Monday, December 24, 2012

Food processors called laggards

The Conference Board of Canada says the food industry “has become an innovation laggard and does not appear to be very concerned about it.”

“Canada’s food processors are not increasing –in fact, they are barely maintaining – global market share in the face of competition from established and new players,” the board says in a new report.

“Most Canadian firms in the food industry don’t think innovation is a priority,” says the board.

The combination of low investment in research and low priority on innovation explain why Canada’s share of global food and drink exports declined from 4.2 per cent in 2000 to 3.2 per cent in 2010, says the Conference Board. The share increased to 3.9 per cent last year.

Brazil’s share nearly tripled and China’s share almost doubled and now they each hold 6.3 per cent.
The Conference Board’s recommendations are that:

-      -  Food processors should innovate to create new products for emerging and fast-growing markets.

-       - Small and medium-sized companies should innovate for niche markets to increase their profits. “Innovation is as much a survival strategy as a growth strategy.”

-      - Supermarket chains should use the data they collect in their loyalty programs to ensure that their product innovations meet consumer demands.

-     -  Retailers and food processors should improve their working relationships, clarifying retailers’ expectations about product volumes, shelf fees, food quality and food safety, because that would reduce product-innovation waste.

-      - Governments should promote more competition and export market access. “More innovation could be stimulated by transitioning sheltered subsectors to fair but competitive environments,” says the report. -It may have in mind the supply-managed dairy and poultry sectors.

-       - The Food and Drugs Act needs to be overhauled “to accelerate innovation in healthy food and food safety.”

-       - Government funding for food research and innovation “should be better aligned with innovators’ financial needs. Currently many firms with genuine financial need are failing to access public research and development funds for innovation. Savings could be redirected . . . (to) the primary agriculture sub-sector where innovation returns on public research and development have historically been strong.”
Y(The new five-year federal-provincial Growing Forward program for farmers puts a higher priority on innovation.)

-      -  “Incent more food innovation with social value. Governments should adjust regulation and use financial incentives to support and stimulate healthier and more environmentally-sustainable food innovation.”