By Jennifer Friesen
DIGITAL JOURNAL
March 16, 2026
Photo by JSB Co. on Unsplash
Walk through a Canadian grocery store and you’ll find wheat from Saskatchewan, the canola oil from the Prairies, and potatoes from Alberta or Prince Edward Island.
But the food itself, the packaged product on the shelf, was often processed somewhere else.
Canada has long been a major global food exporter. The country shipped about $101.2 billion in agri-food exports in 2025, reflecting the scale of its agricultural production and global reach.
But much of the infrastructure that turns raw ingredients into finished food sits outside the country.
Global trade made it easy for ingredients to move across borders for processing until pandemic disruptions and geopolitical tensions exposed how dependent those supply chains had become.
A new report from the Canadian Food Innovation Network (CFIN) argues that those disruptions revealed something deeper about Canada’s food system.
Canada grows a lot of the crops. The gap shows up in everything that happens after the harvest.
Processing plants, ingredient manufacturers, logistics networks, packaging suppliers, and equipment providers form the backbone of modern food systems.
That structure affects everything from grocery prices to economic competitiveness.
And according to Alexandra Barlow, VP of programs at the CFIN, the reasons for it aren’t too complicated.
“There are some structural challenges for doing business in Canada that don’t make it the cheapest option,” she says.
Higher wages and operating costs have pushed many companies to locate processing capacity in lower-cost markets.
So if Canada supplies so many of the ingredients, why are other countries doing more of the cooking?
The part of the food system we ignore
Public conversations about agriculture in Canada tend to focus on farms. Policy debates revolve around crop yields, exports, and farm technology.
The industrial side of the system receives much less attention.
Processing plants, ingredient suppliers, packaging manufacturers, transport networks, and distributors do the work of turning crops into the food that appears on grocery shelves. The money in the food business is made along that chain rather than on the farm.
Canada’s food manufacturing sector is larger than many people realize, with about one in nine Canadian jobs depending on the system that moves food from farms to consumers. Within that system, roughly 6,900 food and beverage processing companies employ more than 300,000 people across the country, says Barlow.
Most are small or mid-sized processors.
Those companies often operate with tight margins and aging equipment, which makes large technology upgrades hard to manage.
Barlow notes that over the past 104 quarters, Canadian businesses have consistently chosen to invest in people rather than machinery and equipment, with plans to prioritize machinery over hiring showing up in only about 11 quarters.
That preference for expanding through labour rather than automation has weighed on productivity for years.
The Organisation for Economic Co-operation and Development warned in a 2025 productivity outlook that Canada continues to lag peer economies in business investment in machinery and advanced equipment.
Food manufacturing illustrates how that pattern plays out on the ground.
During the pandemic some Canadian manufacturers struggled to secure packaging materials and specialty ingredients needed to keep production lines running. When those inputs stalled, companies scrambled to find new suppliers or reformulate products to keep food moving through the system.
Supply chain disruptions have not fully eased.
In early 2026, escalating conflict in the Middle East created what shipping analysts described as a “dual chokepoint crisis” affecting both the Strait of Hormuz and the Red Sea, forcing container carriers to divert vessels and suspend routes across parts of the region.
Shipping companies have increasingly rerouted vessels away from those corridors, adding distance, time, and cost to global trade flows.
For Barlow, those episodes expose something the sector has been wrestling with for years. She says the gap appears in the parts of the system that sit between farms and consumers, where food is processed, packaged, and distributed.
“We talk a lot about agriculture in Canada,” she says. “But we don’t talk nearly as much about the manufacturing and processing side of the food system.”
Where innovation spreads and where it stalls
Food innovation tends to get talked about as if it happens in labs or startup incubators. Picture giant robotic arms and The Matrix-looking code designed to look swanky in green and black but is just Hollywood magic.
Most technological change in the food industry happens somewhere inside processing plants that upgrade equipment, automate production lines, or adopt new ingredients that change how food is manufactured.
That kind of magic is slower and a lot more expensive than launching software.
Installing a new processing system can require millions of dollars in equipment, months of testing, and major changes to how a factory runs. For companies operating on thin margins, those decisions are often delayed until equipment reaches the end of its life.
Barlow says the pace of adoption often comes down to financing rather than enthusiasm for new technology.
