. Hog prices also increased significantly as the spread of Porcine Epidemic Diarrhea virus (PEDv) led to a high level of mortality in piglets and reduced U.S. supplies by around 2 percent.
Canadian livestock producers benefitted from these conditions. Total Canadian livestock receipts increased by 19 percent in 2014 to reach a record $25.5 billion, largely due to the price impact of declining herds and low slaughter animal availability. Prices for slaughter animals increased by 25–30 percent. In tandem with a declining cost of feed grains, this translated into sharply higher average incomes for Canadian hog and cattle farms.
International Food Companies in Ontario
-
Olivieri Foods Limited
In 2013, Canada Bread Company Ltd. sold Olivieri Foods, its fresh pasta and sauce business, to Spain’s Ebro Foods in a $120 million deal.
Hamilton, ON -
Dr. Oetker GmbH
In 2014, Germany’s Dr. Oetker GmbH opened a $135 million frozen pizza plant, warehouse, and distribution center in London, Ontario.
London, ON -
Ontario Agri-Food Technologies (OAFT), Soy 20/20 and The University of Guelph
The Ontario Food Cluster is the nexus for strong talent links between industry and public sector R&D via networks and organizations.
Guelph, ON
By the numbers, the Canadian agriculture and agrifood sector:
- Generates $106.9 billion, accounting for 6.7 percent of Canada’s GDP
- Provides one in eight jobs in Canada, employing over 2.2 million people
- Is the largest of all manufacturing industries in Canada, accounting for 16 percent of the total manufacturing sector’s GDP in 2013, and 16.7 percent of all manufacturing jobs
- Is focused on U.S. exports, with the United States accounting for 50.8 percent of total exports; China accounting for 11.2 percent; and Japan, the EU, and Mexico accounting for another 17 percent combined
- Is seeing strong export growth, with an increase of 10.8 percent in 2013 to $23.4 billion to the U.S., while exports to non-U.S. markets grew by 6 percent to $22.7 billion
- Enjoys government R&D investment of $643 million, and a further $130 million from the private sector
- Is supported by Agriculture and Agri-Food Canada’s “Growing Forward 2” program to enhance the competitiveness of agri-food sectors (A federal-provincial-territorial initiative, the program will provide $3 billion of funding between 2013 to 2018.)
- Is on a sustained growth trajectory, with the value of food processing shipments more than doubling between 1992 and 2013 to $98.8 billion
Ontario offers Canada’s largest concentration of agri-food companies — 3,200 strong — that choose to invest in what’s called the “Ontario Food Cluster” for its easy proximity to the U.S. market and unmatched diversity of 200 agricultural commodities from 57,211 farms, including 669 certified organic farms. Those farms are bolstered by a provincial talent base of 740,000 researchers, industry employees, and agricultural innovators who have built a reputation for reliable, sustainable sources of raw materials, state of-the-art automated food-processing methods, and food safety standards.
The Canadian agriculture and agri-food sector generates $106.9 billion, accounting for 6.7 percent of Canada’s GDP. Five recent foreign direct investments in Ontario underline Canada’s appeal for international agri-food companies:
In 2013, Canada Bread Company Ltd. sold Olivieri Foods, its fresh pasta and sauce business, to Spain’s Ebro Foods in a $120 million deal. The next year another foreign company came shopping for the Canada Bread Company, with its sale to Mexico-based Grupo Bimbo for a blockbuster valuation of $1.8 billion.
Also in 2014, Germany’s Dr. Oetker GmbH opened a $135 million frozen pizza plant, warehouse, and distribution center in London, Ontario — its first in North America — capable of producing 27 million pizzas per year. Dr. Oetker then promptly purchased Canada’s McCain Foods’ pizza business to further its strategic goal of establishing itself as a leader in Canada as well as expanding its position in the U.S. Northeast, with the goal of manufacturing 50 million pizzas per year .
Not to be outdone by Dr. Oetker, Aryzta AG, a Swiss-based global food business, purchased Oakrun Bakery, and its 237,000-square-foot plant that produces fresh and frozen products, for $340 million. Such investments are happening elsewhere across Canada. After its investments in Ontario, Grupo Bimbo purchased the iconic Canadian snack cake brands Jos. Louis and May West, along with the bakery division of Quebec-based Saputo Inc. for $120 million in late 2014. Then in June of this year, America’s WhiteWave Foods Co. acquired Vega, a British-Columbia-based maker of plant-based nutrition products like powdered shakes and snack bars, for $550 million.
R&D Talent and Innovations
International agri-businesses appreciate the Canadian talent story. Canada invests more in higher education R&D as a share of the economy than does any other G7 country, and it offers one of most favorable tax treatments for R&D among the G7. The Canadian system of tax credits and accelerated tax deductions covers eligible costs including agri-food business salaries, overhead, capital equipment, and materials. Canadian tax credits can reduce the aftertax cost of $100 in R&D to less than $41.
As an example, the Ontario Food Cluster is the nexus for strong talent links between industry and public sector R&D via networks and organizations including the Advanced Foods and Materials Network (AFMNet); Soy 20/20; Ontario Agri- Food Technologies (OAFT); Program in Food Safety, Nutrition and Regulatory Affairs; and the Guelph Food Technology Centre. Each year the center consults with over 1,500 businesses in the food and beverage industry, trains more than 3,000 professionals, and provides services that reach across the globe to 26 countries in eight languages.
- Omega-3 fortified eggs, milk, and cheese
- Nearly 100 varieties of soybeans, many destined for Asian markets for tofu, natto, and soymilk, based on numerous partnerships with companies and organizations
- Cattle vaccine against shipping fever Bovine Respiratory Disease (BRD) complex, recently licensed to Boehringer Ingelheim Vetmedica Inc.
- Human immunotherapies against Clostridium difficile (C. diff) licensed to Stellar Biotechnology
- The world’s first edible, organic, monodisperse nanomaterial derived from corn with applications in personal care and nutraceuticals
- Mars Horsecare Perform’N Win electrolyte drink for racehorses
- Yukon Gold potatoes
While Canada has a reputation for vast expanses, it’s a little-known fact that most Canadian cities are within a two-hour or less drive from the U.S. border. Recent multibillion-dollar investments in port, rail, road, and air transport offer supply-chain efficiencies.
Ontario offers Canada’s largest concentration of agri-food companies — 3,200 strong. Canada’s welcoming approach to international companies is reinforced by the fact that one in five Canadians has a mother tongue other than English or French; Asian and European languages are spoken extensively. And Canada leads the G7 for the administration of justice and offers equal opportunities for all individuals.
Given that the agriculture and agri-food sectors generate $106.9 billion or 6.7 percent of the national GDP and provide one in eight jobs in Canada, that welcoming approach is particularly responsive to business expansion in these sectors. Canada offers an uncapped number of work permits available to foreign workers, a fast and straightforward process for intra-company transfers, and special programs to help recruit required R&D talent.
Are you hungry yet? Canada’s ready to help your company feed the world.