Canadian Food companies do Innovate

I thought it would be appropriate at this reflective time of year to look back and acknowledge the many companies, and their staff, who have succeeded at innovation.  We often hear that Canadian food companies perform poorly when it comes to “innovation” even though we see hundreds of new products introduced into the marketplace each year.

Recently, FOODTECH Canada was asked to participate in an innovation showcase to highlight “innovation successes” from Canadian companies that worked with our food centre members. Fortunately, we had many to choose from. The showcase occurred at the end of November, and featured eleven products from five food technology centres. All of these food and bio-products are agriculture based, and all feature Canadian raw materials. Products included Honibe solid honey drops, Buckshots buckwheat snacks, Three Farmers Camelina oil, Bajong energy bars with dried berries and ginseng, Tabletree’s pure Black Cherry juice, Siwin Foods meat based meals, Ceapro’s dried beta-glucan, Manitoba Harvest Hemp hearts, Buffalo Stix bison and cranberry jerky, Solberry Seabuckthorn purée, and Etuvé sous-vide meals.

A number of these products have been recognized for their uniqueness and quality. Awards include both national and international recognition as ‘best new products’, including Seabuckthorn, Honibe drops, Buckshots and Black cherry juice. It’s not surprising to also hear that two of these products (Honibe and Buffalo Stix) were recently launched into space with Canadian Astronaut Chris Hadfield, after being chosen in a national campaign to select the top 10 Canadian food products for this mission.

These products were developed with support from FOODTECH Canada’s network of food technology centres. Centres help companies understand what is involved in commercializing food products  including the technology, equipment, food safety and regulatory requirements that are needed to enter the marketplace. Collectively, food centres work with 1,000 companies each year, resulting in several hundred new products and multiple improved processes.

Despite these efforts, the Conference Board of Canada released a study showing that only one-third of companies considered product or process improvements priorities that would impact their ongoing success. According to Daniel Munro, Principal Research Associate, “when it comes to innovation, the Canadian food industry is content to compete for the bronze medal.” We know that Canada’s trade balance continues to decline, and the Conference Board also compared Canada’s performance to Brazil and China for their share of global food exports. While Canada’s share rose 0.7 per cent in 2011, Brazil’s share tripled and China’s nearly doubled in the same time frame.

So, what to do? The Conference Board recommends eight actions for business and government. While all of these are sound, quite a number are focussed on R&D. Most of  the above products, as innovative as they are, were not heavily supported by “research” in the traditional sense (with a few exceptions). Rather, they involved much applied developmental work, that looked at maximizing agriculture materials, to create higher value food products. We need more focus on this activity in Canada, to both increase our domestic uptake of agriculture outputs and to add value right here in Canada. In addition to the eight actions,we would add that we need more support for companies to access the spectrum of innovation resources, such as those found within our food technology centres. Obviously, they seem to know how to help Canadian food businesses achieve innovation success.

You get what you focus on

Rebecca Dee-Bradbury, Kraft Food’s Australasian Chief, believes that “you get what you focus on” and as a result, Australia  is primarily seen as a raw material supplier to Asia.  According to Dee-Bradley, the Australian food industry should be more than Asia’s commodity food supplier.  If Australia is not seen to be a high-value food innovator, what does this say about Canada?

In Canada, much of our  focus has been on production, resulting in commodities that we ship outside the country for others to add value and return home. All at a higher price, of course.  On the one hand, we should be proud of the high quality raw materials that we export globally. Both private and public sectors have invested heavily in order to provide customers with the traits that they desire. On the other hand, much effort has been made to export raw materials. As such only 45% of Canada’s agriculture outputs go directly to the processing sector here at home.  It seems there is a great opportunity for our collective industry on two fronts — to improve the domestic market for our own quality raw materials, and to increase exports of higher value products.

