Food manufacturers, including those using poultry products, are struggling through a tough year, according to the Conference Board of Canada.
In its report, Canadian Industrial Outlook: Canada’s Food Manufacturing Industry, Summer 2012, the board says the slow recovery in the United States – Canada’s key export market – coupled with a significant run-up in commodity prices and a weak Canadian job market have slowed the industry’s growth. Furthermore, large discount retailers, such as Wal-Mart which has only recently entered the grocery sector, have made it harder for processors to pass on increased costs to store level, decreasing profitability. In addition, consumers are attracted to the less expensive store-owned brands, putting further pressure on the margins of food manufacturers who are selling national brands.
The industry’s gross domestic product is forecast to increase by only 0.5 per cent this year. Industry profits will rise slightly this year to $4.7 billion from $4.6 billion in 2011. Gross domestic product growth should improve in 2013, the board says.