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The Canadian Fruit and Vegetable Canning, Pickling and Drying Industry

The Canadian fruit and vegetable canning, pickling and drying industry, North American Industrial Classification System (NAICS) 31142, comprises establishments primarily engaged in canning, pickling, drying and otherwise preserving, other than freezing, fruit and vegetables. It includes establishments primarily engaged in making or reconstituting juices and drinks that are partly juice including those using aseptic packaging⁽¹⁾

Introduction

The principal activities and products in this sub-sector include canned fruit and vegetables, juices and drinks (not frozen), cider, dehydrated and dried fruit and vegetables, pie filling, horseradish, infant and junior food (fruit and vegetable base), relishes, fruit and vegetable sauces, canned vegetable soups, tomato ketchup, tomato paste, tomato pulp and purée, pickles and vinegar.

The Canadian fruit and vegetable canning, pickling and drying industry has undergone significant change during the last two decades in response to changing consumer demand for new and different products and to the evolution of a more open trading environment. Since 1989, the industry has significantly restructured into fewer plants to improve competitiveness, while marketing an overall expanded range of products to meet an ever-widening demand. Under the influence of globalization, the fruit and vegetable canning, pickling and drying industry has changed from serving a protected, domestic-oriented market to one that is more open and competitive.

Following the implementation of the Canada-United States Free Trade Agreement (FTA) in 1989, the industry underwent a period of rationalization and specialization resulting in fewer plants and products but increased production. Most remaining firms, including both multinational enterprises (MNEs) and small to medium-sized companies (SMEs), also modernized equipment and developed training programs in response to the pressures of globalization, changes in retail distribution requirements and consumer preferences. From 1991 to 1999, overall economic activity in the fruit and vegetable canning, pickling and drying industry showed quite modest growth.

Significance

In 1999, shipments of canned, pickled and dried fruit and vegetables totaled $3.71 billion. In 2001, exports were $522 million and imports were $1.394 billion. In 1999, employment in the sector was 13,183. (The many seasonal workers in this sector are taken into account in the employment figures by considering their numbers of hours worked. For example, an employee working enough hours to account for one-quarter of the hours of a full-time year-round job would count as having one-quarter of a job).

The fruit and vegetable canning, pickling and drying industry has historically experienced a large trade deficit, primarily because of consumer demand for a variety of products that cannot be grown in Canada. Between 1990 and 2000, total per-capita consumption of fruit and vegetables increased. In particular, per capita consumption of fresh and frozen fruit and vegetables as well as of canned and dried fruit and especially of fruit juice rose during the decade. However, per capita consumption of canned vegetables and vegetable juice declined over the same period. Specifically, per capita consumption of fresh, canned, frozen and dried fruit increased 4%, 10%, 22% and 3% respectively between 1990 and 2000. As well, fruit juice consumption rose 34% over the same period. In addition, per capita consumption of fresh and frozen vegetables rose 10% and 20% respectively between 1990 and 2000. On the other hand, per capita consumption of canned vegetables and vegetable juice fell 12% and 27% during those years.

The total food and beverage processing industry's value added from own manufacturing in 1999 was $23.3 billion, with canned, pickled and dried fruit and vegetables accounting for $1.46 billion or 6.3% of the total. Value-added in the fruit and vegetable canning, pickling and drying industry was 45.3% of total shipments, compared to 37.1% for food and beverage processing as a whole.

Structure

Total shipments of own manufacture of canned, pickled and dried fruit and vegetables were $3.06 billion in 1999 as shown in Figure 1. The fruit and vegetable canning, pickling and drying industry accounted for $522 million, or 3.7% of the total food and beverage (excluding fish) processing industry's $14.3 billion in exports in 2001. Imports of canned, pickled and dried fruit and vegetables totaled $1.39 billion, or 11.5% of the $12.1 billion in total processed food and beverage (excluding fish) imports in 2001. Much of this was imports of tropical or semi-tropical products (citrus juices, canned pineapple, etc.).

Figure 1 : Imports, Exports and Domestic Shipments, 1999

In 1999, the fruit and vegetable canning, pickling and drying industry included 143 plants and employed 13,183 people. Employment in the Canadian industry, which decreased by 58 jobs (0.4%) between 1991 and 1999, is generally concentrated in small and medium-size population centres, close to agricultural production. It is important to local labour markets.