In an interesting analogy, Australia’s food processing industry has experienced a number of challenges in the past few years. This includes rising input costs and a high dollar value, which has driven a number of companies to close factories or relocate off-shore. Unfortunately, similar issues are facing the Canadian food processing industry. In a similar analogy, Dee-Bradley is the food industry representative on the Australian Prime Minister’s Task Force on Manufacturing. Interestingly, most of Australia’s recent successes in processed foods marketed to Asia incorporate local agriculture materials. Recently, Canada formed a new Agri-Innovation committee, with 8 producer, and 2 food industry representatives.  This new committee is tasked with providing advice to the Minister on “agricultural innovation”.   Borrowing the quote from Rebecca Dee-Bradley, is Canada’s agri-innovation focus too narrow, or should it broaden to include more of the food manufacturing sector? To paraphrase another well-known quote “what’s good for the processing sector may be good for the agriculture sector”.

The Australian task force will  recommend the creation of a globally relevant food innovation centre. This will bring together a collaboration of existing organizations, and will be modelled on Singapore’s Food Innovation and Resource Centre. In Canada, we have a number of food innovation centres, located in each province. These centres work with producers, primary processors and value-added manufacturers to commercialize innovative products and ingredients, which are exported to 180 countries  The majority of these are based on local agriculture products.  While the centres are networked through FOODTECH Canada, for the most part, centres and their industry clients, do not play a significant role in the  federal agricultural innovation dialogue.

According to one Australian food member, there is much dismay that Australia has little international clout in the value-added sector, stating “it’s incredible to think that Singapore itself sees a great future in food processing, so why don’t we?  Canada could take notice of these global efforts and show the world that like Australia, we can also do more than just “digging and planting”.

How will CFIA’s modernization impact you?

Earlier this year, a Senate  Bill was introduced (Bill S-11) to consolidate a number of food acts into a single Safe Foods for Canadians Act.  The SFCA will provide a more efficient legislative framework to govern most foods, regardless of the type of product. This seems a natural evolution for the Canadian Food Inspection Agency (CFIA) as they move towards consolidation from several departments (in the early 90’s) to a single agency tasked with ensuring safe food for Canadians.

If this act is passed, all importers and domestic processors that sell products outside their province of origin, must obtain a license from CFIA. In order to acquire this, processors must demonstrate they have effective controls in place to ensure safety. Namely, these are “preventative food safety control plans” (or PFSCPs). Note CFIA is not saying everyone will require a full HACCP plan. Rather, the plan has to include good manufacturing practices, such as sanitation procedures, and implement appropriate “product and process controls” to ensure food is safe to consume. So, in many ways, it is similar to HACCP but the controls will depend on the level of risk inherent in the food being produced.

So, what does this mean for the food processing industry? CFIA is currently in the process of sharing their “inspection modernization” plans. For some plants that are currently registered (such as meat and dairy operations) little will change in the day-to-day management of food safety.  While not many of the operational details are known at this time, indications are that requirements will not be lessening. However,  indications are that industry will be tasked to take a stronger role in demonstrating that they have correct practices in place.  Processors that have never been federally licensed will have to implement systems that meet CFIA’s requirements of PFSCP (assuming they are  importers or trade  intraprovincially). This will include a large number of processors under the “non-regulated” sector, such as confectionery, and bakery products, to name a few.

So, what will these companies do? Larger companies with multi-product facilities that already require HACCP can benefit from their operational knowledge.  Smaller processors will have to independently examine their current practices and determine what is missing and should be included in their updated plans. There are a number of organizations that can assist, including the food centres within FOODTECH Canada.  Centres have expertise in helping companies develop, implement and audit HACCP-based systems, as well as train staff on food safety practices, such as sanitation, record keeping, recall, etc. Some centres have developed programs geared specifically to smaller processors with low risk foods.

Overall this progression should benefit the industry in that more and more retailers and vendors are asking for food safety assurance, such as the Global Food Safety Initiative. GFSI includes a process for smaller companies to obtain recognition over a number of years. The implementation of fully developed PFSCPs will go a long way to support such a goal, and this can be a double win for industry as CFIA is considering how to recognize food safety systems (such as GFSI) that have equivalent outcomes.

Industry strives to ensure that food is produced safely. Nonetheless, some companies lack internal resources to know what is needed in all scenarios. Therefore, an incremental approach makes sense, along with a great deal of hand-holding to ensure that everyone can achieve the desired outcomes. The end goal is to ensure that we have fewer and fewer incidences of compromised food, and with current news of massive recalls, it is clear that industry needs on-going support from a number of players.

