Report of Canada’s Economic Strategy Tables: Agri-food

From: Innovation, Science and Economic Development Canada

Canada's agri-food sector spans a wide range of industries—from primary agriculture and aquaculture to food, seafood and beverage processing. Our passionate and hard-working producers, processors and value chain partners have earned Canada a global reputation as a supplier of safe and high-quality products. With the world's population projected to rise to 10 billion in 2050, there are huge opportunities to supply the growing global demand for protein. Seizing these opportunities is something we can do, but it won't be easy. The sector faces intense competitive pressures in global and domestic markets, which means we need Canadian leadership in innovation as well as an agile regulatory system and enabling infrastructure to secure our position as a preferred supplier to high-value markets.

Targets

$140B in domestic sales by 2025, an increasefrom $110 billion in 2017

$85B in exports by 2025, an increase from $64.6 billion in 2017

In February 2017, the Minister of Finance's Advisory Council on Economic Growth identified Canada's agri-food sector as having great potential to be a driver of economic growth for the nation. In Budget 2017, the Government of Canada presented a challenge to the sector by setting a goal of $75 billion in exports by 2025.

After assessing global and domestic trends and growth opportunities, the Agri-Food Table set a more ambitious target of $85 billion in agriculture, agri-food and seafood exports by 2025 (32% increase from $64.6 billion in 2017). In acknowledging the importance of the Canadian market, we decided it was equally important to set a target for the domestic market, which we have set at $140 billion in sales of agriculture and food processing products by 2025 (27% increase from $110 billion in 2017). These growth targets will position Canada as a global leader in high-value markets and reclaim previous lost domestic opportunities. Achieving these targets will require bold action in regulations, infrastructure and market readiness, supported by innovation and a future fit workforce.

Figure 1: Agriculture, Agri-food and Seafood Exports, 2005–2025

Figure 2: Domestic Agriculture and Food Processing Sales, 2005–2025

What we need to overcome

There are several critical obstacles standing in the way of us achieving our goals. The following elements need to be overcome in order for us to realize our ambitions:

• Internal regulatory barriers hinder innovation and competitiveness
• Investment is lagging across all sectors, particularly food and beverage processing
• Lack of strong Canadian firms to lead internationally
• Acute infrastructure bottlenecks disrupt flow of goods within Canada and to export markets
• Lack of reliable broadband limits ability to take advantage of new technologies
• Tight labour markets, restricted access to foreign workers, and evolving skillsets for the sector all pose challenges
• Trade barriers are increasing and becoming more complex

What we need to become

For Canada's agri-food sector to succeed, we need:

• An agile regulatory system that supports innovation, provides certainty to industry, and protects health and safety
• A business climate that supports the scaling up of Canadian companies and makes us a top country in which to invest
• A smart, interconnected transportation system that is free of bottlenecks
• Broadband and IT infrastructure accessible in all communities and by all businesses
• A labour force that meets the range of skills and experiences required to achieve sector growth targets
• Access to global and domestic markets where goods are traded more freely

The actions we propose

Based on research, global best practices and insights shared at Table meetings, we propose the following five key areas to strengthen the Canadian agri-food sector:

Figure 3: Five key areas to strengthen the Canadian agri-food sector

The competitiveness of Canada's agri-food sector is stymied by the 'tonne of feathers' dilemma, whereby hundreds of well-intentioned and seemingly unobtrusive regulations add up to weigh down our performance, productivity and growth.

Proposal

An agile regulatory system that promotes the competitiveness of the agri-food sector and moves at the speed of commerce

Why this matters

Canada's regulatory system provides globally renowned quality and safety assurance to Canadians and our trading partners. Regulatory safeguards are, of course, a necessary part of producing, processing and selling food, and essential for protecting consumers, producers and other value chain stakeholders. Unfortunately, Canada's system is increasingly inhibiting industry's nimbleness by restricting innovative practices and products, by being slow to make approvals, and by not being coordinated across departments and levels of government. Most importantly, there is no central body that looks at the cumulative impact of regulations from multiple departments on the sector's competitiveness.

To make matters worse, amending regulations in Canada–even those regulators agree areredundant–is usually a long, technical process that draws considerable resources. Canada needs its regulatory system to move at the speed of commerce.

Figure 4: Global Competitiveness Index (Burden of Government Regulation) for OECD Countries

Canada is facing intense competition from other jurisdictions, many of which have more agile regulatory environments. If we hope to achieve our vision and growth targets, it is imperative to have in place a regulatory system that works in tandem with industrial growth strategies and supports the sector's competitiveness.