“I wouldn’t say that it’s a cultural thing,” she says. “I would say that it’s a capital availability problem first and foremost.”
It also determines how quickly new ideas leave the startup ecosystem and make their way to real production lines.
Startups are producing a steady stream of technologies aimed at the food system. Some are building digital traceability tools that track ingredients through supply chains, and others are developing automated production systems, robotics, or new food ingredients designed to simplify manufacturing.
But the companies inventing those tools are rarely the ones operating large factories.
The report points to a specific group of companies that may ultimately determine whether these innovations spread through Canada’s food industry.
While Canada has roughly 70 large-scale facilities with over 500 employees that have easier access to capital, the real opportunity for resilience lies in the 573 medium-sized processors. These companies, which employ between 100 and 499 people, generate $18.4 billion in sales and are heavily trade-oriented.
Barlow describes them as the companies most likely to test new technologies inside real production environments. She says these mid-sized players represent a significant opportunity for the sector.
“The mid-size players are quite strong.” she says. “They’ve got an outsized opportunity, through increased modernization and investment in technology, to really increase their output, but also drive at profitability.”
Because they have the necessary volume to supply major Canadian retailers, their success is key to displacing imported products in the “center of store.”
Under CUSMA, tariffs on most processed food products traded between Canada, the U.S., and Mexico have been largely eliminated, which has made it easier for finished goods to move across borders within North America rather than be processed domestically.
Their decisions about when to modernize equipment, automate production lines, or adopt new ingredients could shape how quickly the broader sector evolves.
Why supply chains are now a national conversation
Across much of the last year, conversations about economic sovereignty have largely focused on technology and energy
Governments around the world are debating who controls semiconductor manufacturing, critical minerals, data infrastructure, and the energy systems that power modern economies.
Food rarely appears in the same category.
Yet the systems that move food from farm to table operate through similar global supply chains, and Canadian households have been feeling that reality at the grocery store.
Statistics Canada reported today that grocery prices continue to place pressure on household budgets, with food remaining one of the largest contributors to consumer inflation in recent years.
Those price pressures often trace back to the same global networks that shape other industries. Ingredients, packaging materials, processing equipment, and shipping routes frequently cross multiple borders before food reaches store shelves.
Barlow says those dependencies deserve more attention in national policy discussions.
“Food is not only part of our food sovereignty conversation,” she says. “It should be part of our defense conversations, because we’re not going to be much use to ourselves if we can’t actually feed 40 million Canadians who live here today.”
Other governments have begun approaching supply chains through that lens.
Industrial policy initiatives in the United States and Europe now focus heavily on strengthening domestic manufacturing capacity and reducing reliance on vulnerable global supply chains.
Food systems aren’t always included in those strategies.
But as countries rethink economic resilience in sectors ranging from semiconductors to AI infrastructure, the same questions increasingly apply to the systems that produce and distribute food.
A system Canada is still building
Canada’s food system has evolved around global trade.
Crops grown on Canadian farms move easily across borders, often entering processing systems in other countries before returning to store shelves as finished foods.
For years that arrangement worked efficiently. But rising food prices, geopolitical tensions, and renewed debates about economic sovereignty have pushed governments and industry leaders to examine the industrial infrastructure that sits between farms and consumers.
Today roughly 70% of the food consumed in Canada is produced domestically, according to Barlow. The report suggests there is room to strengthen that number by expanding processing capacity and supply chain infrastructure inside the country.
Barlow says one long-term goal discussed is to move that figure closer to 80% over the next decade, which would mean sustained investment in food manufacturing, automation, and logistics networks.
So we’re talking about capturing more of the value created between the farm and the grocery shelf.
Barlow adds that the conversation around those gaps is beginning to cross between sectors.
“They’re not conversations that are unique to our organization,” she says. “Many groups are having these conversations with government, and that’s really good. We need to all be singing from the same songbook in order to change here.”
Final shots
Business investment patterns have favoured hiring over machinery, slowing automation in sectors like food manufacturing.
Innovation exists in the food sector, but adoption often depends on whether smaller processors can access capital.
Written ByJennifer Friesen
Jennifer Friesen is Digital Journal's associate editor and content manager based in Calgary.
