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									A Strategy for Ontario’s Food and
 Beverage Processing Industry
                                   W
                                                        e are pleased to present the following
                                                        Strategy for Ontario’s Food and
                                                        Beverage Processing Industry. The
                                                        Strategy reflects the critical need to
                                                        take action to ensure the long term
                                   health and prosperity of the industry. As the second
                                   largest manufacturing sector in the province, employing
                                   over 110,000 people and purchasing 70% of Ontario’s farm
                                   production, a viable and competitive food and beverage
                                   industry sector is essential to the overall health and viability
                                   of the entire agri-food sector and ultimately, the province
                                   of Ontario.

                                     The Strategy was driven by industry, with support from
                                   the Ontario Ministry of Agriculture, Food and Rural Affairs,
                                   to develop a plan to guide both industry and government
                                   in decision and policy making over the next five to ten
                                   years. It is about a successful future for the industry, the
                                   changes and actions necessary to achieve that future and
                                   the strategies to get there. The Strategy reflects wide-spread
                                   consultation with industry.

                                      The creation of the Strategy is the beginning. The key
                                   to success will be the implementation of the priorities and
                                   actions identified in the Strategy. The Alliance of Ontario
                                   Food Processors is committed to working with government
                                   and industry to move forward towards the creation of a
                                   prosperous future for all of Ontario’s food and beverage
                                   processing industry.

                                          Alliance of Ontario Food Processors
                                       Association of Ontario Chicken Processors
                                                  Ontario Dairy Council
                                         Ontario Food Processors Association
                                        Ontario Independent Meat Processors
                                                Wine Council of Ontario




2   A Strategy for Ontario’s Food and Beverage Processing Industry
                                         Executive Summary
               Setting Priorities for the Future
Food and beverage processing in Ontario is the:
1st customer for farmers
    Buying 70% of the production from Ontario farms.

2nd largest manufacturing sector in ontario
   A $33 B industry employing over 110,000 directly and at least another 100,000 indirect jobs.

3rd largest food cluster in north America
   A hub of innovative food companies, research institutions and suppliers.

   For the last fifteen years the industry has shown
steady growth in both sales and employment, at a
time when many other manufacturing sectors watched
employment erode. However things are changing.
Slow productivity growth and low levels of investment
in research and development have left the industry
trailing	its	competitors.	Rapid	increases	in	input	costs	
and	a	higher	Canadian	dollar	have	further	reduced	the	
competitiveness of Ontario food products. Years of slow
but continuous growth in jobs and revenue have ground
to a halt and are turning downward.


   But Ontario food and beverage processors have a vision
of a bright future built on health, quality, innovation and
value to consumers. These are the companies that will
link food and health, creating products to help Ontarians
stay healthier and potentially reducing the drain on the
province’s healthcare budget. The vision depends on
creating an environment where Ontario companies can
thrive and continue to contribute to Ontario’s economy
and health agenda. The industry needs access to inputs
from farm products to labour, capital and research and
development capabilities. It needs closer relationships
with farmers and customers. Most important, it needs a
supportive policy and regulatory environment.




                                                              Setting Priorities for the Future ~ An Executive Summary   3
                                                Executive Summary
                    Setting Priorities for the Future
       The priorities for the future are clear. The most
    important is creating better relationships with farmers,
                                                                     A focus on early results
    governments and customers. The approach for the future           The goal of this strategic planning process is results,
    has to be on entire supply chains, with governments              to create real change and to help the industry achieve
    creating an environment that allows Ontario companies            its vision. The following initial results are targeted
    to compete on a level playing field. The second priority,        for	2008.
    reforming the regulatory environment, is essential for
    supporting industry competitiveness. Innovation in
    Ontario processing companies is being held back by a             Governance and infrastructure
    complicated, outdated regulatory system that has not                •	 Create	an	Implementation	Committee	within	the	
    kept pace with changes in the marketplace.                             Alliance of Ontario Food Processors to guide the
      Improving Ontario’s food and beverage processing                     process of achieving the goals of the strategy.
    innovation	system	is	the	third	priority.	Chronic	under-
    investment in research and development and in                    relationships
    productivity needs to be reversed, with both industry
                                                                        •	 Create	an	all-industry	working	group	to	develop	a	
    and governments investing in the future of the industry.
                                                                           set of common principles for industry relations.
    The strategy must also address innovations aimed at
    improving industry performance in environmental and                 •	 Implement	pilot	studies	on	new	industry	decision	
    energy management.                                                     making models.
       The final priority is human resources, a continual               •	 Schedule	regular	meetings	with	the	Minister	and	
    challenge	for	every	company.	Clear	strategies	to	attract,	             Deputy	 Minister	 of	 Agriculture,	 Food	 and	 Rural	
    develop and retain employees are vital to maintaining                  Affairs.
    human capital in the processing industry. Further                   •	 Create	 an	 industry/government	 working	 group	
    education and training to develop the skills necessary                 at	 the	 Deputy/Minister	 level	 with	 relevant	
    to support the sector are vital to its future.                         ministries.
                                                                        •	 Create	a	web-based	directory	of	Ontario	food	and	
                                                                           beverage processors and their products.


