The B.C. food manufacturing sector is facing considerable difficulties. This trend is not isolated to B.C., as the Atlantic region of Canada also struggles with similar issues. However, the challenges in British Columbia are primarily policy-induced, in contrast to the Atlantic region, where geographical and demographic factors contribute to the difficulties faced by food manufacturers.
Food manufacturing is pivotal as the strategic anchor of a food supply chain, crucial for creating wealth and value and driving innovation. A strong food processing sector not only supports farmers but also shields the entire food industry from the impacts of macroeconomic variables such as currency fluctuations. Moreover, the challenges posed by climate change only exacerbate the difficulties, making it more critical for regional economies to have robust processing capabilities to mitigate these effects. With inadequate processing facilities, consumer prices are subject to increased volatility and uncertainty.
Farmland values serve as a key indicator of the health of the food manufacturing sector. According to the 2023 Farm Credit Canada report, farmland values in Canada have increased by an average of 11.5 per cent. By comparison, most Atlantic provinces have consistently remained below the national average, with New Brunswick at 5.6 per cent, Newfoundland and Labrador at 7.4 per cent and Nova Scotia at 7.8 per cent.
This trend is reflective of decades of focus solely on supporting farmers without sufficient emphasis on food manufacturing. As a result, the Atlantic region has lost many plants, allowing Quebec and Ontario to supply most of the domestic food consumed in the region. Even in the case of supply-managed commodities like dairy, most of the milk and butterfat are transported out of the region and returned days later for consumption, which contributes to higher retail prices. It is no coincidence that the Atlantic region currently has the highest food insecurity rates in the country.
However, the challenges in the Atlantic region are largely due to its remoteness and the weak economic case for processing in an area with a population of less than three million. Conversely, British Columbia's situation is different. According to the same Farm Credit Canada report, British Columbia was the only province where farmland values decreased by 3.1 per cent. This decline points to underlying issues in the sector.
A recent report commissioned by the Greater Vancouver Board of Trade and NAIOP Vancouver Chapter highlighted those industrial lands, which constitute only four per cent of the total land area, support over 450,000 jobs and contribute $50.1 billion to the regional GDP, with a total output of $92.5 billion. This demonstrates the significant economic contribution of value-added sectors. Unlike the Atlantic region, British Columbia has many competitive advantages, including a younger and larger population, better infrastructure, more capital, a vibrant entrepreneurial ecosystem and proximity to major urban markets.
However, what British Columbia now critically needs is greater access to industrial lands. Without adequate industrial space, investments are diverted elsewhere. The shortage of industrial land is stifling growth and innovation, prompting companies to relocate from Metro Vancouver to nearby areas such as Calgary, Edmonton and Washington state, taking new jobs and investments with them. For example, a poultry plant, Sunrise Foods, recently relocated to Alberta to service the British Columbia market, which may have contributed to higher chicken prices in the province. B.C. consumers are paying 40 per cent more for chicken than the national average, even though chicken is supply-managed in Canada and prices should be stable.
British Columbia is at risk of following the Atlantic region's footsteps by failing to prioritize food manufacturing due to antiquated land management principles. Processing is, and will likely remain, the neglected component of the food supply chain. Once it is gone, it is hard to restore. As food processing erodes in the region, British Columbia will gradually become more food insecure, a direct result of policy decisions that emphasize an idyllic, pastoral view of farming over the practical needs of modern food supply chains. This short-sightedness could lead to significant economic and social challenges for the province.
Sylvain Charlebois is senior director of the agri-food analytics lab and a professor in food distribution and policy at Dalhousie University.
