Canada’s Food Industry: Industrial Outlook, Summer 2006

Canada’s food manufacturing sector continues to struggle, because the strong Canadian dollar is limiting export growth while increasing import competition for food processors. After dropping by 20 per cent last year, overall sector profits will climb back up by only 2.6 per cent this year, to $1.8 billion, thanks to moderate growth in domestic demand.

Given this weak growth, food manufacturers are cutting costs, leading to a drop in employment of 3.3 per cent this year. But the sector’s fortunes will begin to improve next year.

A modest outlook for output growth will combine with an equally modest outlook for price appreciation to generate unexceptional growth in revenues over the next few years. However, cost appreciation will be even more subdued, allowing for a steady improvement in profits. By 2010, overall profits are expected to reach $2.4 billion.