                                                                     regulations
                                                                        •	 Identify	first	target	priorities	for	regulatory	reform	
                                                                           and strategies for creating change.
                                                                        •	 Work	 with	 OMAFRA	 to	 create	 a	 single	 window	
                                                                           office for regulatory advice and support.


                                                                     Innovation
                                                                         •	Implement	a	Food	&	Beverage	Investment	Fund.	
                                                                         •	Create	a	knowledge	acquisition	and	transfer		
                                                                           function.


                                                                     Human resources
                                                                        •	 Complete	the	two	human	resource	projects	related	
                                                                           to education, training, and creating employers of
                                                                           choice.


4   A Strategy for Ontario’s Food and Beverage Processing Industry
                   A Vision for a Healthy Future
  Ontario food and beverage processors have a vision of              Food and beverage processing will remain a mainstay
the future for their industry. It is a vision of a competitive     of manufacturing in Ontario, but not by staying the
industry, where delivering quality, innovation, health             same. The industry will reposition its products to
and choice to consumers are the top priorities.                    dominate the healthy food arena supported by a strong
   It is also a vision of a significant economic and social        but updated and adaptable regulatory system.
force,	 providing	 jobs	 for	 many	 new	 Canadians	 and	              Economic prosperity will be built on partnerships
attractive careers for those in the industry. It is about          with supply chain members from farmers to retail,
success	 for	 all	 players	 –	 farmers,	 processors,	 retailers/   with strong support from governments. Investment
foodservice and the province of Ontario.                           in innovation, research and development, and in new
  The industry of the future will be productive,                   markets, will propel the industry to success.
domestically    and     globally    competitive    and                The industry needs a plan to achieve its vision. It also
environmentally sensitive, where many companies find               needs leaders who can shape the strategy and rally the
their competitive advantage in differentiated products,            support of the industry and its partners in implementing
competing on innovation, quality and providing                     a strategy to help the entire agri-food industry, not just
consumers with the best value.                                     one part.
                                                                      It’s an ambitious undertaking, but one that is made
                                                                   essential by the rapidly changing environment for food
                                                                   and beverage processing.



                      A VISIon For Food And BEVErAGE ProCESSInG In ontArIo
                   Ontario’s food and beverage processing industry will be a leading epicenter
                   of food innovation in North America. Innovation, health, quality and skilled
                   employees underpin the industry’s future. The industry will continue to be the
                   main link between Ontario farmers and consumers in Ontario and abroad.




                                                                            Setting Priorities for the Future ~ An Executive Summary   5
                           Food and Beverage Processing today
                   Essential to Ontario’s Economy
       Food and beverage processing is the essential link                  Ontario food and beverage companies employ over
    between farmers and consumers, buying 70% of Ontario                110,000 people. At least another 100,000 in related
    agricultural production. But it is also Ontario’s second            industries owe their jobs to food processing. Many jobs
    largest manufacturing industry, with $33 billion in sales           are in cities but the industry also provides opportunities
    annually and the third largest food industry cluster in             in rural communities; about 700 of Ontario’s food and
    North America.                                                      beverage processing establishments are located in rural
       It has the potential to play an integral part in the             communities.
    province’s innovation agenda and the strategy for a                   The industry provides a first job for many new
    healthier	 society.	 Until	 skyrocketing	 Canadian	 dollar	         Canadians	and	rewarding	careers	for	thousands	across	
    slowed its rise, Ontario’s food and beverage processing             the province. And it can do a lot more!
    industry experienced years of steady growth in both
    revenue and employment.




