Canada's future in food processing

by Susan Reidy
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Murad Al-Katib, president and chief executive officer of AGT
During the Canadian Global Crops Symposium, AGT’s Murad Al-Katib said Canada needs to grow its food processing infrastructure. Photo by Susan Reidy. 
 
Value-added will be key to the success of the Canadian agriculture industry in the future, including more food processing, said Murad Al-Katib, president and chief executive officer of AGT Food and Ingredients, Inc.

Al-Katib addressed the issue of building Canada’s reputation and what is needed to grow the nation’s agriculture industry during his keynote address at the Canadian Global Crops Symposium at the end of March in Toronto, Ontario, Canada.

“In 10 years, we will be serving a different consumer base than Canadian agriculture is serving today,” he said. “That consumer base is going to be toward more value added.”

Canada has the opportunity to play in the new markets and growth drivers, Al-Katib said, including health, nutrition, sustainability and middle-class consumer spending. It won’t just be about meeting the demand but meeting the right demand.

“The instant gratification of data and the ability with your smartphone to have everything at your fingerprints is what the agriculture sector’s challenge is going to be as we move forward,” he said. “How do we position our sector using digitization and technology to serve that consumer base that is different than the consumer base we serve today?”

The nation has an undeveloped value chain, and only processes 50% of its agriculture inputs.

“We lack investment in processing infrastructure,” he said. “Government spending on risk management has kind of been the focus. The government has been investing where there is market failure and not investing where we are attempting to boost our productivity and enhance technology.”

Canada’s advantages, challenges

Canada already has many of the components needed for a successful food processing industry, including transportation.

“The availability of containers and intermodal in Canada have changed favorably as a result of the fact imports are coming in from Asia and we are part of the backhaul back into the world market,” Al-Katib said. “Containers, as we move more into the case for food processing, are going to be a very important mode.”

It costs about $85 a tonne, the same to haul a hopper car from Regina to Toronto, as it would to move food product by intermodal to anywhere in the United States, he said.

Canola should be the model of success, he said. The joining of research, innovation and then the building of domestic crush capacity has transformed Canada from being a canola seed exporter to an exporter of meal and oil.

“We think the same thing can happen in wheat and we think the same thing can happen in pulses,” Al-Katib said.

Food processing is the second largest industry in terms of the value of production and it represents 2% of the GDP. But the industry only has a 2.8% share of global exports, he said. If that can double by 2027, the industry could see a $19 billion gain.

Canada’s other advantages in growing its agriculture industry include natural resources, a strong network of research and development facilities and a diverse consumer base that stimulates product development, Al-Katib said.

The nation also has a history of being an early adopter of technology.

“The ability to implement technology on large-scale farms is one of our advantages in our sector,” he said. “Try doing that on one-acre farms in another area of the world. That becomes one of the big opportunities we have along with our political stability and our goodwill.”

However, the industry also faces its share of obstacles, Al-Katib said, such as trade barriers and regulations. The country does not have preferential trade agreements with three of the five biggest potential export markets: China, India and Japan.

“Until we recognize and we secure preferential access through trade agreements, we’re going to be in trouble,” he said. “All of the things that we’re struggling with in countries like India today would be subjects of a comprehensive trade agreement. We need to continue to urge that type of movement.”

Currently, Canada has a 5.7% share of global direct-from-farm agri-exports, putting it fifth behind the United States, China, the Netherlands and Brazil.

“I’m not happy about being No. 5; it is not something we should celebrate,” Al-Katib said. “We’ve got a lot of people coming right behind us and ahead of us. I think with a concerted effort, we can boost our share.”

Al-Katib said projections show that Canada can reach 8% market share, putting it second only to the United States. That increase would translate into $11 billion of growth in the sector by 2027.

Canada can reach those goals through productivity gains and breeding and agronomy, Al-Katib said.

“We continue to see certain lands becoming more productive,” he said. “We are seeing broader irrigation programs that will allow us to boost production as we move forward.”

Economic strategies

How Canada will help feed 9 billion people in the decades ahead will be addressed in the Canadian government’s Economic Strategy Tables. The tables are a new model for industry-government collaboration and include six topics: advanced manufacturing, agri-food, clean technology, digital industries, health/bio-sciences and resources of the future.

As part of the Agri-Food Table, which Al-Katib chairs, a food policy framework is being developed. Bottlenecks are being examined and actionable items will be prepared by July or August, Al-Katib said. By fall, the plan should be presented to Navdeep Bains, minister of innovation, science and economic development.

The building blocks of Canada’s agri-food growth strategy include setting a target of increasing agri-food exports by $30 billion over the next five to 10 years. This would put Canada among the top three in agri-food exports. It also includes launching a few bold pilot programs that small and large players can rally behind across key sub-sectors, Al-Katib said. He envisions aligning this building block with the Innovation Supercluster Initiative, the government’s plan to invest C$950 million in business-led projects with the greatest potential to energize and grow the economy.

“The Superclusters must be aligned with the bold pilots for the national strategy implementation,” Al-Katib explained. “If you put C$150 million in the ag sector and match that with C$300 million from the private sector, you have a bold, ambitious pilot to go along with a bold and ambitious aspiration.”

AGT, Ag-West Bio Inc. and more than 60 innovation partners have joined the supercluster “Unleashing the Potential of Canadian Crops.” Its mission is to capture the export market opportunity for plant-based food and feed by stimulating collaboration on novel technologies and value-added supply-chain infrastructure.

More than C$400 million in private sector money has been committed to the program, which will include components in business incubation and financing; value-added processing; genomics and breeding research; food processing and more.

One project involves supply chain innovation tracking chickpeas from a farmer’s field in western Saskatchewan, through handling, transport, processing, caning, distribution, onto the shelves and to the consumer. The block chain enabled and certified system will gather data along the way on production, sustainability and more.

“Those are the type of projects we are going to be doing on a pilot scale and hopefully commercialize into a broader system,” Al-Katib said.

 

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