What we recommend

The Government of Canada set in motion a regulatory reform agenda that includes a targeted review of regulatory requirements with a focus on agri-food and aquaculture. We encourage the government to use this review asan opportunity to support industry competitiveness.

Our call is to:

Fundamentally transform regulatory processes to bolster Canada's agri-food competitiveness by reforming regulators' mandates to include innovation, growth and overall sector competitiveness as a core consideration

The health and safety of Canadians are, without question, of paramount importance. In addition, our world-renowned food safety system is a key part of our national brand and helps secure access to markets. However, more regulation is often mistakenly assumed to automatically lead to better health and safety outcomes. The fact is we need smarter regulation to ensure that legitimate risks are mitigated at the lowest economic cost. The mandate of Canadian regulators, therefore, should be modernized to reflect this dynamic (including the cumulative impact on competitiveness), and be based on the principles of investor confidence, be outcome-based, and consider the full range of regulatory and non-regulatory tools available. During our Table meetings, members were unanimous that one of the key elements essential to the success of this initiative is the need for regulators to do a better job of consulting earlier and more often to fully appreciate the competitiveness challenges faced by the regulated party as well as the sector more broadly.

Establish a permanent and independent panel of industry experts to advise regulators

This panel would perform a "challenge function" by identifying efficiencies and enhance opportunities for industry participation. It would also work with regulators to regularly review the stock of all regulations, technical guidance and associated policies to ensure they are necessary, appropriate and effective in achieving intendedobjectives in the most cost-effective manner possible.

The panel would identify unintended impacts and find ways to mitigate or eliminate them as quickly as possible and identify opportunities for efficiencies, such as alternate service delivery opportunities, compliance strategies that recognize a key trading partner's assessment of product safety, and third-party accreditation.

Take immediate action to address specific regulatory challenges that are hurting the agri-food sector's competitiveness

Overly prescriptive and process-driven regulations are preventing companies from adopting innovative productsand production systems, responding to shifting market opportunities and accessing the latest technologies used by competitors. Regulators need to work with industry, as well as the panel recommended above, to identify opportunities to achieve our strict health and safety outcomes at the lowest cost to the economy.

Pilot Projects

Pilot projects and regulatory sandboxes can be used to test the efficacy of new technologies, products, production techniques and compliance systems in a safe space and demonstrate their effectiveness at improving the sector's competitiveness under real-world conditions. The Table recommends the following pilotprojects be launched immediately:

• Explore alternative pathways to front-of-package labelling that will achieve the intended outcomes of the Healthy Eating Strategy
  • — Leverage the agri-food sector's experience reducing trans fats without resorting to strict labelling and warnings on food packages
• Explore innovative procedural tools and processes that allow changes to regulations that do not affect health and safety outcomes (such as Nestlé's example of fortified wheat flour in Kit Kat bars) to be made quickly and efficiently
  • — The pilot would identify best practices for regulatory agility and inform broader regulatory changes
• Increase regulators' use of digital tools and services to streamline transactions with industry by:
  • — Using e-certificates for plant and animal exports
  • — Working with industry on blockchain pilots to find opportunities to use secure digital ledgers for food traceability, transaction records, regulatorycompliance, etc.

Ongoing Regulatory Barriers

In addition to launching pilot projects, we recommend the government take immediate action to address the standing regulatory bottlenecks hurting the sector's competitiveness. There are many redundant regulations that were drafted under different market conditions and before the introduction of modern technologies. Failure to address these ongoing irritants will drag down the sector's competitiveness. The Table has identified the following issues for immediate action:

• Modernize the Canadian Grain Act to remove unnecessary/duplicative regulations
  • — For example, examining alternate service delivery opportunities and accrediting third-parties for inspection could bring efficiencies in the area of mandatory outward weighing and inspection currently performed by the Canadian Grain Commission. In addition, the process for grain classification needs to take into account market realities
  • — Modernization should not compromise producer protection
• Undertake actions to facilitate economic development in the aquaculture sector
  • — Using the Agriculture and Agri-Food Canada (AAFC) minor use Pest Management Centre as a model, establish an organization to generate data in support of minor use health products and drugs for aquaculture to keep Canadian producers on par with their competitors who are able to gain access to these products more quickly. This organization could leverage joint scientific reviews and findings fromrecognized credible global authorities
  • — Ensure Aquaculture Activities Regulations and license processes provide operational and economic flexibility
  • — Via a new Aquaculture Act (and any associated regulations), reflect the need for an economic growth approach for this sector
• Modernize Canada's regulatory approach for new technologies, with particular focus on precision breeding techniques (e.g., CRISPR), to ensure it continues to provide an efficient and predictable pathway to commercialization by:
  • — Improving guidance and clarity for product developers on the interpretation of Canada's novelty-based regulatory trigger
  • — Streamlining data requirements for assessment of bio-similarproducts (e.g., crop protection and animal health products)
  • — Undertaking greater cooperation with key trading partners—especially the UnitedStates—to reduce overlap and maximize efficiency by participating in joint reviews and work-sharing documents and information relating to the review of pesticides and other emerging technologies, products and processes
  • — Identifying efficiencies and enhanced coordination of requirements across the three separate safety assessments (i.e., human food, animal feed and environmental safety for novel products of biotechnology)
• Undertake a review of regulations pertaining to Product of Canada/Made in Canadalabels to respond to consumers increasingly looking to purchase Canadian products and enable greater industry usage of the claims (see recommendation for domestic branding initiative included in the market development and diversification section of this report)
  • — Use of provincial claims instead of national claim fragments themarketplace and reduces economies of scale

The Table has assembled a list of interprovincial regulations (see section on market development and diversification)

Tracking success

Canada will rank in the top 10 among Organisation for Economic Co-operation and Development (OECD) member countries for ease of regulatory burden by 2025. (The World Economic Forum ranked Canada 14 out of 36 OECD countries on its Global Competitiveness Index in 2017–2018.)

Proposal

Build a state-of-the-art transportation and IT infrastructure network

Why this matters

To support the growth targets of $85 billion in exports and $140 billion in domestic sales by 2025, Canada needs high-quality and resilient transportation and communications infrastructure.

A well-functioning trade-related transportation system is critical to Canada's reputation as a reliable supplier of high-quality products to Canadians and people around the world, and to long-term overall economic performance. New global regional trade pacts as well as population growth in Asia could radically transform what, where and how we ship in the future. But Canada's infrastructure is already struggling to deliver products to market in a timely, consistent manner, and long-term infrastructure planning is often muddied by short-term political considerations. If we are going to boost domestic sales and exports, we need to make transportation infrastructure development a strategic national priority.

Rural areas in Canada are disproportionately affected by a lack of access to reliable broadband service. The lack ofbroadband service in rural areas is a key bottleneck to why precision agriculture technologies and other digital tools have not been adopted as widely or extensively as they could — and should — be. While these precision agriculture technologies offer significant productivity gains for primary agriculture, universal broadband service in fact offers opportunities for all business that operate throughout the sector, including logistics, advisory services, food and beverage processing, and aquaculture. Potential benefits of expanding broadband service to under served areas includes enabling greater automation with Industry 4.0 technologies (e.g., robotics, Internet of Things [IoT], machine learning, etc.), optimizing supply chains through big data analytics, achieving higher yields through more precise application of farm inputs, and expanding e-commerce opportunities for all businesses.

Infrastructure is too important to the country's economic well-being to be politicized in election campaigns every four years.

What we recommend

Provide a strategic approach to infrastructure planning and funding with a coordinated 50-year rolling National Infrastructure Plan developed by government and industry, including prioritization of infrastructure projects to address critical bottlenecks

Such a plan would be critical to guiding long-term planning and funding decisions, providing greater certainty and stability to investors and industrial users with regard to infrastructure priorities. The National Infrastructure Plan would include a rolling list of high-priority short-, medium- and long-term (next 50 years) infrastructure needs, and any expected private and public infrastructure spending. The plan would be supported by multi-modal Gateway Strategies that reflect regional needs (Pacific, Atlantic, Arcticand U.S. trade corridors).

The plan should be developed by a permanent committee of government and industry representatives that report to the federal, provincial and territorial (FPT) ministers of transport. The committee would meet periodically to discuss transportation infrastructure issues and ongoing updates to the proposed National Infrastructure Plan.