AC Nielsen data show that retail sales in 2000 in stores that sell mostly groceries across nine provinces (Newfoundland and the Territories are excluded) amounted to $855 million of shelf stable juices and fruit or vegetable-based drinks, $430 million of canned and bottled vegetables, $283 million of sauces dips and garnishes, $280 million of dry vegetables, $205 million of canned and bottled fruit, $122 million of jams, jellies and marmalades, $109 million of pickles, $74 million of fruit snacks, $70 million of popping corn, $54 million of dry fruit, $39 million of olives and $19 million of relishes. These sales include both Canadian-made and imported products.

Most firms canning, pickling or preserving fruit and vegetables operate during short harvest seasons, and must finance the inventories of their products throughout the rest of the year. Many companies are continually taking steps to extend their production seasons by processing crops with different harvest seasons and by producing related value-added products such as soups, baked beans and other products after the harvest season is finished.

The practical limitations of transporting finished goods play a role in determining marketing patterns in the industry. Canned, pickled and dried fruit and vegetables are relatively easy to ship long distances. Tariffs on most goods traded between Canada and the U.S. have been eliminated. Similarly, tariffs between Canada and Mexico either have been or are being phased out under the North American Free Trade Agreement (NAFTA), with the few rema ining tariffs on processed fruits and vegetables to come to an end in 2003. Tariffs with other trading partners have been reduced under the Uruguay Round agreement in the World Trade Organization (WTO). Remaining Canadian import tariffs on canned, pickled and dried fruit and vegetables generally apply to goods that compete directly with domestic production.

Because of climate (number of frost free days and heat units), the U.S. has higher average yields than Canada for many fruit and vegetable crops. However, yields for some crops in Canada compare with or exceed yields from U.S. border states. With improved varieties and management techniques, yields in southern Ontario have increased to the point of being comparable to those in California. Drip irrigation and fertilization (fertigation) are among the latest methods being introduced to increase yields. Cool climate crops such as peas and beans have equal or better yields in Canada than in northern states. For cole crops (cabbage, cauliflower, and Brussels sprouts) and potatoes, Canadian weather conditions compare favourably with most northern U.S. states.

Of course, some fruit and vegetables are not grown in Canada because of the northern climate. Tender fruit such as peaches and pears can be grown commercially in Canada only in certain particular micro-climates; there is only one tender fruit cannery in Canada, which is supplied by crops from the favourable local micro-climate of Ontario's Niagara region. As well, processing of broccoli, which requires considerable hand labour, has tended to move to Mexico where wages are lower.

There is a tight relationship between growers and processors in this sector. Crops for processing are grown under contracts which often specify varieties, sizes, colours, tolerance levels for blemishes and bruising as well as price. The processors usually supply the seed. Spot market purchases are used only to fill gaps.

Some processors hire specialists to spray the crops with pesticides and others engage workers to harvest the crops and deliver them to the processing plants. Thus, the processors exercise considerable control over the conditions under which their fruits and vegetables are planted, grown, harvested and delivered to the processing plants.

Canadian and foreign raw materials are used to make finished products such as canned and pickled vegetables; canned and bottled tomato products; juices; pie fillings; soups; apple sauce; canned peaches, pears and fruit cocktail. Products are for both retail and food service.

In 1999, there were 143 canned, pickled and dried fruit and vegetable establishments (including juice and drink plants and those using aseptic packaging technology), which was 27 fewer than in 1991. Fruit and vegetable canning, pickling and drying is dominated by firms operating mainly in Ontario, Quebec and British Columbia, close to sources of primary agricultural production. Some major MNEs have significant operations in Canada, but most processors are smaller, Canadian-owned operations.

MNEs have contributed to growth of both imports and exports as their Canadian plants have focused on areas where they have competitive advantages on a regional basis in both U.S. and Canadian markets or in production flexibility. Canadian plants produce commonly known brands for the Canadian or North American markets, while benefitting from the marketing strengths of their parent MNE firms. They often have product mandates for "mainstream" products such as canned peas, beans and corn, as well as for value-added processed foods. Such mandates can build exports. At the same time, the need to fill out product offerings in the Canadian market can increase imports.

Similarly, many SMEs have rationalized and focused their operations to remain competitive. These strategies involve the development of specialty products for market niches. In some cases SMEs also co-pack brand name products for MNEs or produce private-label products.

