Canada’s Food Industry: Industrial Outlook, Winter 2006

Canada’s food manufacturing sector is beginning to improve, after shrinking in the closing months of 2004 and early 2005 because of stagnant domestic demand, a decline in prices and weak exports due to the strong Canadian dollar.

A modest improvement in output growth will combine with an equally modest outlook for price appreciation to generate unexceptional growth in revenues, which will average 3.9 per cent per year between 2006 and 2010. But cost growth will be even more subdued over the forecast period, allowing for a steady improvement in profits. Thus, dollar profits will rise to $1.9 billion in 2006, after declining by nearly 30 per cent in 2005. By 2010, profits are expected to reach $2.5 billion.

The outlook includes a special focus on dairy regulations and on the low productivity growth in the broad food manufacturing sector that stems from weak investment spending.