                                                                      Food
                                                      $ 33 B Revenue
                                                      Steady growth –    32% 1997-05                          Trade
                                                      2nd Largest manufacturing sector               $ 8-9 B Exports
                                                      More than 3,000 establishments                 78% 1995-2002
                          Jobs                                                                       Inter-provincial as large
                  110,000 + direct jobs                                                              as international




       Retail, Food Service                       Ontario’s Food & Beverage
                                                     Processing Industry                                         Health
          & Consumers
                                                                                                        Functional foods
      Safety, quality
                                                                                                        Healthier formulations
      New product innovation




                                           Rural Communities                                    Farming
                                          700 businesses located in                      Purchases 70% of Ontario
                                          rural Ontario                                  Farm Production




6   A Strategy for Ontario’s Food and Beverage Processing Industry
                      Positioning for the Future
                                                      Goal
              A vibrant, growing future for Ontario’s food and beverage processing industry
              depends on positioning and partnerships. This strategy lays out several goals
                                          for the next five years.


By 2013 ontario’s food and beverage processing industry will strive to:
   •	Be	a	$40	billion	industry	
   •	Deliver	choices	that	consumers	want	in	quality,	variety	and	health	
   •	Contribute	many	products	with	functional	characteristics	aimed	at	improving	the	health	of	consumers	
   •	Expand	skilled	employment	
   •	Work	with	farmers	to	enhance	industry	competitiveness	so	both	benefit	
   •	Be	recognized	as	a	vital	component	of	Ontario’s	economy	by	government	and	the	public	
   •	Double	the	current	investment	in	R&D	and	new	technology	
   •	Revitalize	food	and	beverage	processing	productivity	
   •	Build	an	international	reputation	as	a	supplier	of	quality	
   •	Speak	with	a	united	voice	on	issues	vital	to	the	entire	industry	


Positioning the Industry
For consumers to care and governments to invest, the         An engine of economic growth
industry must show its relevance and importance to             •	 Continued	 growth	 and	 contributions	 to	 the	
Ontario society.                                                  economy and employment remain driving factors
                                                                  for the industry.
Health
   •	 Both	 society	 and	 the	 Ontario	 government	 have	    Farmers’ best customers
      identified healthy food products as a priority.          •	 For	farmers,	Ontario	food	and	beverage	processors	
      Food and beverage companies will improve the                will continue to be their best customers. Ontario
      health impacts of current products and produce              processing companies already “buy local” and
      functional foods and natural health products                want to do more.
      aimed at improving health. Food and beverage
      processors will take the lead in incorporating new
      research on the relationship between food and          Innovation and quality
      health into healthier products that will help lessen     •	 Innovation	 and	 quality	 will	 be	 foundations	 for	
      spiraling provincial health care budgets.                   the industry in the future. Ontario’s industry will
                                                                  continue to be a leading centre of food processing
                                                                  in North America, incorporating innovation,
                                                                  health, energy and environmental considerations.




                                                                    Setting Priorities for the Future ~ An Executive Summary   7
                                           The Need to Act
      Achieving the vision for the future will not be easy.             Although the industry is a major employer, finding
    The industry has reached a critical point and requires a         and retaining employees is a constant challenge. Many
    new strategy to be competitive.                                  new	 Canadians	 find	 their	 first	 jobs	 in	 processing,	
       Growth	 in	 sales	 and	 employment	 has	 ground	 to	          but the industry is not viewed as an attractive career
    a halt after more than a decade of respectable gains.            opportunity. Many stay in the industry only until they
    Productivity growth has slowed and fallen behind                 find another job. In schools, students are generally
    other sectors. Investment in research and development            unaware of the opportunities in the industry or do not
    lags	far	behind	the	level	found	in	other	G7	countries.	          consider it as an attractive career option.
    Food processors now have to compete for inputs with                Without a different approach, Ontario’s second largest
    bioproduct and biofuel companies, which are often                manufacturing industry will watch its contribution to the
    heavily subsidized. Processors are challenged to meet            economy and society of Ontario erode as international
    the demands of fewer, larger customers and have                  competitors move further ahead in both productivity
    difficulty passing on rapidly increasing input costs.            and innovation. This will hurt Ontario’s farmers and
      There are still many new opportunities but both                workers. But it doesn’t need to happen. It is possible
    provincial and national regulatory systems often act             to make the changes needed to ensure a strong and
    as barriers to innovation and capitalizing on those              competitive future for the industry.
    opportunities. For example, companies involved in                   Change	 has	 already	 started.	 The	 food	 and	 beverage	
    functional foods will often market to the rest of the            processing industry has initiated two projects to attract
    world	 first.	 Canada’s	 outdated	 and	 rigid	 regulatory	       and train workers. There are numerous examples
    system is actually restricting the public from products          of farmers and processors working closely to define
    that could make them healthier.                                  strategies for developing new markets, increasing
                                                                     efficiency and for undertaking the research needed to
                                                                     advance their industries. But these kinds of initiatives
                                                                     must be a priority across the entire industry. They
                                                                     need to be supported by investments in innovation,
                                                                     productivity and by a modern and adaptable regulatory
                                                                     system.
                                                                        This strategy puts more focus and effort toward
                                                                     creating a prosperous future for all of Ontario’s food and
                                                                     beverage industry. Its objective is to identify positive
                                                                     directions for the industry and its partners and then to
                                                                     initiate the actions needed to assure that future.
                                                                        The planning process has identified four strategic
                                                                     priorities for action – new relationships, supportive
                                                                     regulatory environment, innovation and human
                                                                     resource capacity.