Embrace digitally-enabled infrastructure systems, and coordinate infrastructure and supply chain performance data through a new National Transportation and Logistics Platform

To ensure a transportation system of the future, it will be crucial to begin investing in new and emerging technologies to support digitally enabled and data-driven infrastructure systems. The data from these systems could be coordinated with existing data through a National Transportation and Logistics Platform to inform the National Infrastructure Plan. That platform would collect, integrate, streamline and publish data on:

• Capacity and use of strategic transportation infrastructure assets
• Supply chain performance metrics for all transportation modes
• Public and private maintenance spending and investments in new infrastructure

Increasing data collection on infrastructure assets will better position the transportation sector to assess infrastructure uses and future needs, including how to incorporate smart technologies and automation.

Create "quick wins" for the National Infrastructure Plan by taking early action to address key bottlenecks, with consideration of innovative financing solutions for major projects

Several infrastructure funding programs have been announced, yet there remains a number of critical bottlenecks that industry has identified (see map on next page). The Table is calling for the National Infrastructure Plan to give early consideration to projects that will result in immediate economic opportunities and signal the commitment of the plan's permanent committee of government and industry representatives to help the sector achieve its growth targets. Potential quick wins could include:

• Upgrading trade-enabling infrastructure and addressing bottlenecks at the Port of Vancouver
• Improving Canada's National Highway System to increase efficiency and reduce trucking-related congestion (e.g., Quebec-Windsor corridor)
• Making other high-priority improvements that may be identified through other processes, such as the St. Lawrence Seaway Review

In addition, to leverage public and private funding, mechanisms such as the Canada Infrastructure Bank should be explored. Institutional investors and pension funds may be entities for attracting and leveraging private investment in transportation infrastructure.

Allow full participation in digital transformation through 100% broadband coverage across Canada by 2025–with unlimited data and 100 Mbps download speeds and 50 Mbps upload speeds

We recommend the government commit sustained funding for the appropriate mix of technologies in order to achieve 100% coverage. Connecting the most difficult-to-reach rural and remote locations will require a mix of technologies. We strongly support Budget 2018's commitment to low Earth orbit (LEO) satellites as a good opportunity to bring reliable internet to rural parts of Canada, and echo the Digital Table's call for Canada to bea leader in development and adoption of this technology. LEO satellites are a lower-cost option for expanding low-latency broadband to sparsely populated areas where fibreoptic cable may not be feasible. Partnerships and funding from a range of sources will be critical to achieving these targets, particularly those for phase two.

Tracking success

• Canada will rank in the top 10 among OECD countries in the infrastructure category of the World Bank's Logistics Performance Index by 2025, up from 17^th in 2018.
• Canada will have 100% broadband coverage with 100 Mbps download and 50 Mbps upload speeds by 2025.

Figure 5: Examples of Transportation Bottlenecks and Vulnerabilities

Proposal

Develop and diversify Canada's agri-food markets

Why this matters

Maintaining and expanding competitiveness in domestic and international markets is essential to sector growth. We need to create clear and well-informed strategies for where to play and how to win in key geographic and product markets if we are to achieve our growth targets.

With over half of the value of Canada's agriculture and seafood production exported, the competitiveness of the sector depends on maintaining and increasing access to key international markets. Maximizing our performance in each market will require a dedicated strategy rather than a one-size-fits-all approach.

To compete on a global scale, Canada's sector requires a level playing field. Canada engages in international standard-setting bodies (ISSBs) and plays an important role in developing global standards, guidance and recommendations essential to facilitating trade. The continued integrity and fairness of the international rules-based trading system is instrumental in achieving our growth targets

At the same time, Canadian firms produce many of the types of foods enjoyed by domestic consumers and sold $110 billion worth of goods in Canada in 2017. The domestic market has been growing at a faster rate than Canadian firms' share of it, leading to lost opportunity. Last year, for example, imports accounted for nearly 30% of the processed food market, up from 22% 10 years previous. With imports taking the place of high-quality Canadian products on the shelves at home, the Canadian agriculture and agri-food sector must rise to the challenge.

Yet as much as we see barriers being erected abroad, they exist at home, too. Canadian firms often report that it is easier doing business internationally than within Canada. Canada has many rules and regulations at federal and provincial levels that have unintended consequences, namely stifling the movement of goods within Canada, creating additional costs, making the playing field uneven and inhibiting companies from scaling in Canada. As Canada looks to compete against agri-food powerhouses with larger populations, lower production costs and longer growing seasons, we cannot afford to balkanize our country into separate jurisdictions that impede the scaling up of companies and the free-flow of goods and services.