Smaller regional processors tend to pack the mainstream products. The smaller plants often handle peak loads during the harvest season and then experience long periods of under-utilization or temporary closure.

Intermediate sized, diversified canning plants use their production capacity more evenly throughout the year than do smaller plants, sometimes generating profitable growth by introducing new high-margin products.

Performance

Shipments of own manufacture of canned, pickled and dried fruit and vegetables rose from $2.56 billion in 1991 to $3.06 billion in 1999, an increase of 19.5%. When cumulative inflation, which totaled 12.2% between 1991 and 1999 is considered, these figures translate into modest growth of the overall sector.

Employment in the industry in 1999 was 13,183 which was 0.4% fewer than in 1991 (see figure 2). While shipments of own manufacture rose, employment did not as the industry rationalized and became more capital intensive.

In 1992, 65% of Canadian exports of canned, pickled and dried fruit and vegetables went to the U.S. By 2001, that figure had increased to 89% under the Canada-U.S. Free Trade Agreement. Exports in 2001 to the United Kingdom, the next most significant market, were 2% of Canada's exports of canned, fruit and dried vegetables.

Figure 2 : Shipments of Own Manufacture and Employment, 1991-1999

Imports from the U.S. represented 58% of total Canadian imports of canned, pickled and dried fruit and vegetables in 1992 and rose to 69% in 2001. Most imports were products not grown in Canada or, in some cases, low cost "commodities" such as apple juice concentrate imported for further processing. Major import items included concentrated orange and other juices, canned fruit, canned tomatoes and tomato paste. Imports of juice concentrates from relatively low wage countries such as Brazil, China, Poland and Argentina are the raw materials from which Canadian juice processors make “juices from concentrates”. As well, there is significant production of freshly pressed apple juice and cider in Canada. After the U.S., the most significant sources of imports to Canada were China which supplied 4% of imports in the sector in 2001, followed by Thailand and Spain which supplied 3% each.

The canned, pickled and dried fruit and vegetable industry reflects a domestic orientation, with exports representing only 14.5% of shipments of own manufacture in 1999. Import penetration was significant at 33.5% of the Canadian market. Between 1992 and 1999, Canadian processors' share of the Canadian market declined from 77% to 66.5%. The trade deficit for this sub-sector increased from $626 million in 1992 to $872 million in 2001.

Compared to their U.S. counterparts, Canadian fruit and vegetable canners, picklers and driers tend to have smaller plants with shorter production runs. Although they tend not to have the same economies of scale as the U.S. plants, they often have greater flexibility in shifting from one production run to another to accommodate specific market requirements.

The processing industry uses a considerable portion of the total domestic production of fruit and vegetables. According to Statistics Canada, the percentages of fruit and vegetables purchased by processors in Canada is 32% based on value, and 40% based on volume.

The industry faces uncertainties because of climate conditions that affect the quality, yield and cost of produce. Therefore, companies secure appropriate sources of raw materials, both in Canada and abroad, and maintain long-term agreements with suppliers. Many reduce the impact of risk through the diversification of product lines.

Most provinces have marketing boards to negotiate, on behalf of growers, prices and conditions of sale of major horticultural crops to processors. The systems of negotiation and arbitration vary by province and board.

Since the beginning of tariff elimination under the FTA in 1989, there has been active cooperation between the boards and processors. Changes in marketing board procedures have provided benefits to both growers and processors. Changes to the traditional pricing arrangements for some crops have meant that produce is often priced according to a formula that increases the competitiveness of the Canadian processing sector. At the same time, processors have assisted growers in improving yields.

During the past decade, the introduction of warehouse club stores that emphasize value, as well as the increasing concentration of the distribution sector in general, have increased pressure on processors to reduce prices and focus on efficiencies. Furthermore, the introduction and increasing prevalence of private or own-label products by retailers have further pressured processor margins and increased retailer leverage. Although making goods for private label leaves retailers in control of the “brand equity” resulting from consumer loyalty and leaves lower margins for processors, it has provided real growth opportunities for some small- and medium-sized processors without requiring the expenditures needed to launch their own brands.