Is Innovation Passé?

A recent article in the Wall Street Journal suggested that the word innovation is past its prime and is in danger of become a cliché. The author suggests that companies are throwing the term around, but aren’t creating any monumental change. In terms of overuse, a search of reports shows companies mentioned some form of the word “innovation” 33,528 times last year, which was a 64% increase over the past five years. As well, more than 250 books with “innovation” in the title have been published in the last three months alone. Not surprisinlgy, Bill Taylor recently blogged on the Harvard Business Review “Please, can we all just stop innovating?” 

So, does this mean the end of innovation and development for industry? According to Phil Donne, President of Campbell’s Canada, there are many legitimate reasons for a food company to continuously innovate . He was speaking at the recent Canadian Institute of Food Science & Technology conference, which is attended by folks from industry, research, academia and government. What Phil Donne defined as innovation is “a new way, done first”.  This is echoed by Bill Taylor, who provides some excellent examples of truly innovative businesses, but suggests what they did was really a new way of doing business. Some examples he cites are “creating and building a great customer service brand” for Zappos, or “creating a whole new category of entertainment” for Cirque de Soleil.  A new way, done first describes innovation and captures the heart of businesses undertaking creative approaches to develop better products or services.  Along these lines, Campbell’s Nourish soup is also a significant achievement, as a new, done first  “meal in a can” that requires no heat or water to consume. It’s an innovative nutrient dense solution for the world’s hunger and disaster relief needs.

Perhaps we need a better descriptor for the ongoing efforts of businesses which continuously provide safe food to Canadians, while being mindful of trends for health, new flavours and  exotic foods, sustainability, and better ways to prepare wholesome meals. The CIFST conference highlighted many of these new technologies and products, including EnWave’s vacuum drying which results in higher quality dried foods, Simply Fresh’s Meal kits for Fish, to increase fresh fish consumption, Cigis’ work on  incorporating pulse flours into “healthier for you” foods,  and the HealthCheck program that requires manufacturers to reduce sodium in products.  These are examples of doing something new, first. Innovation can’t go away, but as Bill Taylor asks, can we stop trying to innovate and just do something new? and I  would respectfully add, “first”.

Food Innovation Strategies around the Globe

There is much interest and continued discussion on “innovation”. Some of this is a result of the recently published review of federal R&D investment in Canada, and mostly, how this investment is not being transferred into new commercial products or improved technologies. Agriculture & Agri-Food Canada is in the process of defining the next policy framework, in which innovation is considered a key driver for competitiveness and adaptability for the agri-food industry.

The recent federal budget highlights support for innovation, including increased support for NRC IRAP, venture capital, Business-led Centres of Excellence, and an improved SRED tax incentive program. For the food industry specifically, some of these will be helpful. Still, we seem far behind other jurisdictions, with food manufacturing specific innovation programs to recognize the importance this sector plays in many economies. 

One example is from Hightech Europe . This organization received $3.4M EURO to create the “First European Food processing Network of Excellence”. It’s objective is to link European competencies in the food processing sector. Admittedly, they state that “excellent research has been carried out but has not always lead to substantial innovations in the market”.  This is the same worry that we hear from reviews that examine Canada’s performance with research and commercial outcomes. Other countries, including Australia, New Zealand, Singapore, the UK, and the US have also invested funds in food specific innovation strategies, granting programs, and physical infrastructure, such as the newly created $26M Food Bowl in New Zealand.

We know that the Canadian food industry is globally competitive with exports going to over 180 countries. To remain competitive and continue to grow international markets, Canada should similarly focus support on the food industry, through strategic innovation programs. While support for knowledge creation is important, support for knowledge transfer is also required – with programs that balance ideas with implementation — much like our competitors are doing now around the world.

Federal R&D Review could spark Innovation Culture

Yesterday, the independent panel tasked with reviewing federal R&D funding published its report. The panel made six key recommendations that ranged from simplifying the SR&ED tax credits, to reorganizing the National Research Council (NRC)  into collaborative centres with business, universities and provinces. Interestingly, their first recommendation was to create a new national “Industrial Research and Innovation Council”.  This is significant, as it recognizes the need to embrace innovation in the broader context.

