Innovation among Canadian food businesses is on a positive track, but it’s being held back by the approval process, which is often slow, unclear, and outdated, with the continuing impact of tariff talk adding its own array of challenges.
In June, the Canadian Food Innovation Network (CFIN) published the results of member surveys on a key blockers to Canadian food innovation and the impact of U.S tariffs providing some interesting insights and recommendations.
In the first survey, focused on What’s Holding Back Canadian Food Innovation?, it was found that while new ingredients that push boundaries are being developed, Health Canada’s novel food review process isn’t keeping pace. Following are some key insights:
- 73% of those surveyed said they are developing novel ingredients or products, with a strong focus on sustainability, nutrition, and functionality.
- Trending categories include gut health ingredients, upcycled inputs, cell-cultivated dairy, and natural clean-label preservatives.
- But – regulatory reviews are taking 6–12 months, limiting the ability to scale up and compete globally. Respondents felt this was of particular issue when compared to faster approvals in the US.
- In addition to being slow, the regulatory processes were seen to lack transparency, flexibility, and process clarity.
Because of this, respondents wanted clearer guidance, faster and more efficient review processes, and prioritization of low-risk innovations that align with public health, sustainability, or trade goals.
The second survey focused on the industry’s pulse related to the U.S. announcement of 25% tariffs on Canada. Not only did this threat increase costs, it disrupted supply chains and cross-border partnerships, leaving Canadian food businesses with some difficult decisions, such as whether to absorb or pass down costs, change suppliers, and/or layoff workers. Following are some of the key responses:
- Nearly 33% of respondents planned to pass tariff-related costs to consumers or clients.
- 22% of exporters began scouting new international markets to offset risk, while 18% sought domestic suppliers.
- Only 2% reported cutting or freezing staff.
- 13% described other impacts, such as shelving expansion plans and investments, facing increased insurance and freight costs, and renegotiating cross-border contracts.
To help offset future disruption, CFIN provided four proactive actions to consider:
- Diversify and expand exports into growth regions, such as Southeast Asia and the EU, which have favourable trade agreements and strong demand for food innovation.
- Consider utilizing the Trade Commissioner Service or EDC’s market-entry services to more easily select and penetrate new markets.
- Reduce cross-border risk by partnering with Canadian producers, co-manufacturers, and service providers, and build flexibility into pricing, procurement, and logistics.
- Several federal programs are available to help businesses affected by U.S. tariffs, offering financial aid, strategic advice, and advocacy.
While the long-term outcome of tariffs is still uncertain, monitoring developments and building flexible strategies can help food companies be better positioned to respond.
CFIN is using the results of the surveys to help advocate for the industry – incorporating the findings into briefings for Health Canada and other government stakeholders to garner food sector support and more resilient trade policy, and provide a stronger voice for food innovators in national decision-making. The responses also aided CFIN in creating a guide to help food businesses in exploring new international markets and diversifying their supply chains.
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