8   A Strategy for Ontario’s Food and Beverage Processing Industry
                  Strategic Priority 1 - new relationships
        1.1 New partnerships with farmers
   While many food and beverage processors do not               Farmers and processors depend on each other, but
buy directly from farmers, the reality is that 70% of        their relationships have been strained by continuous
Ontario’s farms products are processed by Ontario            conflict over prices and increasing pressure to compete
companies.		Ultimately,	all	Ontario	food	processors	are	     through innovation and product excellence. Innovation
affected by the supply of Ontario farm products and the      often depends on supply chain partners. It will be
relationship between farmers and processing companies.       impossible for processors to adopt an innovation agenda
Therefore, a major priority is to improve cooperation        without	involving	the	farmers	who	supply	them.		Closer	
between farmers and processors so that together they         relationships are in everybody’s best interests. Ontario
can compete at home and abroad.                              needs new models focused on the entire industry. Both
                                                             farmers and processors must embrace the idea that only
                                                             by working together can both be successful.

                                                      Goal
          To create more cooperative long-term relationships between processors and farmers
                 aimed at maximizing the performance of the entire agri-food industry.

Moving beyond ad-hoc advisory boards                              then moving on to address issues like research,
   •	 Where	 they	 exist,	 advisory	 boards	 have	 tended	        new product and market development, biosecurity
      to operate in an ad-hoc fashion, convened to                and interprovincial movement of products. This is
      deal with a crisis and then ignored. In a rapidly           already happening in many sectors but there is
      changing global marketplace, the agri-food                  room for more.
      industry needs more. It needs leaders who focus
      on the sector-wide issues, identifying the action      Guiding Principles
      priorities for the entire sector.
                                                                •	 To	be	successful	new	relationships	should	be	built	
                                                                   upon a set of high-level guiding principles that
Moving beyond price                                                are co-developed by producers, processors and
   •	 While	pricing	will	always	be	a	point	of	contention,	         industry partners. Although each sector may find
      it is critical to create an environment where each           its own optimal structures, the principles will
      sector can move beyond price to deal with the issues         ensure that all sectors are working toward the
      that are vital to the future of the entire industry.         same general objectives.
      This means negotiating prices periodically and


                                              ProPoSEd ACtIonS
  1. Conduct an all industry consultation to identify common agri-food industry issues to be addressed
     and to define guiding principles for industry cooperation and operation.
  2. Study cooperative models in other industries and regions.
  3. Develop strategies for cooperation for individual sectors based on the guiding principles. As a first
     step, run pilot projects in both regulated and unregulated industries.
  4. Integrate with the Presidents’ Council to discuss and collaborate on processor/producer operations
      on an ongoing basis.