The concurrent emphasis on Efficient Consumer Response has meant that processors have introduced extensive technological and business model developments such as electronic data interchange, bar coding, direct store delivery and continuous product replenishment (just-in-time shipments) into their operations, all of which improve efficiencies and reduce supply chain costs. As well, processors use strategic approaches such as category management, to increase profits in product categories.

Like other food and beverage processors, fruit and vegetable canners, picklers and driers are rapidly moving with the rest of the retail packaged goods industry to using Canada's new national electronic product registry/catalogue. The registry facilitates E-commerce by ensuring the integrity of product data using international standards of data exchange. By January 2003, the registry is to be the only source of product data for selling to Canada's major food retailers. As part of its E-commerce development, food processors are developing the capability to track and trace their products throughout the food chain to specific batches at processing plants and will eventually be able to trace batches back to particular farms.

Issues, Challenges and Opportunities

Functioning within a global environment

MNEs continue to rationalize production among their multi-plant operations. Even plants within a firm can compete for the production of specific food products for the entire North American market and beyond. Consequently, the increase in imports from the U.S., in part, reflects inter-plant transfer of product across the border. Loss of a product line in Canada also means that raw materials are no longer sourced in Canada, thus possibly resulting in job losses in both agriculture and processing. On the other hand, some Canadian subsidiaries of MNEs have received product mandates to serve the U.S.

SMEs, for their part, have to compete in an increasingly open Canadian market but also have increased access to export markets, particularly the U.S. Overall, Canadian fruit and vegetable canners, picklers and driers are faced with increased import competition, particularly from processed tropical fruit and a wider range of processed vegetables that serve the growing ethnic market. This reflects consumer demand for a more diverse range of food. To counterbalance the influx of imports as much as possible, the industry is increasing its exports of products in which it has comparative advantages.

Regulatory issues

Canada Agricultural Products Act

The Canadian Food Inspection Agency administers the Act and Regulations that govern much of the activity of the fruit and vegetable canning, pickling and drying industry, including the interprovincial and international shipment of many of the industry's products as well as most of its agricultural inputs. The industry is regulated by the Processed Products Regulations, under the Canada Agricultural Products Act, which stipulate that certain processed products must be sold in Canada only in specified standard container sizes. Standard container requirements for certain products in cans, bottles and jars cover apple juice, apple sauce, pears, peaches, fruit cocktail, cherries, green and wax beans, beets, mushrooms, corn, peas, pumpkin, squash, sauerkraut, tomatoes, tomato juice, tomato purée, tomato paste, ketchup, spaghetti sauce, jams, jellies, marmalades, vegetable soup and many other categories.

As well, the Fresh Fruit and Vegetable Regulations require that fresh fruits and vegetables moving interprovincially or internationally be packaged in standard containers and be labelled in accordance with the Regulations. Both sets of Regulations provide for a system of Ministerial Exemptions, administered by the Agency, to enable cross-boundary shipments of both fresh and processed fruit and vegetables not in standard containers (usually bulk shipments) when needed to alleviate shortages. The intent is to ensure that local fresh produce is used before produce is brought from other provinces or countries.

Food and Drug Act

The Food and Drug Act applies policies, standards and scientific assessments of food products with respect to health. At time of writing (May, 2002), Health Canada is bringing forward nutrition labelling requirements for processed foods that will be additional to the current requirement to list ingredients on labels. Nutritional labelling will likely provide information on numbers of calories and amounts of components such as fat, saturated fat, trans fat, cholesterol, sodium, carbohydrate, sugars, protein, vitamins and calcium present in processed foods. In addition to inspecting under the Canada Agricultural Products Act, the Canadian Food Inspection Agency carries out inspections of food products under the Food and Drug Act.

Another issue is the addition to food products of certain vitamins and minerals that could provide specific diet related health benefits. A few juice processors have recently been allowed to add calcium to orange juice within terms specified by Health Canada. At time of writing, Health Canada is considering approving fortification with specified vitamins and minerals as well as associated diet related health claims within limits they determine to be in the public interest.

In Canada, firms have not been allowed to make health claims on food labels unless those foods are classed and approved as drugs. At time of writing, Health Canada is consulting on a list of health claims that might be permitted on labels of specific foods.