While the Agri-Food Table fully recognizes the need to compete on price, we also need to differentiate ourselves. Canadians are increasingly choosing to buy and support local and Canadian-made products. For producers to reach this important market and be able to convey the benefits of buying Canadian, buyers need to be able to easily identify Canadian food. Consumers abroad, too, are looking for high-quality food products that are safe and innovative. Canada should aim to be a supplier of choice in all these respects.

Finally, if Canada is going to compete on the international stage, we will need companies that have the scale to go up against global giants. An ambitious strategy is needed to ensure our highest-potential companies obtain the support they need to scale up and be world-leading firms.

What we recommend

Advance a coordinated and strategic approach to winning in key markets by developing priority market strategies for Canada and key export markets

We recommend an Agri-Food Market Advisory Council of business leaders to work with federal, provincial and territorial governments on developing and implementing strategies to determine where to play and how to win in key markets, particularly in Canada, North America, Europe and Asia. Strategies would be based on market analysis of future growth opportunities and supply chain capacity in Canada.

Bolster an open and rules-based approach to trade by demonstrating strong international leadership

International standards like those developed by Codex Alimentarius are a very important part of the rules-based international trading system. The Government of Canada should provide additional resources to ISSBs to develop science-based international standards and to Canadian government agencies and departments to enhance their participation in the work of the ISSBs. The government should continue to address non-tariff barriers through the negotiation of dedicated chapters in areas including technical barriers to trade as well as sanitary and phytosanitary measures (SPS) in bilateral and multilateral trade agreements. These robust rules should build on well-established, existing World Trade Organization commitments.

Government and industry must continue to work together to identify measures that significantly harm Canada's food export interests, especially those that may run counter to trade obligations, and address these measures through all available channels, including formal dispute settlement where appropriate.

Break down Canada's own barriers to trade by leveraging the Canadian Free Trade Agreement to create a path to free trade in food products between provinces and territories by 2020

The Canadian Free Trade Agreement (CFTA)–which came into force on July 1, 2017–commits FPT governments to reduce and eliminate barriers that restrict the movement of goods, services, investment and persons within Canada. A Regulatory Reconciliation and Cooperation Table (RCT) of senior government officials was created to oversee work on resolving barriers and developing common regulatory measures for emerging issues.

Breaking down interprovincial trade barriers helps Canadian firms capture a greater percentage of the domestic market, which is an important market in its own right. Removing barriers to growth within our borders will also allow more companies to scale up production and make the leap to international markets on a stronger footing.

As a first step, FPT governments should focus their attention on addressing the top three or four barriers to interprovincial commerce per year. We would like to highlight the following priorities requiring immediate action:

• Certification of organic standards
  Interprovincially traded organic products are subject to the Organic Product Regulations, which require producers to be certified in accordance with the Canadian Organic Standard. However, products produced and sold within a province must only be certified organic where provincial regulations require it. Having a harmonized regulatory environment would create a level playing field for selling organic products in Canada and uphold the integrity of the brand by allowing consumers to put trust in a consistent standard.
• Packaging requirements
  Food handlers, distributors and processors are prohibited from shipping both fresh and processed fruits and vegetables across provincial boundaries if they do not meet the prescribed rules on packaging, labelling and grading under the Canadian Agricultural Products Act. Allowing goods to be shipped hundreds of kilometres within a province without having to meet these requirements while barring a food processing plant from sourcing the same products from a farm one kilometre away if it happens to be on the other side of a provincial border is a regulatory inconsistency that stifles productivity and efficiency.
• Transportation
  There is a patchwork of regulations and allowances, depending on province/territory, that has resulted in several barriers for the trucking industry, including on wide base single tires, spring weight limits and other restrictions. For example, certain truck configurations can only be driven in British Columbia at night and in Alberta during the day, with the result that drivers may have to wait several hours before crossing the border between these provinces. Moreover, due to differing regulations on tire sizes, some trucks must change their tires at certain provincial borders. Addressing these inconsistencies across Canada would improve transportation systems to the benefit of the agri-food sector, among others.

• Aquaculture
  A complex regulatory framework with no uniform set of regulations across governments has led to difficult and lengthy processes for establishing, amending and expanding aquaculture sites. This is resulting in stifled growth and lost opportunity for the aquaculture sector.
  
  These four areas can be actioned immediately by FPT governments to demonstrate their commitment to building a formal strategy for creating free internal trade in Canada by 2020.