                                                                     Setting Priorities for the Future ~ An Executive Summary   9
                        Strategic Priority 1 - new relationships
      1.2 New partnerships with government
        In spite of its importance to the provincial economy,         voice will processors gain the policy attention needed
     farmers and workers, the food and beverage processing            to help achieve its vision. Without government support
     industry has a low policy profile. While other provinces         in both policy and regulatory reform, Ontario food and
     have numerous programs targeting the industry,                   beverage processing will suffer, and this will ultimately
     Ontario has few. Within government, the needs of food            impact farmers, as well as rural and urban communities.
     and beverage companies are continually overshadowed              New relationships with key ministries in the Ontario
     by the other priorities. Only by speaking with one               government are a critical component of the strategy.

                                                                Goal
                To help the Ontario government fully understand the contributions of the food and
             beverage processing industry and to achieve a better balance between those contributions
                   and the policy attention and commitment that it receives from governments.

     Recommended Approaches:
     Premier and Cabinet                                                   coordination across all involved ministries is an
        •	 The	 first	 objective	 would	 be	 to	 enhance	 the	             important objective. A more equitable balance of
           industry profile at the highest levels of government            resources	is	needed	within	OMAFRA,	with	more	
           and	 to	 secure	 a	 commitment	 from	 Cabinet	 to	              human, program and funding resources directed
           support the industry’s strategy for a prosperous                at improving the competitiveness of Ontario food
           future. This will facilitate sharing intelligence,              and beverage processing.
           programs and policies across ministries.
                                                                      Federal government
     oMAFrA as an advocate                                               •	 The	 Ontario	 government	 can	 advocate	 at	 the	
        •	 OMAFRA	 can	 help	 the	 various	 ministries	 that	               federal level to ensure that food and beverage
           affect the industry to understand the impact                     processing becomes a national policy priority.
           of their policy decisions. Horizontal policy

                                                       ProPoSEd ACtIonS
       1. Meet with the Premier and reinforce the role and importance of the industry to the province. Update
          the Premier on an annual basis.
       2. Obtain Cabinet support for the strategy for food & beverage processing.
          - Meet with the Deputy Ministers’ Business Climate Group.
          - Steering or implementation committee to meet with other relevant ministries.
       3. Schedule regular meetings with Minister and Deputy Minister of Agriculture, Food and Rural Affairs.
       4. Support and cooperate with OMAFRA’s restructuring and redefinition of services for food processing.
          Help align Ministry resources with food processing needs. Provide details on priorities, information
          needs and suggestions for the most necessary and beneficial services.
       5. Develop a government/industry working group.
          - Identify relevant ministries that affect food and beverage processing.
          - Meet annually to set priorities and an action plan for the industry.
          - Set deliverables for priorities and action items.
          - OMAFRA to lead the process.
       6. Engage a government relations manager and create a communications strategy for governments
          and the public.

10   A Strategy for Ontario’s Food and Beverage Processing Industry
                   Strategic Priority 1 - new relationships
    1.3 New partnerships with customers
  Both farmers and food and beverage processors                companies are a challenge, particularly for smaller
must work more closely with retailers and food service         companies.	 Customers	 are	 getting	 bigger	 and	 expect	
companies to better understand their needs and                 aggressive pricing and product innovation. Identifying
develop strategies to better serve and expand those            ways to cooperate more closely with customers is a
markets.	Closer	partnerships	with	retail	and	foodservice	      priority.

                                                        Goal
         Increase access to retail and foodservice markets in Ontario and outside by improving
               the industry’s ability to work with customers and better meet their needs.

Improve access to ontario retail and foodservice               Create a directory of ontario food processing
   •	 Identify	 barriers	 to	 using	 more	 Ontario	 product	      •	 The	 directory	 would	 provide	 information	 about	
      in processed products sold in the province and                 companies, their capabilities, products and
      ways to connect processing companies with                      services, and new offerings. It will only be useful
      customers.                                                     if the directory is:
                                                                  1. Current - Companies	need	to	invest	the	time	to	
Build on the Buy ontario initiative                                  keep their information up to date.
   •	 The	 ‘Buy	 Ontario’	 initiative	 in	 the	 Minister’s	       2. Active - It should be more than a passive source
      Strategic	Advisory	Committee	Report	provides	an	               of information. It should push information to
      opportunity to build relationships with Ontario                interested parties, such as new product releases
      retail and food service companies, as well as with             highlighted on the website and through email
      farmers.                                                       alerts to subscribers with specific interests.
   •	 It	 is	 primarily	 an	 awareness	 campaign	 targeting	      3. Well funded - It must have sufficient funding to
      consumer awareness of Ontario products.                        be an up-to-date communication forum.
      Increasing the processed food and beverage
      content provides an opportunity for all levels of
      the industry.



