Present in every region of Quebec, the agri-food industry is an essential component of the economy and of people’s daily lives. It goes far beyond primary production, encompassing processing, distribution and retailing, supporting a value chain that is vital to local economies.
With over 75,000 businesses, this dynamic sector contributes to the province’s food self-sufficiency and stimulates innovation. However, it faces many challenges: labor scarcity, climate change, pressure from international markets, changing consumer behaviors and technological transformations.
Contrasting performances in 2023
Despite these challenges, biofood companies maintained a solid performance in 2023, according to Le bioalimentaire économique, Bilan de l’année 2023, published by the Ministère de l’Agriculture, des Pêcheries et de l’Alimentation du Québec (MAPAQ). Rising prices underpinned some of this growth, although the increases were less marked than in 2022. Quebecers nonetheless felt this food inflation in their grocery baskets, as prices rose by 8.3% for food and non-alcoholic beverages, well above the general inflation rate of 4.5%.
The biofood industry’s real gross domestic product (GDP) grew for the third year running in 2023, increasing by 0.9% to reach $29.5 billion, or 6.9% of Quebec’s GDP. However, this figure remains below the pre-pandemic peak of $30.2 billion.
A closer look at this data reveals that some industry segments are faring better than others. Commercial food and drinking places have been the growth drivers, posting a 5.2% increase in 2023. However, with a real GDP of $5.8 billion, this sub-sector has yet to recover its pre-pandemic level of $6.8 billion.
Agriculture and fisheries
Results were more mixed in agriculture and fisheries, which saw their GDP fall by 4.9%, while food processing grew slightly (+0.5%). Wholesalers and traditional food stores recorded declines of 1.1% and 2.2% respectively, continuing a downward trend that began in 2022.
Labour shortages: a persistent challenge
With 530,085 workers, up 2.6% on the previous year, the Quebec agrifood sector has almost returned to its pre-pandemic employment levels, but the labor shortage remains a major concern, affecting all segments of the industry.
Agri-food jobs in Quebec
In food processing, there are some 7,000 unfilled jobs in the province. According to Food & Beverage Canada, this represents a quarter of all job vacancies in the country, or 28,000. Agriculture, meanwhile, is struggling to hire locally, relying more and more on temporary foreign workers (TFWs) to fill its labor needs, a trend that has been growing steadily over the years. In 2022, the Canadian agricultural sector employed 64,660 TFWs, the majority of whom were deployed in Quebec and Ontario. This high number is explained by specific barriers to local recruitment, including the location of businesses in rural areas and the physical nature of the work. Lack of access to childcare also hinders the participation of women in this sector. Retention is another headache for farm operators, as the turnover rate among farm employees is particularly high. Signing bonuses or other incentives put in place by employers do not seem to be sufficient measures to attract and retain candidates. In 2022, according to the Canadian Agricultural Human Resource Council (CAHRC), two out of five farm businesses were unable to find all the employees they needed. The shortage of workers is likely to get even worse, with over 85,300 people expected to retire from Canadian farms by 2030.
Technology to the rescue
Automation is often presented as one of the answers to labor shortages. However, several obstacles are slowing down its adoption. High technology costs and a lack of digital infrastructure, including high-speed Internet access in rural areas, are holding back the take-up of automation. Despite these difficulties, some companies see modernizing their processes as the way to increase productivity and remain competitive. According to MAPAQ, technology use in the agricultural sector in Quebec shows a growing adoption of various advanced solutions, with a clear progression in recent years. By 2021, around 19% of dairy farms in Quebec were using fully automated milking machines, an increase on 2016, when only 8% of farms had them. This trend is particularly marked on large farms generating gross revenues of over $500,000. Just over 3,400 farms, or one in nine, have installed automated steering systems on their farm equipment. These technologies, which ensure precise application of crop protection solutions and nutrients in the field, are particularly widespread among grain and oilseed producers (31%), as well as vegetable farms (24%). However, with the increasing use of technology, employee skills development is becoming an important issue. The general perception of agricultural occupations as low-skilled hinders the attraction of new talent. According to Agriculture and Agri-Food Canada, nearly 64% of employers feel that the employees they hire lack the skills needed to succeed in this sector, which hampers opportunities for growth and innovation.
