Manufacturers in the food and beverage sector in B.C. are sounding the alarm because a rising number are struggling with higher expenses and lower profits.
In its most recent report on the status of the industry, the B.C. Food and Beverage Association (BCFBA) is now calling on the provincial government for “practical solutions.”
After the initial report two years ago, the lobby group says that little has improved and the challenges have only become larger.
According to the statement, “expenses have increased faster than revenues for much of the past five years.”
Food and beverage companies are dealing, among others, with lower consumer spending, uncertainty around trade with the U.S., and higher raw material costs.
Additionally, the BCFBA says that most companies are not able to pass the rising costs on to retailers and end customers.
“Manufacturers reported difficulty securing timely price increases from retailers, meaning cost increases are often absorbed through reduced margins,” the report said.
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BCFBA warns that this could lead to factory closures and a loss of output in the sector.
“Because of the cost of doing business here, we are not seeing big companies moving in. We have food companies leaving B.C., but we don’t have other ones coming in to replace them,” said James Donaldson, CEO of BCFBA, in an interview with CityNews.
“So, overall, our manufacturing capacity shrinks a little bit, and that puts pressure on our food system, which affects food security, and it affects pricing as well.”
He says that any disruption to the industry’s operation, hinting at the skyrocketing oil price and issues with shipping, increases costs even further.
In order to prevent further damage to the industry, he calls on the province to support market diversification and supply chain resilience.
According to Donaldson, one option is to allow access to “unutilized land that could be leveraged for food and beverage manufacturing.”
“The cost of industrial space in B.C., particularly in the Lower Mainland, is extremely high. That’s been an ongoing issue for small companies and bigger companies here in B.C.”
BCFBA’s report states that 47 per cent of the industry’s companies say that the cost of acquiring land or renting suitable facilities is a major challenge.
The organization is suggesting leveraging the Agricultural Land Reserve (ALR) for food manufacturing uses, including land not suitable for agricultural production due to poorer soil conditions.
B.C. is defining ALR as land where agriculture is recognized as the priority use, which currently covers 4.6 million hectares in the province.
He adds that the sector is also facing issues with the retention of skilled workers as it is competing with other industries in the province.
The BCFBA represent about 2,800 companies which employ more than 37,000 people in B.C.
The food and beverage industry is generating almost $15 billion in revenue.
The three largest markets for exports are the U.S., China, and Japan.
– With files from Monika Gul.