                                                ProPoSEd ACtIonS
  1. Retail - Cooperate with Canadian Council of Grocery Distributors and Canadian Federation of
     Independent Grocers to identify issues and opportunities for improving Ontario food processing
     service to grocery organizations.
  2. Foodservice – Identify programs that can help foodservice organizations use Ontario products to
      promote their businesses. Work with the Canadian Restaurant and Foodservices Association.
  3. Help shape the ‘Buy Ontario’ program to use even more Ontario products by actively involving food
     and beverage processors.
  4. Create a Directory of Ontario Food and Beverage Processors - website/directory with company and
     product database.
  5. Coordinate the many programs promoting Ontario food products – Cooperate with OMAFRA and
     industry organizations to review the different programs and identify ways that food and beverage
     companies can participate and contribute.
  6. Establish a council of retailers, processors and farmers to identify and address important
     industry issues.

                                                                      Setting Priorities for the Future ~ An Executive Summary   11
                                                Strategic Priority 2
Creating a Supportive Regulatory Environment
        Innovation in the food and beverage processing                   A strong regulatory system can be a competitive
     industry is being held back by an inflexible, outdated           advantage in global and domestic markets, providing
     regulatory system that has not responded to the changing         customers assurance of the safety and quality of Ontario
     realities	of	the	global	food	business.	Regulatory	reform	        food products. However, the current regulatory system
     lags far behind the changes occurring in the marketplace.        places a burden on processors, is often unpredictable or
     For example, regulations slow the introduction of                excessively slow and inhibits innovation and the flow of
     new products far beyond what is necessary to protect             products between provinces and to other countries. New
     the public. They take an increasing proportion of                regulations often appear to be developed in a vacuum.
     management time and are preventing consumers from                Impact assessments frequently miss unanticipated
     gaining access to healthier food products and information        results, in part because processors are not consulted
     about the health benefits of those products.                     during the process of creating the regulations.

                                                               Goal
                  Create a regulatory environment that protects public safety but at the same time
                  encourages innovation and supports Ontario’s agri-food industry, a system that
                provides a level playing field for industry participants and minimizes the barriers to
                                       international and inter-provincial trade.

     Reforming provincial and national regulatory systems is a multi-year process
     and will only be achieved by making progress on several fronts simultaneously.
      •	 Using	partnerships	with	governments	and	industry	               •	 Improving	the	regulatory	process	to	ensure	greater	
         associations to create the political will and pressure             efficiency and timeliness of decision-making in
         to achieve real change                                             relation to regulatory action and consistency in
      •	 Reforming	 the	 process	 of	 creating	 regulations	 to	            applying and enforcing regulations
         include critical reviews prior to implementation                •	 Achieving	 better	 coordination,	 integration,	
         with significant consultation with industry on                     harmonization, and resource sharing to overcome
         impacts and implementation                                         the problem of regulatory overlap between federal
                                                                            and provincial governments

                                                       ProPoSEd ACtIonS
       1. Strategy implementation committee to identify and prioritize current regulatory barriers and develop
          a strategy to address the highest priority barriers.
       2. OMAFRA and Minister of Agriculture, Food and Rural Affairs continue to push for regulatory reform
          particularly related to the recommendations of the Minister’s Strategic Advisory Committee.
          - Examine where Ontario can influence regulatory reform and assist the province in finding solutions.
          - Encourage the provincial government to harmonize regulations with other provinces. Identify
          inter-provincial barriers to food and beverage trade and work with government and other agri-food
          organizations to address them.
       3. OMAFRA and AOFP will identify ways that industry can be more involved during the process of
          developing regulations.
       4. AOFP will partner with other organizations seeking to change agri-food regulations and identify
          workable models for change to apply to priority areas.
       5. Encourage the Government of Ontario to establish a ‘one-window’ access point to assist members
          of the agri-food sector in navigating different regulatory approval and policy processes.

12   A Strategy for Ontario’s Food and Beverage Processing Industry
                                            Strategic Priority 3
                                Fostering Innovation
  Innovation is essential to Ontario food and                      new products and creative ways to reduce costs,
beverage	 processors.	 Consumers	 expect	 more	 variety,	          while maintaining value for the consumer. At the
quality	 and	 health	 options.	 Retail	 and	 foodservice	          same time, firms must address new challenges
organizations demand a stream of innovative                        in both energy and the environment.