Environment

With respect to environmental issues, the processing firms must meet all laws (e.g. the Canadian Environmental Protection Act, the Canadian Environmental Assessment Act and each province's legislation) and regulations. They must follow regulations that govern which pesticide sprays can be used in which amounts. Consumer awareness of pesticide residues is increasing. Firms check pesticide residue levels in their products to ensure that they are within regulation levels.

One environmental issue that food processors in general have faced is waste remaining from packaging. At least one processor has recently reduced the thickness of glass in its bottles and decreased the size of its bottle tops to achieve a reduction of 25% in container weight, thus reducing the fuel used by its large trucks as well as wear and tear on tractor trailers when it hauls product to market, with the added environmental benefits of reducing the amounts of wasted materials as well as emissions of greenhouse gases and other air pollutants.

Waste reduction is important everywhere and particularly for large urban centres that are rapidly using their landfill capacity and are experiencing difficulty and expense in finding and using acceptable new landfill sites. Reduction of materials in packing cartons can potentially provide both financial and environmental benefits.

Similarly, reductions in waste go hand-in-hand with cost savings as food processors and other manufacturers make increasing use of plastic, rather than wooden, pallets. Although more expensive to buy, plastic pallets, which can be made from recycled plastic, can be used many more times than wooden pallets which tend to be mangled fairly quickly by fork lifts and then sent to landfill.

Prior to plant construction, fruit and vegetable canners picklers and dryers, among other food processors, must meet municipal zoning requirements. A proposal to build a new state of the art plant or to substantially enlarge an existing facility could result in hearings to assess environmental impacts before construction may proceed. For example, fruit and vegetable processing involves using wash water which must be adequately cleaned so that it does not pollute streams and water tables with organic material that would cause unacceptable levels of biological oxygen demand. Provinces and municipalities have to be satisfied that systems will be put in place for waste water treatment. Some processors take a pro-active approach by developing “best practices” with respect to the environment in both field and plant, for example reducing their energy and water usage as well as their creation of both solid and water waste.

Overall, there is a trend to internationalize regulations through general trade treaties, and the industry will face the challenge of looking at regulations that could be harmonized, either bilaterally with the U.S. or multilaterally through the World Trade Organization and Codex Alimentarius.

Science, technology and innovation

Canning, pickling and drying are traditional technologies and canning remains the method of choice for bringing processed tomatoes and tomato products, beans and juices to the marketplace. The texture of tomatoes and various beans (e.g. kidney and white) is preserved better by canning than by freezing. As well, canning remains a process used to bring significant quantities of corn and peas to consumers. Ultra High Temperature packs are also important for juices and other products. Canadian canning operations generally employ readily available and established processing technology adaptable to the particular requirements of a manufacturer. When a company upgrades a facility, it normally does so by modernizing or replacing older equipment, with an emphasis on higher productivity and better quality control.

Many companies that were marginally profitable and financially unable to upgrade their plants or equipment have already left the industry because of intensified price competition, while other firms have invested in plant and equipment to become internationally competitive.

Much of the machinery used in food processing or in warehousing end products is manufactured in Europe or the U.S. Technological changes in the industry are manifested in new packaging processes or new materials, efficient process control systems, automated distribution systems or new product formulations.

Leading Canadian-owned firms undertake significant research and development (R&D) in product adaptation and production efficiency achievement. Subsidiaries of MNEs generally do not perform extensive R&D in Canada. However, because of their close ties to sophisticated parent firms, they have access to state-of-the-art industry innovations and new products.

Firms have innovated with packaging as well as with the foods themselves. Juices and juice-based drinks are sold in cartons, glass bottles, PET (plastic) bottles, aluminum cans and multi-layer "boxes", as well as through fountains, with the use of PET increasing in recent years. There was movement from cans to clear plastics and "tetrapak" boxes in the 1990s, with this trend seeming to have stabilized by 2002.

Opportunities in the domestic market

Canada is certainly the market in which the largest amount (85.5%) of Canadian canned, pickled and dried fruit and vegetables is sold. The popularity of pasta dishes continues to contribute to sales of canned tomato products. The domestic market for ready-made "meal solutions" is growing and presents opportunities for new sauces and other fruit and vegetable products. In addition, as increasing percentages of expenditures on food are spent in restaurants and other foodservice locations, there are increasing opportunities for canning, pickling and drying of fruits and vegetables in the large formats that foodservice requires.