Increase the profile of Canadian agri-food products by advancing a strong and coordinated brand

Currently, FPT market development initiatives are not consistent and do not support a unified Canadian brand. Canada needs a One Brand–One Voice approach to give Canadian food products a strong competitive edge and make them more "visible" to consumers at home and abroad. FPT governments should work with the Agri-Food Market Advisory Council to establish a comprehensive approach that will strengthen Canada's position in key markets. This must include increasing the sector's online presence in growth markets as well as a strong on-the-ground presence to maximize the sector's influence on consumers, wholesale buyers/distributors, and food and lifestyle promoters.

Additionally, "Product of Canada" and "Made in Canada" claims are seen as too restrictive to be useful. As a result, companies tend to use provincial claims rather than adopt a national approach. To make it easier for consumers to quickly identify Canadian products at a national level, Product of Canada and Made in Canada requirements should be reviewed in collaboration with industry and provinces.

Create an "Own the Podium" strategy to scale up Canada's most promising and innovative agri-food businesses to become world-leading anchor firms

Canadian agri-food companies are not exempt from the historical challenge of scaling beyond our country's borders to become world-leading anchor firms. We need to support promising agri-food companies so they can become world leaders and ultimately develop into anchor firms that help the sector grow as a whole. However, we need a new approach to close this "scaling gap." We support the "Own the Podium" signature initiative as a way to focus efforts on high-potential companies with proven track records and strong continued prospects of success.

Tracking success

Canada will achieve $85 billion in exports by 2025 and $140 billion in domestic sales by 2025.

Innovation is not an opportunity. It is a deliberate process we build into every aspect of our company's operations.

Proposal

Invest in innovation and boost competitiveness through increased automation and digitization

Figure 6: Food manufacturing investment in machinery and equipment as a percentage of sales is trending downward, from 2.3% in 1998 to 1.2% in 2016.

Why this matters

In order to reach our growth targets, Canada needs to increase investment and technology adoption. The Canadian agri-food sector's expenditures on R&D as a percentage of sales has fallen by 24% since 2008, and lags behind other countries (the U.S. and France each devote 0.6% of sales to R&D while Canada's spend is just 0.2%). Investment in machinery and equipment has also been on a steady long-term decline. In addition, the U.S. recently passed a capital cost allowance that allows businesses to deduct the cost of depreciable assets in one year instead of amortizing them over several years, further chilling Canadian and international business leaders' appetite to make their next North American investment north of the border.

The relatively small amounts of Canadian investment in food processing innovation is fragmented across a collection of universities, food technology centres, research centres and incubators that collaborate locally and have a limited capacity (i.e., personnel or infrastructure) to develop advanced technologies for the industry, commercialize new products at significant scale, or help firms of all sizes access national and international markets.

Agri-food businesses are adopting digital technologies that collect large amounts of data. This data is being collected, but stored in different formats and different platforms. This lack of interoperability inhibits the use of shared open-data platforms that provide important insights and enablenew innovations to sprout up.

What we recommend

Encourage investment and technology adoption through significant incentives including an accelerated capital cost allowance for machinery, equipment and digital automation tools

We recommend the Government of Canada introduce an accelerated capital cost allowance (ACCA) to help accelerate the adoption of machinery, equipment and digital automation tools by allowing companies to recover the costs of these investments more quickly and improve cash flow and rates of investment returns, thereby lowering their investment risk.

We propose the ACCA should be provided over an extended period to boost the competitiveness of our tax environment and give businesses some planning certainty, especially for larger and more complex projects that require investments spread out over several years. To maximize industry impact, the ACCA would allow eligible machinery and equipment assets to be written off in one year.

Meet consumers' evolving desire for innovative products and advance industry development, demonstration and adoption by creating a Canada Agri-Food Innovation Centre

We propose creating a networked centre or hub for agri-food innovation that would connect existing agri-food innovation centres to help firms of all sizes test new products and production techniques as well as make betteruse of technologies and applied research so they can scale up, develop new products and processes, and sell to new consumers. The centre would support applied research and provide advanced technology platforms, pilot facilities, industry advisors and events focused on practical solutions, technology adoption and expanding market opportunities.

The centre would provide physical and virtual space for firms of all sizes and would work in partnership with major private sector sponsors, post-secondary institutions with strong agri-food R&D facilities and all levels of government. It would draw on the best practices of world-leading non-governmental organizations such as the German Institute of Food Technologies, Australia's Food Innovation Centre at Monash University, the Netherlands' Food Valley innovation ecosystem and the recently announced Unilever Global Foods Innovation Centre at Wageningen University & Research.