                                                            Goal
         Revitalize Ontario’s food and beverage processing innovation system. Increase investment
          in productivity, new product R&D and support for commercializing new ideas and new
          products. Create a system that is focused on innovation, customer value, environmental
                                   sustainability and future opportunities.

Reversing the loss of competitiveness will require efforts on several fronts.
Increase access to capital                                         Invest in energy and environment
   •	 According	 to	 the	 industry,	 lack	 of	 capital	 is	 the	      •	 Although	energy	and	the	environment	have	always	
      greatest barrier to innovation.                                    been major issues for Ontario’s food and beverage
                                                                         processors, their importance has increased
                                                                         dramatically in the last five years. Both energy
reverse the productivity decline
                                                                         and waste management costs have doubled. An
   •	 Food	 manufacturing	 ranks	 second	 to	 last	 in	                  estimated 15% processing cost of production
      productivity growth among the province’s twenty-                   is related to energy and another 5% to waste
      one manufacturing industries.                                      management. The industry’s competitiveness
   •	 Between	 1990	 and	 2003	 average	 manufacturing	                  depends on its ability to improve energy and
      value	 added/worker	 rose	 44%	 in	 Ontario’s	                     environmental sustainability.
      manufacturing industries.
   •	 The	 beverage	 sector	 kept	 pace	 at	 48%,	                 Focus on consumers
      but food processing productivity growth
                                                                      •	 The	industry’s	future	depends	on	being	able	to	meet	
      was	 only	 21%.	 	 Investment	 in	 new	
                                                                         and exceed consumer expectations and staying at
       equipment and training is needed to improve
                                                                         the forefront in new product development and
      industry competitiveness.
                                                                         supply chain innovation.

Increase investment in r&d
                                                                   Create a culture of innovation
   •	 Canada	is	far	behind	other	G7	countries	in	R&D	
                                                                      •	 Instill	a	commitment	across	the	industry	to	invest	
      investment in food and beverage processing.
                                                                         in the relationships, people and technologies
      Food manufacturing also lags behind other
                                                                         needed to support an innovation culture.
      manufacturing	 sectors	 in	 Canada	 in	 R&D	
      investment.	 The	 Federal/Provincial/Territories	
      Assistant	 Deputy	 Minister’s	 report	 of	 2006	
      identified investment in food and beverage
      processing	 R&D	 as	 a	 priority	 for	 improving	
      competitiveness and incomes.




                                                                          Setting Priorities for the Future ~ An Executive Summary   13
                                                Strategic Priority 3
                                    Fostering Innovation
 Invest in innovation related training                                  Improve operating margins
     •	 Training	workers	to	support	innovation	is	critical	to	             •	 The	 industry	 is	 high	 volume/low	 margin,	 and	
        the successful implementation of new technologies.                    profits in recent years have been insufficient to fund
                                                                              investment in new technologies and processes. Excess
                                                                              processing capacity in many sectors adds to costs and
 Enhance commercialization capabilities
                                                                              reduces the ability of companies to invest.
     •	 R&D	is	not	enough.	The	process	of	commercializing	
        new food products must be faster and easier.
        Incentives to develop and commercialize new                     Support access to information
        products, removing regulatory barriers and                         •	 Create	extension	support	systems	to	provide	global	
        supporting knowledge networks can play a role in                      technology scanning and information sharing around
        bringing new technologies to market.                                  new technologies, market intelligence and competitor
                                                                              reaction.
 Improve supply flexibility
     •	 Ontario’s	 agricultural	 industry	 cannot	 always	
        assure a reliable stream of inputs for new product
        opportunities. This should be an objective of new
        relationships with producers.


                                                                                    ProPoSEd ACtIonS
                                                                      1. Implement a Food Investment Fund.
                                                                          - Develop programs and policies to assist
                                                                          companies to invest in innovation and
                                                                          productivity.
                                                                          - Identify current programs that may be better
                                                                          used or modified to make them more effective.
                                                                          - Invest in food and beverage processing
                                                                          research and development. Identify barriers to
                                                                          investment and strategies for overcoming them.
                                                                          - Increase support for commercializing new
                                                                          products and technologies and invest in
                                                                          programs and organizations that bridge the
                                                                          commercialization gap between new ideas,
                                                                          research institutions and commercial products.
                                                                          - Build on current programs and initiatives.
                                                                      2. Create a fund aimed at energy and
                                                                         environmental management.
                                                                         - The fund would support research, new
                                                                         technologies, pilot studies, audits, retrofits and
                                                                         infrastructure support and training.
                                                                      3. Create a technology scanning and extension
                                                                         function and invest in industry knowledge
                                                                         transfer.