Put simply,  innovation  is the successful implementation of a new idea, product or service. Research is an important component of innovation, particularly for radical (vs. incremental) innovation. Nonetheless, it is the commercialization of the idea, that defines innovation of any type. It’s not clear that the creation of a national council will focus on the later stages after proof of concept, but many organizations, including NRC, have articulated the need for commercial or market relevant research.  Being focussed on the commercial relevance of research will surely benefit a company’s innovation outcomes.

A second proposed benefit of having a central agency deliver R&D/Innovation funding is to make the system less complex for industry to access. It may be beneficial to also divest oversight to organizations that work closely with SMEs, that understand industry needs, and can therefore strategically target funding. A number of European and Australian R&D agencies offer “innovation vouchers” for companies to work with scientific organizations. These are much simpler to administer and are usually managed by the organization.

But beyond linking like-minded organizations and streamlining financial support, Canada needs to enhance its corporate innovation culture. It is one thing to have funding available and another for companies to understand the process of innovation, including how it will benefit their organizations,  how much is needed, where to find resources, etc. The Minister of State for Science and Technology, Gary Goodyear, recognizes that “when businesses don’t invest in research and development of new products, it will be harder for them to remain competitive and grow”. However, suggesting that industry should invest in more R&D doesn’t make it happen overnight.  Aside from research other components are needed  for successful innovation, including support for scale-up and technology transfer, business and market intelligence, proof of commercial relevance along with access to capital at earlier stages of commercialization.

Overall, the recommendations seem practical and a more focussed approach through a central council with the development of a clear federal voice will hopefully lead to recognition of the culture needed to ultimately help Canada improve its innovation success.

Creating Food Innovation Systems

Currently, there is a groundswell of discussion going on about the food industry. Much is arms-length in that it is not tied specifically to any one company, but rather, by organizations and individuals that are aligned with food processors. This includes the Conference Board of Canada/Food Centre, the Canadian Agri-Food Policy Institute, the Agri-Food Innovation & Regulatory Chair, Canadian Food Processing Industry roundtable, various food industry associations, and a handful of interested individuals, in addition to the government of Canada through various departments and agencies.

What’s the basis of all this activity? The short answer is ‘innovation”. While this may not seem surprising, the timing is interesting. Recently, food manufacturing became the number one manufacturing industry in Canada, for both sales and employment. This, in itself, is a significant milestone and worthy of discussion. However, if the industry is number one in Canada, why all the concern about innovation now?

It seems that people are realizing that the systems we have been utilizing to “help” industry innovate in Canada, may not be fully complete. Innovation can effect all areas within a company and thus impacts productivity, competitiveness and sustainability. All good reasons to shine the spotlight on how the sector innovates, and by extension, how it competes globally and how sustainable the industry will be in the long-term. 

A recent article in BioBusiness (July/Aug) suggests that the ways government invests in R&D has failed to spawn significant commercial success, according to author Rory Francis. It asserts that there are other components of the innovation “system”, including market assessment, technology transfer, access to capital, HR capacity, regulatory environment and more, which have to be well-developed  and well-connected to capture the economic potential of research.

Developing effective innovation systems is where concerned industry supporters, including governments, need to focus. While investment in research to spawn new products or processes has been well supported, the translation of research and novel technologies has been less than stellar. According to many well accepted definitions, innovation includes not only the generation of the idea, but its successful implementation. Supporting implementation is where our innovation systems are incomplete.  

FOODTECH Canada in aligned with these discussions, and wants to develop programs that can put more connected, networked systems in place for the food industry. This would bring expertise in the above areas, such as market intelligence, technology transfer practices, and infrastructure, along with scientific capital, to the doorstep of processors. We encourage a continued dialogue on how to make these linkages and systems operational in Canada. Many other countries have this figured out, and now its Canada’s time.

In Sales and Employment, Food Manufacturing is #1

Today the Globe and Mail reported that the food sector is the largest manufacturing industry by sales. According to the Globe, sales set a record last year, topping $800 billion – more than textiles, paper, machinery and aerospace combined. Food manufacturing also surpassed transportation equipment to become the industry’s top employer.  Even during the recession, as most other sectors slumped, food sales kept growing.

