Maple Leaf Foods, U.S.A.?
By Medicine Hat News Opinon on April 27, 2019.
Maple Leaf Foods, the largest pork processor in the country, has opted to build its new meatless plant south of the border. Unfortunately, the decision makes perfect sense. The iconic Canadian food company recently announced plans to spend US$310 million on a 230,000-square-foot processing plant in Indiana, where its Lightlife Burger and other products will be made. It will become the largest facility of its kind in North America. The company is clearly capitalizing on the expanding plant-based market and is hedging against several disruptive factors. But the fact that the new plant will be built in the U.S. still comes as a huge disappointment. Maple Leaf has many reasons to look beyond meat products to build its business. For one, biosecurity issues lurk all over the world, starting with the African swine flu, which is raising havoc in Asia. Canada is one case away from seeing borders closed to many countries around the world. The livestock industry is very fragile – the beef sector knows that too well after the mad cow crisis 15 years ago. Certainly the demand for pork and other processed meat products has remained robust despite the overpowering rhetoric we’ve heard recently about the world succumbing to veganism. But the rise of flexitarianism is real. So companies like Maple Leaf are investing in vegetable proteins, despite their heritage and past commitments towards traditional protein sources. In order to focus more on plant-based dieting, Maple Leaf has acquired two U.S.-based companies. Building a new facility is a natural extension of an ongoing strategy to help Maple Leaf pivot between major protein sources. The rationale has merit. But Maple Leaf is building its plant in the U.S., not in Canada, despite the fact that peas will be the plant’s main ingredient. And Canada is one of the world’s largest pea producers. This speaks to how anemic our food processing industry has become. Food processing in Canada desperately needs measures to enhance its competitiveness. Countless federally-licensed facilities are in need of serious capital investment. Visits to some of these plants seem like time-travel – the technologies used are decades old. Canada has increasing difficulty attracting foreign investors, in part due to unpredictable new policies affecting the business environment. And it’s not just about taxes and regulations. It’s also about providing a stable, sustainable focus on factors that enable economic growth and talent management. On these fronts, the U.S. has been outwitting Canada for a few years. According to a report by Food & Consumer Products of Canada (FCPC), which represents food manufacturers, 83 per cent of new, branded products launched in Canada were neither developed nor manufactured here. This lack of innovation is deeply rooted in our inability to think creatively and generate intellectual property for this critical part of the agri-food sector. Growing challenges linked to labour, costs and skill management are more than apparent, and the situation is getting worse. According to the same survey by FCPC, the number of full-time employees in the industry has declined by 7.3 per cent over the last five years. Labour and operation relocations outside of Canada are to blame. That’s meant the loss of 22,000 jobs in food manufacturing. Essentially, the sector has lost 12 jobs a day, every day, for five years. In addition, our infrastructure to move food products is highly deficient compared to the U.S. So Maple Leaf is building a plant in Indiana simply because it makes perfect business sense. In fact, the company didn’t have much of a choice. Unless some market fundamentals change, Canada has no case for new processing plants. In the last decade, the U.S. has seen almost 4,000 new plants built. Canada has seen just 20. Something is clearly wrong. We have an abundance of ingredients and are on the leading edge of artificial intelligence that can make our manufacturing more efficient and productive. But those factors can’t compensate for our unskilled labour force, capital access deficiencies and poor infrastructure. The federal government has set an agri-food export target of $85 billion by 2025. That can only be reached by making our food-processing sector more competitive. Canada needed the nearly 500 jobs created by the Maple Leaf facility in Indiana, but we can hardly blame the company for making the choice it did. Dr. Sylvain Charlebois is senior director of the agri-food analytics lab and a professor in food distribution and policy at at Dalhousie University, and a senior fellow with the Atlantic Institute for Market Studies. 20-19