14   A Strategy for Ontario’s Food and Beverage Processing Industry
                                          Strategic Priority 4
        Building Human Resource Capacity
  Employment in food and beverage processing is rarely         longer terms needs of attracting, retaining, and training
considered as a first choice for students or other potential   workers specifically for the industry. The success of
employees. However, the industry offers numerous               the food and beverage processing industry depends
sustainable employment opportunities ranging from              upon its ability to attract, retain and develop workers,
manual labour to the latest in new technologies.               particularly in light of the growing competition for the
Prospective employees are unaware of the opportunities         declining labour pool.
and the industry has not focused enough attention on the

                                                        Goal:
         To provide employers with the tools and to develop a workforce with the skills required
                      to support the Ontario food and beverage processing sector.

Recognizing the importance of this issue, the industry previously undertook a
labour study, which highlighted the following goals.

Create the ‘Industry of Choice’ by:                            Create the ‘Employer of Choice’ by:
   •	 Profiling	the	Ontario	food	and	beverage	processing	        •	 Providing	 employers	 with	 the	 tools	 to	 attract,	
      industry as a viable employment and career                    retain and train workers
      opportunity
   •	 Developing	 post-secondary	 education	 pathways	 Two projects have been started to address these objectives.
      to train employees, providing the technical and They are a start, but more will be needed in the future.
      supervisory skills needed to succeed in tomorrow’s
      processing industry


                   ProPoSEd ACtIonS
  1. Support the two current human resource
     projects, the Workforce Development Project
     and the Post Secondary Curriculum Blueprint for
     Ontario’s Agri-Food Industry.
  2. Hire a manager to coordinate the projects and
     initiatives, to undertake outreach and promote
     the industry as an attractive career option.
  3. Participate with the Industry Coalition to
     establish a Premier’s Council that will develop a
     comprehensive provincial skills strategy.




                                                                      Setting Priorities for the Future ~ An Executive Summary   15
                                     Implementation
   Moving ahead requires focus and commitment, but            Focused action
it will also require organization and profile. The food         The plan identifies action items in four priority areas.
and beverage processing industry has long suffered            The implementation committee and the industry will
from its inability to work together at the highest level to   focus on those action items during the initial stages of
identify and prioritize issues, and to develop strategies     implementation, creating early successes and building
to cooperate with governments and industry partners to        momentum for change.
create workable solutions. The creation of a strategic plan
is a beginning. Although the specific implementation          Speaking with one voice
details will be laid out in full in the implementation          An effective communication strategy is vital to the
plan, the first steps include the following:                  process. The early stages of the strategy are concerned
                                                              with communication — with farmers and customers,
Assembling a Strategy Implementation Committee                government and food and beverage processors. The
   As the leader for implementing a strategy for              industry must speak with one voice during the process
Ontario food and beverage processors, the AOFP will           through the implementation committee and AOFP
assemble an industry led steering committee including         board.
industry leaders and association senior executives. The         While individual sectors will continue dealing
committee’s mandate will be to finalize the details of the    with their own specific issues and opportunities, the
implementation plan and oversee the completing of the         implementation committee will represent the food and
action items. Although the committee will direct the          beverage processing industry as whole. The actions must
implementation, it will ultimately be responsible to the      be decisive and the messages to industry, governments
Board of Directors of the AOFP.                               and partners must be clear, concise and unified.

Creating supporting infrastructure                            A different future needs a different approach
  Acting on the plan and moving the industry ahead               The industry is important, the challenges are real, but
will require supporting resources in communications,          the future is promising for food and beverage processing
membership development, industry relations and                in Ontario. This strategy is about success—success that
government relations to support implementation.               can only happen with the full and active participation
                                                              of industry, farmers, customers and government. By
                                                              supporting food and beverage processing, all of Ontario’s
                                                              agri-food industry will benefit.

								
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