The paper goes on to report that the sector is not without its challenges. These include the strong Canadian dollar which has an inverse effect on exports, as well as high commodity prices and, what some consider, an outdated regulatory system when it comes to approving new foods and food claims. 

While Canada currently relies heavily on the US market, many companies are knocking on other country’s doors, including the UK, Japan, and China. Canada’s reputation as a provider of clean, healthy and high quality products often helps open doors according to manufacturers looking to expand their export reach.

The growth of the value added sector is only good news for many of Canada’s agriculture and fisheries producers, as  Canadian processors are the single largest buyer, taking nearly half of their outputs. So, how does the industry keep this position? What is needed from processors, producers and government to maintain this growth? Several organizations, such as CAPI and the Conference Board, are exploring ways to better collaborate and innovate, with new models for working together. FOODTECH Canada believes more coordinated activity between  ‘service’ providers, such as universities, colleges, and our own food and bio-technology centres, will help industry supply the products globe-trotting and health-focused consumers are looking for.

Being a significant sector, calls for robust oversight that is supportive and strategic. FOODTECH puts out a call for government and organizations that work with the food sector from start to finish, to ensure that we continue to collectively enhance the industry’s position in Canada and around the globe.

Input into Growing Forward 2 policy discussion

Agriculture & Agri-Food Canada invites interested parties to join the discussion on the future of agriculture policy and help develop the next policy framework – Growing Forward 2. 

FOODTECH also encourages participation in this ongoing public consultation, recognizing the significance of agriculture and food manufacturing to this country.  Charting the Way Forward to 2020, a discussion paper, provides the framework for the next agriculture policy and there are a number of references made regarding Canada’s food needs. These include future trends that will shape what food products will be demanded by local and global markets in the years ahead. It also mentions growth in export trade for agri-food products and notes that three quarters of Canadian processed food is sold in the domestic marketplace.

In particular, the policy is focussing on these areas: Competitiveness & Market Growth, and Adaptability & Sustainability. In some cases these terms refer primarily to agriculture, such as “sustainability” that  includes risk management programs targeted to farming operations. However, sustainability can also involve helping processors address consumers concerns about manufacturing foods with lower water and energy inputs, or beter utilization of by-products. Or, it can refer to better managed distribution systems that avoid food waste.  Therefore, it is important to have a robust dialogue with everyone that is intimately connected with our agriculutre and food sector.  This includes producers, processors, input suppliers, distributors, buyers, and sellers of Canada’s agriculture and food products. From these, future policies should reflect the important win-win relationship between agriculture and food, and supporting sectors, helping to create conditions that strengthen these economically valuable connections.  

A number of consultations have ocucred across the country, with a few sessions remaining open. You can also send comments electronically. For background information on Growing Forward 2,  and information on the consultations, go to: http://www.agr.gc.ca/GrowingForward2

Food is getting it’s own political identity

According to a recent Globe & Mail article, for the first time in Canadian election history, food becomes a political priority. Each of the country’s federal parties have included strategies that highlight food as a distinct priority separate from agriculture. This extent of this varies by party. The Globe offers a summary of party platforms by category, that gives highlights of each party’s “food” focus.

This is positive recognition of the mutually supporting nature of “agriculture” and “food”. In Canada, the food industry is the single largest buyer of Canada’s agriculture outputs. We’d like to see this continue to grow. In order to do this, we need a healthy production system and a vibrant food processing industry.  It’s not beneficial to focus on only one part of this increasingly interdependant value chain.

However, one apparent omission in the political platforms is the word “food industry” (with the exception of the Liberal party which promotes export support for food and beverage processors).  We propose that supporting research and innovation for the value-added processing industry, in addition to agriculture, will have a significant effect on the economy. This sector is already a major force in Canada as the second largest manufacturing industry. More importantly though, a stronger Canadian processing industry will have a profound impact on the agriculture sector as it generates market pull for producer outputs. Let’s truly recognize Canada’s “agri” and “food” industries as significant sectors that work very well together and with support, can continue to grow their national and global positions.