March 16, 2026
Photo by JSB Co. on Unsplash
Walk through a Canadian grocery store and you’ll find wheat from Saskatchewan, the canola oil from the Prairies, and potatoes from Alberta or Prince Edward Island.
But the food itself, the packaged product on the shelf, was often processed somewhere else.
Canada has long been a major global food exporter. The country shipped about $101.2 billion in agri-food exports in 2025, reflecting the scale of its agricultural production and global reach.
But much of the infrastructure that turns raw ingredients into finished food sits outside the country.
Global trade made it easy for ingredients to move across borders for processing until pandemic disruptions and geopolitical tensions exposed how dependent those supply chains had become.
A new report from the Canadian Food Innovation Network (CFIN) argues that those disruptions revealed something deeper about Canada’s food system.
Canada grows a lot of the crops. The gap shows up in everything that happens after the harvest.
Processing plants, ingredient manufacturers, logistics networks, packaging suppliers, and equipment providers form the backbone of modern food systems.
That structure affects everything from grocery prices to economic competitiveness.
And according to Alexandra Barlow, VP of programs at the CFIN, the reasons for it aren’t too complicated.
“There are some structural challenges for doing business in Canada that don’t make it the cheapest option,” she says.
Higher wages and operating costs have pushed many companies to locate processing capacity in lower-cost markets.
So if Canada supplies so many of the ingredients, why are other countries doing more of the cooking?
The part of the food system we ignore
Public conversations about agriculture in Canada tend to focus on farms. Policy debates revolve around crop yields, exports, and farm technology.
The industrial side of the system receives much less attention.
Processing plants, ingredient suppliers, packaging manufacturers, transport networks, and distributors do the work of turning crops into the food that appears on grocery shelves. The money in the food business is made along that chain rather than on the farm.
Canada’s food manufacturing sector is larger than many people realize, with about one in nine Canadian jobs depending on the system that moves food from farms to consumers. Within that system, roughly 6,900 food and beverage processing companies employ more than 300,000 people across the country, says Barlow.
Most are small or mid-sized processors.
Those companies often operate with tight margins and aging equipment, which makes large technology upgrades hard to manage.
Barlow notes that over the past 104 quarters, Canadian businesses have consistently chosen to invest in people rather than machinery and equipment, with plans to prioritize machinery over hiring showing up in only about 11 quarters.
That preference for expanding through labour rather than automation has weighed on productivity for years.
The Organisation for Economic Co-operation and Development warned in a 2025 productivity outlook that Canada continues to lag peer economies in business investment in machinery and advanced equipment.
Food manufacturing illustrates how that pattern plays out on the ground.
During the pandemic some Canadian manufacturers struggled to secure packaging materials and specialty ingredients needed to keep production lines running. When those inputs stalled, companies scrambled to find new suppliers or reformulate products to keep food moving through the system.
Supply chain disruptions have not fully eased.
In early 2026, escalating conflict in the Middle East created what shipping analysts described as a “dual chokepoint crisis” affecting both the Strait of Hormuz and the Red Sea, forcing container carriers to divert vessels and suspend routes across parts of the region.
Shipping companies have increasingly rerouted vessels away from those corridors, adding distance, time, and cost to global trade flows.
For Barlow, those episodes expose something the sector has been wrestling with for years. She says the gap appears in the parts of the system that sit between farms and consumers, where food is processed, packaged, and distributed.
“We talk a lot about agriculture in Canada,” she says. “But we don’t talk nearly as much about the manufacturing and processing side of the food system.”
Alexandra Barlow is the VP of programs at the CFIN – Photo by Joanna Wojewoda
Where innovation spreads and where it stalls
Food innovation tends to get talked about as if it happens in labs or startup incubators. Picture giant robotic arms and The Matrix-looking code designed to look swanky in green and black but is just Hollywood magic.
Most technological change in the food industry happens somewhere inside processing plants that upgrade equipment, automate production lines, or adopt new ingredients that change how food is manufactured.
That kind of magic is slower and a lot more expensive than launching software.
Installing a new processing system can require millions of dollars in equipment, months of testing, and major changes to how a factory runs. For companies operating on thin margins, those decisions are often delayed until equipment reaches the end of its life.
Barlow says the pace of adoption often comes down to financing rather than enthusiasm for new technology.