Market diversification (export)
Last year, Quebec’s biofood exports reached $11.9 billion, an increase of 3.3% over 2022. Although positive, this growth is lower than that observed in Ontario (+9.4%) and Canada as a whole (+6.4%). This gap is due in particular to lower exports in certain key sectors. Pork, Quebec’s main export product, saw a third consecutive year of decline (-7%). Foreign sales of fish and seafood fell by 22%.
However, other sectors offset these declines: oilseeds saw exports rise by 25%, reflecting growing global demand for these products. Cereal products (+25%) and unprocessed grains (+12%) also underpinned growth, as did poultry meats and eggs, which rose by 16%, with a 53% increase since 2020.
The United States remains Quebec’s main trading partner, absorbing $8.1 billion of exports, an increase of 3%. However, sales to other key markets, such as the European Union, China and Japan, showed signs of slowing, largely due to lower pork exports to these countries.
Faced with this situation, Québec diversified its export markets. Less traditional partners such as Iran, the UK, Algeria and Taiwan, among others, have contributed significantly to growth. These new markets accounted for 8% of exports last year, an impressive 157% increase over 2022.
At the same time, Quebec’s biofood imports continued to rise in 2023, reaching $10.3 billion, a 5% increase over 2022. This increase can be explained in part by Quebec’s heavy dependence on certain raw materials, such as raw cane sugar and cocoa beans, which saw their imports rise by 74% and 19% respectively.
While international trade agreements offer interesting opportunities for agricultural businesses, particularly with Asia-Pacific, they also introduce greater competition, particularly with the Canada-United States-Mexico Agreement (CUSMEA), which authorizes an increase in American exports to Canada, notably in dairy and poultry products.
Even so, Quebec maintained a positive trade balance in 2023, amounting to $1.6 billion. However, this surplus is down from the peak of $2.2 billion reached in 2021.
Key changes for a sustainable future
By 2050, agricultural demand is expected to be 50% higher than in 2013 due to global population growth, according to the Food and Agriculture Organization of the United Nations. While this creates exciting growth prospects for the agri-food sector, the situation also calls for major changes if businesses are to keep up with demand. According to a recent McKinsey study, the focus will have to be on green agriculture. Quite a challenge, considering that the agri-food sector has been responsible for some 30% of global greenhouse gas (GHG) emissions.
Innovation as a partner for sustainable growth
McKinsey has identified a number of possible solutions for adopting more environmentally-friendly practices: Encourage the development of regenerative agronomy: although it is gaining ground, farmers need to step up their game in this area. Regenerative agronomy is a set of agricultural practices that aim to restore and improve soil health, biodiversity and ecosystems, while producing food in a sustainable way. Due to climate change, extreme weather events such as droughts, floods or heat waves are becoming more frequent. Regenerative agronomy, by strengthening soil structure and increasing its capacity to retain water, enables crops to better withstand these climatic shocks. This makes farms more resilient. Rethinking the use of agricultural land: it should no longer be used solely for production, but also for preserving biodiversity and sequestering carbon. It’s about creating land value that goes beyond crops. Practices such as agroforestry (combining trees and crops) could not only contribute to soil preservation, but also create new sources of income, notably via carbon credits. Reducing food waste: with nearly 30% of the world’s food wasted, waste reduction is becoming crucial. Sources of improvement include better crop storage, thanks to solar-powered cold-storage solutions, and downstream recovery of food waste, which could be converted into energy or compost. Diversifying food production: the transition to more sustainable protein sources is underway. Plant-based proteins and laboratory-grown meat are booming, with a potential market for cultured meat of over $25 billion by 2030. However, challenges remain, not least production costs and consumer acceptance.
Meeting consumer demand
In this transition to sustainability, the adoption of ESG (environment, society and governance) criteria in corporate strategies and business models is no longer an option, but a necessity to maintain a competitive edge in the global marketplace. Consumers are increasingly concerned about climate change and environmental sustainability, and these concerns are reflected in their daily purchasing habits. According to a recent study by Boston Consulting Group (BCG), the food sector is particularly affected by this trend. The survey reveals that 77% of consumers are concerned about sourcing food with a low environmental impact, and 10% make this a top priority. As a result, the market for food products that meet sustainable criteria is experiencing significant growth. Between 2015 and 2021, sales of these foods grew 2.7 times faster than those of conventional products. By 2022, they accounted for 17% of market share, up 3.3% since 2015.
What may slow progress is the price of these foods, since only a small proportion of consumers are prepared to pay a premium for eco-responsible products.
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