Thank you.
On behalf of Food and Consumer Products of Canada, FCPC, and the member companies we represent, I would like to thank the Standing Committee on Industry, Science and Technology for undertaking a study on Canadian manufacturing. I would like to take this opportunity to highlight the important role of the food and consumer products industry to Canada's manufacturing sector and its future.
I'd also like to say how pleased I am to have the Canadian Agri-Food Policy Institute testifying with me today. We collaborate closely, and they do excellent work.
FCPC is Canada's largest industry association representing companies that manufacture and distribute the majority of food, beverage, and consumer goods found on store shelves, in restaurants, and in people's homes. Our membership is truly national, providing high-quality jobs to both urban and rural Canadians in more than 170 federal ridings across the country.
Food manufacturers, as we heard earlier, are in fact the largest employer in the manufacturing sector in Canada. We were pleased that budget 2016 recognized food manufacturing as the largest employer in Canada and an important contributor to the economy. For the first time, food manufacturing was also identified as a priority in July at the federal, provincial, and territorial agriculture and agrifood ministers' annual meeting. We are hopeful that this recognition will be reflected in future government research, policy, and programs.
We also heard earlier that there's enormous growth potential for this industry. It's estimated that the world's population will grow to 9.6 billion by 2050. This will require a 70% increase in global food production. According to the chair of the government's advisory council on economic growth, Mr. Dominic Barton, food will be one of the biggest businesses in the world. Mr. Barton believes Canada has the potential to be a leading global food player, but we're not there yet.
Canada is well positioned to play a vital role in feeding the world with its high-quality and made-in-Canada products. Our reputation in food safety, ranked as number one in the world by the Conference Board of Canada in 2014, can help propel Canada into this leading role. Despite the growing global demand for food and trust in Canadian products, however, Canada is actually importing more value-added processed food than it is exporting. Most recent figures show that we have a trade deficit of $7.55 billion in further processed food products.
According to CAPI, which studied the issue extensively, the reason for the trade deficit is the steady decline in net capital investment in machinery, equipment, and buildings. Certainly we are seeing those challenges presented by aging manufacturing facilities across the country. More incentives are required to urge food and consumer product manufacturers to reinvest in their Canadian plants, open new and modern facilities, and integrate new technology like automation robotics. Other countries are fiercely competing for these investment dollars. We need to be in the game if we want to keep value-added manufacturing jobs here in Canada.
Now, another hurdle is our backward-looking regulations that have not kept pace with advanced technologies, global practices, or new product innovations. A modern regulatory framework would encourage companies to manufacture in Canada, grow their operations, and introduce innovative processes and products. Canada's innovation and growth agenda depends on Health Canada's ability to modernize its food and consumer product regulations.
We also need to carefully consider the impact of new regulations on our industry's ability to innovate and grow. There is currently a lot on the table in terms of Health Canada's potential intervention in our sector: how we make our products, how we package our products, and how we market our products. We recommend that the government take a balanced and holistic view of existing and potential regulatory initiatives as a whole in terms of the efficacy of the measures and their economic consequences.
Overall, I think we need a new way of looking at the food processing sector in Canada and a recognition of its current economic contribution and potential. I like the way CAPI summed this up in a recent report, “Canada is often viewed as satisfied with remaining largely a commodity supplier, rather than doing more to add value to what it produces or enhance its processing potential.”
We need to process for the sake of processing, and figure out how to add value beyond the farm gate. Food manufacturers, however, remain currently under-represented in the federal government. In our home, which is Agriculture and Agri-Food Canada, only about 5% of the entire departmental budget is allocated to the food manufacturing sector. This means that only about 5% of the department's funds in areas like research and programs, which are critical for our sector, are focused on food manufacturing.
If we want to retain and grow food manufacturing jobs here in Canada, we need more balance and equity in the department. We need to take a step back and map out these challenges and opportunities presented by the fourth industrial revolution on a global scale and figure out how to equip Canadian manufacturers with the tools that they need to compete. I highlighted a few steps needed along the way, including more incentives for capital investments, a modern regulatory framework, and more focus on food manufacturing research and programs.
We're taking a deeper dive on these critical issues in partnership with Canadian Manufacturers & Exporters. As explained by CME at this committee on May 31, they're spearheading Industrie 2030, and we are pleased to be working with them in partnership on this project. The objective of Industrie 2030 is to outline an action plan for growth to double manufacturing activity in Canada by 2030. Industrie 2030 will be launched on October 18 and 19 in Ottawa, and we encourage the committee to review the findings as you prepare your report on manufacturing.
Canada has the potential to be a global leader in manufacturing and the work of this committee is extremely important. We share the government's focus on growth, innovation, and competitiveness and look forward to working closely with members in this committee to make manufacturing a priority.
Thank you.