Industry profile (Canada's food processing industry)

In 2001, the Canadian food processing industry (NAICS 311) employed 238,000 people, 12% of the total employment in manufacturing and 9% of the value added. It is Canada’s third largest manufacturing industry.

The Canadian food processing industry profile provides a brief introduction and overview of the industry and it's trends and offers some comparisons of the Canadian food processing industry in relation to the industry in the other G-7 countries.

The food processing industry does not include farming. The Canadian farm and food processing sectors represent approximately 3.7% of gross domestic product (GDP). Add the 2.6 % of GDP associated with food retailing and wholesaling and the food and agriculture industry represents approximately 6.3% of total Canadian GDP.

Food processors at a glance
Characteristics of food processors
Developments in Canadian food processing
Data availability

Food processors at a glance

The largest food processing industry, measured by shipments and value added, was meat processing. The sugar and confectionery industry was the smallest in terms of shipments and sea food product processing was the smallest in terms of valued added.

Meat processing leads the food industry in exports and accounted for one third of the value of total food exports prior to the impact of the nearly four-month embargo on meat exports in mid-2003, as the result of the identification of a single cow with bovine spongiform encephalopathy (BSE). A further 20% of total food exports are accounted for by the seafood product industry, followed by grain and oilseed milling (10%), fruit and vegetable processing (9%).

Meat processing employs the largest number of workers accounting for 28% of all food industry employment. The bakery and seafood industries are tied for second place with 15% each, followed by the fruit and vegetable processing industry with 10% of the workforce. The grain and oilseed millers employ the fewest people with about 3% of all food industry employees.

Meat processors report the biggest payroll with annual wages and salaries of about $2 billion, 28% of the payroll of the total food industry. The bakery sector is a distant second with a total annual bill for wages and salaries of just over $1 billion, or 15% of the food industry payroll. The grain and oilseed milling industry had a payroll of less than $400 million, the smallest of all the food processing sectors.

The largest numbers of establishments are found in the bakery and tortilla industry, a consequence of the many small ethnic and specialty bakeries in the industry. Meat processing reported the second highest number of establishments largely because of the many small specialty producers of smoked meats and sausages.

	Table 1. Number of establishments and workforce, by food processing industry group, Canada, 2001
	Table 2. Wages and salaries, by food processing industry group, Canada, 2001
	Table 3. Manufacturing costs, by food processing industry group, Canada, 2001

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Characteristics of food processors

The average value of shipments per establishment in 2001 varied from $30 million in the grain and oilseed milling industry to $2.7 million in bakeries and tortilla manufacturing.

In terms of production workers, establishment size in the food-processing sector varied from about 76 production workers per establishment in meat processing to 17 in the bakeries and tortilla industry.

Measured by production workers per establishment, meat, sugar and confectionery products, and fruit and vegetable preserving industries have the largest establishments, and animal food processing, bakeries and tortilla manufacturing industries are the smallest.

Labour productivity, measured by the value of shipments per production worker and value added per production worker was highest in the grain and oilseed milling industry followed by the dairy industry. Labour productivity was the lowest in the seafood, meat, and bakery industries which may simply mean that it is still more efficient and more profitable to use more labour and less capital in these industries in comparison to the rest of the sector.

Manufacturing intensity is the value added to a product by manufacturing, calculated and recorded as a percentage of the value of the manufacturers’ shipments. Value added is the value that is added to a product by, for instance, producing baked goods from flour, sugar, salt, yeast, eggs, water, and vegetable oils. Bakeries add 50% to the value to the products they process, greater than any other food processing sector and meat processors add 22% to product values, the least of all sectors. On average, industries in the food-processing sector add about 32% to the value of the products they process.

	Table 4. Average shipment values, value added and prodction workers per establishment, by food processing industry group, Canada, 2001
	Table 5. Average value of shipments, value added, outputs, wages and manufacturing intensity per production worker, Canada, 2001

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Developments in Canadian food processing

The food manufacturing sector has been able to increase the amount of value they are able to add to their products by just over 4% per year but that is about half of the 8% manufacturing industry average. The animal food processors have been the exception, with an 8% average yearly increase, enough to match the manufacturing industry average. Meat processors have made inroads in increasing the value added of their products but with a 5.3% annual increase are just above the food processing industry average. Sugar and confectionary manufacturers were the other bright spot, increasing value added by an average of 5.5% each year between 1992 and 2001.

All food processing sectors were able to increase the value of their shipments over the 1992-2001 period with an average annual increase of almost 5%. The largest yearly increases were achieved by animal food processors (6.7%), grain and oilseed millers (5.9%), sugar and confectionary manufacturers (5.8%) and meat processors (5.6%).

Average annual wages of food industry workers have been essentially flat, declining an average of 0.2% a year since 1992 in comparison to a 1.6% annual increase in the manufacturing sector. Wage declines were greatest among workers in the seafood sector (−2.1%), a sector that has seen a number of plant closings since 1992.

The grain and oilseed millers have made some substantive improvements in their productivity, measured by output per hour of production worker. The millers 8% annual increase since 1992 is double that of the manufacturing sector, and almost three times the increase of the other sectors of the food industry.

Exports are where the food manufacturers have really made progress, increasing food exports 12% each year over the ten year period 1992 to 2001. Exceptional annual increases have been made by fruit and vegetable processors (20%) and bakeries (18%).

Table 6. Annual percentage change of selected food processing industry indicators, Canada, 1992 to 2001

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Data availability

The data in this Industry Profile are those available as of March 2004.