Areas of focus might include the development of innovative food products and processes, activities to accelerate the adoption of robotics, augmented reality tools, artificial intelligence (AI), blockchain and knowledge exchange ina low-risk environment to demonstrate proof of concept and de-risk adoption.

Industry would work with regulators to understand how these technologies could be applied to streamline data and speed up regulatory compliance so entrepreneurs can take advantage of new production systems and market opportunities as they arise. For example, a blockchain pilot could be pursued to develop full product traceability systems and increase efficiency of regulatory compliance spanning the entire "farm to fork" supply chain.

Develop open data standards to promote data sharing and utilization.

We recommend the Standards Council of Canada (SCC), in collaboration with industry and global partners, create guidelines on shared data definitions and standards for Canada so private-sector players can share their data, reveal opportunities to lower costs and manage resources more effectively while strengthening food safety and reducing environmental impacts.

The Canada Agri-Food Innovation Centre (proposed above) could provide a venue for partners to develop open data standards that address risks and concerns associated with security, privacy and intellectual property. Together they could also ensure that the new Canadian data standards areconsistent with international ones.

Definitions and standards should be based on principles outlined under Canada's Open Data Initiative and related data innovation strategies, and facilitate an open operating system or multiple, interconnected open operating systems so data can be shared among and analyzed by farmers, food processors, distributors, software vendors, equipment manufacturers and data analytics companies.

Tracking success

• Canada will increase its food industry capital expenditures per dollar of sales by 50% by 2025.
• Canada will double its food industry private-sector R&D expenditures by 2025.

Proposal

Foster a diverse labour force with the right set of skills to help the sector achieve its maximum potential

Why this matters

Primary agriculture, food processing companies and related input and service providers employ approximately 3.5% of Canadians, yet the sector continues to report critical and ongoing labour shortages across all skill levels. The cause of this is complex, but top reasons cited by industry include a lack of skilled talent both in STEM and other high-skilled occupations (e.g., machine technicians), lack of awareness about career opportunities in the agri-food sector for general occupations (e.g., electricians, plumbers) and perceptions about working in the sector. Primary agriculture and food, beverage and seafood processors also experience chronic under capacity of general labour, which has forced these industries to rely on temporary foreign workers (TFWs). Despite being one of the top users of the TFW program, the agri-food sector is still operating under full capacity.

As we plan for the workforce the agri-food sector needs by 2025, there is an opportunity to increase participation of underrepresented groups including young people, women and Indigenous peoples. The 2016 Census of Agriculture showed that 81% of farm operators are over the age of 35, and only 3.0% of Indigenous firms are agriculture businesses even though a disproportionate number of Indigenous peoples live in rural areas largely associated with agriculture. These underrepresented groups bring new experiences and ideas to their jobs and represent untapped potential for the sector.

What we recommend

Prepare for the workforce of the future by supporting the sector's capacity to plan for, train, attract and retain human capital

The Government of Canada should create a skills and talent collaboration hub empowered to developa skills and talent roadmap for the future involving the participation of existing bodies and in partnership with educational institutions, industry and labour groups.

We recommend this collaboration hub:

• Assess future needs for all skill levels. Businesses, academia and governments need relevant and accurate data on labour supply and demand to facilitate analysis of future skills needs and to make informed decisions.
• Develop a sector-specific strategy for skills development. A McKinsey survey of executives found industry will need to play a leading role in closing skills gaps due to automation. The network should identify tools and strategies that support the alignment of skills development with the future needs of the sector. Such a strategy could include:
  • Curriculum co-development between educators and industry to ensure new graduates learn employable skills and Canadian industries have access to a workforce with skills needed for the future
  • Work-integrated learning opportunities, such as co-op placements and internships
  • Commitment to lifelong learning and re-skilling for workers whose jobs continue to evolve through technological advancement and market changes
    
  We suggest collaborating with the Government of Canada's Future Skills Centre and leveraging digital platforms to ensure good matches among job seekers and agri-food employers.
• Promote the sector as a good career choice. A national strategic awareness campaign should be developed so youth, job-seekers and underrepresented groups see that agri-food offers rewarding career paths. Government and industry should collaborate to position food production and processing as a forward-looking and cutting-edge sector.
  Urban outreach could be done through educational campaigns, Agriculture in the Classroom and 4-H clubs to raise awareness of the sector and its potential avenues for employment.

