Innovation must to flatten the curve, improve productivity: CFIN

A white paper by the Canadian Food Innovation Network (CFIN) argues that well-funded innovations can address some of the most pressing issues in the food and beverage processing sector, such as labour, rising input costs, food waste, and geopolitical risks.

Food prices have increased by 21.6 per cent in the last three years and almost 7 million people have experienced food insecurity including almost 2 million children. Further, food price inflation has reached its highest rate since the early 1980s, with prices rising by an average of 10 per cent in 2022 and a further five-seven per cent in 2023.

The white paper, Unpuzzling Food Inflation: How Innovation Adoption by Canada’s Food Processing Sector will Flatten the Curve, highlights the various factors contributing to the rise in food prices—high input costs, labour expenses, staffing shortages, and geopolitical risks. It also explains how the COVID-19 pandemic worsened the situation, causing supply chain disruptions and further driving costs.

The white paper emphasizes the need for innovation to control food prices and reduce food insecurity.

Labour challenges and rising input costs

Canada’s F&B businesses are struggling with labour shortages, impacting production and increasing consumer prices. The Canadian Agricultural Human Resource Council (CAHRC) reports a deficit of 50,000 workers and predicts 66,800 retirements by 2030, costing the sector up to $3.6 billion annually.

The Canadian Federation of Agriculture (CFA) and Food and Beverage Canada (FBC) found manufacturers are typically 25 per cent understaffed.

Kristina Farrell, FBC CEO, said traditional policy tools help the industry address immediate labour shortfalls, but they cannot fully account for shifting demographics and an ageing workforce.

“The systemic and chronic labour shortfalls in our sector require an innovation-based approach – such as the businesses and stakeholder ecosystem that CFIN is fostering – to drive technological innovation in a way that complements and builds workers’ skills, and empowers them to be more productive,” Farrell is quoted as saying in the white paper.

Shelf life and food waste

The World Food Program (WFP) reports that throughout the supply chain, one-third of global food production is wasted annually. In Canada, 58 per cent of produced food is wasted, valued at $49 billion. This waste contributes significantly to greenhouse gas emissions, with over 56 million tons of GHGs emitted annually in Canada.

Michael Graydon, CEO of Food, Health and Consumer Products of Canada said the country’s F&B sector is working to reduce waste by finding innovative ways of addressing waste in manufacturing and production processes.

“Due to the huge scale of the issue, Canada needs to leverage innovation to create new manufacturing processes, recycling and re-use options, and food preservation techniques to truly change the waste dynamic,” Graydon said in the white paper.

Commercial dynamics in the F&B sector

Most of the 7,600 F&B processors in Canada are small or medium-sized businesses with fewer than 100 employees. These companies often lack the resources for innovation and competitive pricing compared to larger brands. New vision and artificial intelligence (AI) technologies are helping smaller processors by providing accurate data to optimize production and reduce costs, ultimately preventing future food price increases.

The white paper mentions several F&B companies with innovations in the foodtech space. Vancouver’s Purdy’s Chocolatier has reduced the cost of its ingredients and improved the nutritional profile of its chocolates by testing new food ingredients. Toronto’s Laplace Robotics has deployed AI to enhance the functionality of robotic and vision systems on manufacturing lines, thereby improving productivity and quality in food manufacturing. Plan Automation, Bolton, Ont., has developed an X-ray system to reduce food waste by identifying contaminants in food batches.

In the foreword section of the white paper, CFIN CEO Dana McCauley said, “Canada is ripe for innovation in the food industry as a solution to competitiveness, productivity, and food inflation challenges.”

To comprehensively address rising food costs, Canada must accelerate innovation in the food and beverage manufacturing sector, stressed the white paper. This will require time, dedication, and investment, but it is achievable, McCauley added.