Four articles ago, I laid out my view of a possible strategic plan for “Canada Food Inc.” It included a mission, vision, objectives, and some possible strategies to pursue. Three articles ago I expanded my view on Strategy 1, becoming the most innovative food sector in the world. In my next article I expanded my view on Strategy 2, becoming the most productive food sector in the world, and then in the last article I moved on to Strategy 3, becoming the most sustainable food sector in the world. Now I would like to move on to Strategies 4, 5 and 6.
Strategy 4: Focus on developing the export market for value-added products
As the population of the world continues to grow to the projected nine billion+ people by 2050, there is obviously a growing market for food globally. However, most of that growth will come not in the developed parts of the world like Canada, the U.S., Western Europe, Australia, New Zealand and Japan, but in the developing and lesser-developed parts of the world.
We have all heard the acronym BRIC, standing for Brazil, Russia, India, and China, some of the most highly populated and fast-developing countries in the world. These, along with other countries/regions like Mexico, Argentina, parts of Southeast Asian and the Middle East, are markets where the disposable income is rising as the population continues to increase and, therefore, are good markets for export goods. However, because the disposable income is increasing, we should be seeking to export value-added processed finished goods or ingredients rather than lesser-valued commodities. This adds to the financial viability of our sector, and is also good for the Canadian economy in the jobs it creates and the financial contribution to the economy in general.
Of course, most of these economies are also developing their own food industries which will/have become competitors of ours. We must therefore find ways to differentiate Canada Food as indicated in Strategy 1.
There are, of course, the lesser-developed parts of the world that may take a long time to develop to a self-sustainable level from a food standpoint, if ever. These areas need affordable, nutritious, lesser-processed foods and commodities to ensure there is not mass starvation. We have the size and scope of production in this country to be a major contributor to this aspect of global food supply as well. However, the financial benefits to our sector would be significantly lower.
And in the developed markets of the world, as well as the developing, there is a big opportunity to focus on high value-added specialty niches that have high margins, such areas as healthier foods, upscale artisanal type products, specialty ingredients, and other specialty segments. The “brand name” Canada is well thought of and can be built on. Perhaps there is room for regional provenance-type foods to grow in the market – for example Quebec cheeses, Ontario wines, Maritime seafood, Prairie pulses and grains, Alberta beef, B.C. salmon, etc. Perhaps we can rival global “brands” like Danish blue cheese, Kobe beef or New Zealand lamb.
The market analysis referred to in Strategy 1 on innovation should play a key role in determining what types of products in what markets around the world we should focus on to have good export success. This is the first step.
After that, we will need to ensure that trade agreements such as the TPP and CETA do not interfere with our ability to export to the target markets, and that things like efficient logistical services are available to enable small- to medium-size companies to compete in those markets. In this way, we can become a key exporter of value-added food products and learn how to market abroad more effectively. We have a great opportunity to become one of the most significant global exporters of value-added food products.
Strategy 5: Focus on applying value chain management principles to the entire sector
It has been a tradition in the Canadian food sector to create and operate in silos. What that means is that we do not see ourselves as an industry sector that is focused on food. Rather, the producers, processors and retailers have seen themselves as competitors or even opponents in chasing the consumer dollar, government assistance…whatever. And even at each level of the value chain, one sector is a silo versus every other: one kind of livestock grower versus another, one type of processor versus another, and so on. Even at the government level, the provinces compete with one another, and the provinces compete with the federal government. There has been very little collaboration, but that has started to change. When we come to see ourselves as a business sector with complementary goods and services to offer to customers and consumers we will be overall more competitive.
Value chain management is one approach to working together for the good of all. Processors and producers and their suppliers and customers in the food chain can all work for the good of the whole chain and, at the same time, improve results for themselves. Yes, there’s still a buyer/seller relationship in place, but let’s stop butting heads with one another and start finding ways to improve the sector for the good of all.
This is an approach that has been applied and has worked in a number of industries around the world. The methodology has been articulated and can be applied to almost any business value chain.
Many of the issues raised in the other strategies would be best addressed using the value chain approach. For example:
• Productivity: The concepts of continuous process improvement and lean operations, if extended beyond the “walls” of a given operation and extended to the suppliers and customers becomes even more powerful;
• Sustainability: The ability to improve energy efficiency and waste reduction and so on, can be amplified if done in collaboration with suppliers and customers;
• Food safety in any value chain should be planned and implemented all the way from farm to fork to ensure greatest effectiveness.
• Even an area like innovation can be amplified in its impact if a business includes its value chain in seeking new approaches;
• And then there is the “innovation/commercialization” value chain from basic researchers, often academics, to industry players that can be improved and speeded up with a good flow of communication throughout that chain.
We must, and we can, do these things for the good of the entire sector and the Canadian economy. We have a great opportunity to become a shining global example of best practice in value chain management along with the market success derived there from.
Strategy 6: Create a regulatory structure in Canada to enable these strategies.
When all else is said and done, even the most innovative, productive, sustainable and collaborative business cannot be successful if the regulatory environment within which it operates gets in the way of success. We hear, often, that the Canadian regulatory environment as it relates to food is in many ways “in the way.” And, of course, the provincial regulations are often at odds with one another and with the national regulations. We must diagnose and fix that problem so that the industry can be successful and live up to its obvious potential.
This means that all kinds of regulations regarding trade agreements, technical regulations, food safety programs, and so on must be appropriate to health and safety, social responsibility, etc., but they must also facilitate rather than hinder industry operation.
Regulatory Benchmarking: The first action we must take is to carry out a Global Benchmark Analysis of regulatory systems applying to food around the world and determine how we rate overall. This applies to all types of regulations, trade agreements, and so on related to food. Some of this work has already been done and needs to be aggregated, but more needs to be done.
When this is done, we must aggressively adapt the regulatory/policy environment in such a way as to accomplish the desired aims of the regulations, but also not hinder trade and commerce in the sector.
Again, these are all areas that will make us more competitive on a global basis, but along with Strategies 1 to 3, they are key to our global success. It can be done. We can do it. Let’s do it.
In the next article I will look more closely at the actual process that needs to happen to implement such a sector strategy so that there is commitment to its achievement on the parts of all levels of the value chain across all the sectors as well as the commitment of federal and provincial governments to enable it to happen.
Gary Fread is president of Fread & Associates Ltd., consultants to the food industry. He has spent more than 25 years in management positions in the food processing industry, with a background in sales, logistics, purchasing and technical areas. He has worked with Procter & Gamble, Campbell Soup and Morrison Lamothe, and is the past president and CEO of the Guelph Food Technology Centre. He is active in many food industry associations and organizations, serving on the boards of several. Contact him at [email protected]