To address immediate labour shortages facing the sector today, modernize Canada's immigration and temporary foreign worker programs to access the global labour force across all skill levels

Canada needs access to the global labour pool to fill jobs that cannot be met domestically. Despite nearly 64,000 TFW positions approved in 2017 the sector still faces huge labour shortages and reliable access is an ongoing source of frustration for industry.

To address these issues, immediate changes to existing programs need to be made. As such, the Table supports resolution of the following issues identified by the Value Chain Roundtables:

• Labour Market Impact Assessment (LMIA) applications are held up due to farm audits and the farm audit process. Producers are uncertain about their ability to get workers when they are needed
• Employers lack understanding of the farm inspection process and the reach of authority related to unannounced inspections
• Some service delivery practices result in LMIA refusals to the detriment of predictable access to labour
• Service delivery timelines for LMIAs are increasing, creating uncertainty about the best time to submit applications to ensure workers arrive when needed
• Work permits were delayed in Mexico, causing production and revenue setbacks
• There are cumbersome processes even when foreign workers are already in Canada. Among them are the need to reapply for an LMIA, adding to farmers' administration burden and increasing the risk of a foreign worker being sent home
• Policies, guidelines, operations and program changes are poorly communicated, which is resulting in more LMIA refusals, increased processing times and greater difficulty meeting requirements

In addition, new program elements will be needed to allow the Canadian agri-food sector to access the capacity of the global labour force. For example, a "trusted employer" model should be piloted to stream-line processing for employers who have demonstrated integrity and a proven record of trustworthiness. Labour gaps can also be better filled by adopting best practices and service standards from the Global Skills Strategy, such asfast-tracking visa applications for high-skilled workers.

The next generation entering the labour force needs to know they can have an exciting technology job without having to work in the IT sector.

For year-round, permanent labour capacity needs, several federal programming options are available to high-skilled workers seeking permanent residence. Fewer options exist for medium- and lower-skilled workers. We recommend implementing a national food production and processing immigration pilot that offers improved pathwaysto permanent resident status for year-round workers at all skill levels needed in the sector. The pilot could build on the lessons learned from the Atlantic Immigration Pilot, which offers permanent resident status to full-time foreign workers through high-skilled, intermediate-skilled and international graduate programs.

Ensure inclusive growth of the sector by taking concrete actions to support greater participation of underrepresented groups

We recognize the need for a sustained effort to bridge the diversity gap in the sector and the Table calls on industry to set targets for representation that is more reflective of the Canadian workforce. To enable the development of a diverse talent pipeline, industry will need to support youth, women, Indigenous peoples and new Canadians in attaining the skills needed to participate meaningfully, ensure greater awareness and communication of leadership opportunities, and foster a culture that welcomes greater diversity.

As a first step, industry should focus on mentorship opportunities to encourage and support greater participation of underrepresented groups in the agriculture sector and build sector competitiveness.

There is strong growth potential in the aquaculture sector, and Indigenous communities are in a unique position to contribute to its sustainable development and explore new opportunities. Building upon the success of the Aboriginal Aquaculture in Canada Initiative, which supported Aquaculture Business Development Teams to work with regional stakeholders and provide Indigenous aquaculture business planning support services, the Table calls on theagri-food sector to work with Indigenous partners to jointly develop new approaches that will support positive outcomes aligned with the needs and aspirations of Indigenous communities

Tracking success

• Canada will reduce the average job vacancy rate in primary agriculture from 5% in 2017 to 4% by 2025, and in food manufacturing from 3.4% percent to the economy-wide manufacturing average of 2.2% by that same year.
• Canada will increase female representation in food processing industry management to 50% by 2025, compared to 36% in 2017.

Conclusion

The global agri-food market in 2025 will be highly competitive and filled with new challenges. As one of the few net exporters of agri-food products, Canada has both an opportunity and a duty to set aspirational goals and achieve new levels of innovation. Canadahas the entrepreneurial legacy and grit to seize a significant share of the global agri-food market and grow domestic sales as well, achieving multi-billion-dollar targets by 2025. What we need are the right conditions to make that happen–starting with urgently needed regulatory reforms and infrastructure upgrades, and supported by considered strategies for market diversification, technology adoption and the development of skills, talent and labour capacity to meet the sector's competitiveness.

The companies in our sector are willing and ready to do their part. We need government to buy into our vision and use public policy and investment in ways that help us act swiftly and seize opportunities to show Canadians and the world what we're made of. Ensuring we reach our growth targets of $85 billion in exports and $140 billion in domestic sales by 2025 will require nothing short of sustained commitment from both industry and government.