“I wouldn’t say that it’s a cultural thing,” she says. “I would say that it’s a capital availability problem first and foremost.”
It also determines how quickly new ideas leave the startup ecosystem and make their way to real production lines.
Startups are producing a steady stream of technologies aimed at the food system. Some are building digital traceability tools that track ingredients through supply chains, and others are developing automated production systems, robotics, or new food ingredients designed to simplify manufacturing.
But the companies inventing those tools are rarely the ones operating large factories.
The report points to a specific group of companies that may ultimately determine whether these innovations spread through Canada’s food industry.
While Canada has roughly 70 large-scale facilities with over 500 employees that have easier access to capital, the real opportunity for resilience lies in the 573 medium-sized processors. These companies, which employ between 100 and 499 people, generate $18.4 billion in sales and are heavily trade-oriented.
Barlow describes them as the companies most likely to test new technologies inside real production environments. She says these mid-sized players represent a significant opportunity for the sector.
“The mid-size players are quite strong.” she says. “They’ve got an outsized opportunity, through increased modernization and investment in technology, to really increase their output, but also drive at profitability.”
Because they have the necessary volume to supply major Canadian retailers, their success is key to displacing imported products in the “center of store.”
Under CUSMA, tariffs on most processed food products traded between Canada, the U.S., and Mexico have been largely eliminated, which has made it easier for finished goods to move across borders within North America rather than be processed domestically.
Their decisions about when to modernize equipment, automate production lines, or adopt new ingredients could shape how quickly the broader sector evolves.
Why supply chains are now a national conversation
Across much of the last year, conversations about economic sovereignty have largely focused on technology and energy
Governments around the world are debating who controls semiconductor manufacturing, critical minerals, data infrastructure, and the energy systems that power modern economies.
Food rarely appears in the same category.
Yet the systems that move food from farm to table operate through similar global supply chains, and Canadian households have been feeling that reality at the grocery store.
Statistics Canada reported today that grocery prices continue to place pressure on household budgets, with food remaining one of the largest contributors to consumer inflation in recent years.
Those price pressures often trace back to the same global networks that shape other industries. Ingredients, packaging materials, processing equipment, and shipping routes frequently cross multiple borders before food reaches store shelves.
Barlow says those dependencies deserve more attention in national policy discussions.
“Food is not only part of our food sovereignty conversation,” she says. “It should be part of our defense conversations, because we’re not going to be much use to ourselves if we can’t actually feed 40 million Canadians who live here today.”
Other governments have begun approaching supply chains through that lens.
Industrial policy initiatives in the United States and Europe now focus heavily on strengthening domestic manufacturing capacity and reducing reliance on vulnerable global supply chains.
Food systems aren’t always included in those strategies.
But as countries rethink economic resilience in sectors ranging from semiconductors to AI infrastructure, the same questions increasingly apply to the systems that produce and distribute food.
A system Canada is still building
Canada’s food system has evolved around global trade.
Crops grown on Canadian farms move easily across borders, often entering processing systems in other countries before returning to store shelves as finished foods.
For years that arrangement worked efficiently. But rising food prices, geopolitical tensions, and renewed debates about economic sovereignty have pushed governments and industry leaders to examine the industrial infrastructure that sits between farms and consumers.
Today roughly 70% of the food consumed in Canada is produced domestically, according to Barlow. The report suggests there is room to strengthen that number by expanding processing capacity and supply chain infrastructure inside the country.
Barlow says one long-term goal discussed is to move that figure closer to 80% over the next decade, which would mean sustained investment in food manufacturing, automation, and logistics networks.
So we’re talking about capturing more of the value created between the farm and the grocery shelf.
Barlow adds that the conversation around those gaps is beginning to cross between sectors.
“They’re not conversations that are unique to our organization,” she says. “Many groups are having these conversations with government, and that’s really good. We need to all be singing from the same songbook in order to change here.”
Final shots
Canada exports agricultural commodities but much of the processing capacity sits elsewhere.
Business investment patterns have favoured hiring over machinery, slowing automation in sectors like food manufacturing.
Innovation exists in the food sector, but adoption often depends on whether smaller processors can access capital.
Written ByJennifer Friesen
Jennifer Friesen is Digital Journal's associate editor and content manager based in Calgary.