Some MNEs have consolidated operations and/or divested themselves of "non-core" to become more specialized to compete with nearby U.S. plants for North American business. Other firms have built on the flexibility of Canadian plants to undertake efficient production of smaller runs of niche products for the North American market. Still others are gaining advantages through specialization and more targeted marketing to industrial buyers, such as food service operators. Suppliers of both raw ingredients and packaging are working more closely and cooperatively with food processing firms to reduce costs.

An interesting change is the nature of the competition. One company owning major national brands has withdrawn from production. It continues to market its brands but has left the processing to co-packers. All national brands are facing increased competition from private labels. As well, consumer demand and the diversity of offerings led to sales increases of chilled juices and drinks in particular, with an increase of 124% between 1994 and 1996. In Canada, all major grocery chains have developed private label store brands. Private-label and co-pack brands represent additional opportunities for Canadian exports of processed fruit and vegetables, although in the U.S. market, for example, private label is somewhat less developed than in the Canadian market.

The development and use of packaging materials and techniques, such as aseptic or gas-flushed containment, have improved the quality and convenience of foods and beverages. A new and convenient format is pull-top cans of ready-to-serve soups. Such advances will help to improve prospects for growth in product categories such as fruit juices, solid vegetables, sauces and new formats for soups. There has been some displacement of cans by plastics - a trend that now seems to have stabilized.

Canada's changing ethnic composition presents opportunities for fruit and vegetable processors who can make fresh-tasting and convenient products suited to the busy lifestyles of members of ethnic groups as well as members of the mainstream population that want to experience at least a suggestion of cuisines from different parts of the world.

Scientific discoveries about the health benefits of functional foods and nutraceuticals have helped generate additional interest in fruits and vegetables. Alpha and beta-caroteins and flavenoids in fruits and vegetables have been found to neutralize free radicals that may cause cell damage. Lycopene, which is found in tomato products, has been shown to reduce the incidence of prostate cancer. Lutein, found in green vegetables, reduces the risk of macular degeneration. Tannins found in cranberries improve urinary tract health while the probiotic properties of vegetables like jerusalem artichokes, onions and shallots have been shown to improve the quality of intestinal microflora, thereby improving “gut health”. The functional food and nutraceutical sector is estimated to be growing at about 15 percent a year, and will continue to have a positive impact on the fruit and vegetable sectors.

Opportunities in international markets

Increasing import competition in the Canadian market will necessitate expanding exports if the industry is to maintain shipment levels. Tariff and non-tariff barriers on canned, pickled and dried vegetables have been and continue to be reduced and eliminated under the WTO and NAFTA and as more countries negotiate their entry to the WTO. Modernizing and expanding processors will increasingly look to export markets as imports increase. For example, growth in exports is expected for juices as well as jams, jellies, condiments and other value-added products. As well, there will be increasing niche markets in the U.S., EU and Japan for quality fruit and vegetable products tailored to demand.

For some products, the European Union maintains a combination of tariffs and levies that work against Canadian exports with goods from Canada being treated less favourably than goods from other trading partners. For example, Canadian canned corn must overcome a combined charge of over 10%. The current round of Multilateral Trade Negotiations will present an opportunity to try to eliminate that disadvantage.

However, a major issue for processed vegetable exports to the European Union (E.U.) and Japan is genetically engineered organisms (GEOs). Exporters provide their customers in those markets with “certification” on their own letterheads as well as on the letterheads of their seed suppliers that seeds used are not GEOs. In addition, exporters of sweet corn tend to ensure that their corn was not grown next to feed corn in order to protect against cross-pollination. In the European Union, it is the supermarket chains that drive the need to certify that seed used was not GEO, whereas in Japan it tends to be regulation against non-approved varieties that necessitates such guarantees.

Juices are another product group with excellent potential for continuing export growth and there is considerable new product development in both single serve and multiserve containers. Between 1994 and 2001, exports rose from $19 million to $49 million, mostly to the U.S. but with sales to Japan and the Netherlands expanding rapidly. Premium products such as first-squeeze apple juice and a proliferation of new combinations such as carrot-mango-orange and cranberry-blueberry cocktails can play a significant role in developing interest in a line that also includes traditional juices.

Challenges

The main challenges for the Canadian fruit and vegetable canning, pickling and drying industry are to maintain its share of the domestic market and to increase exports. Firms will develop and market the products that best match the companies' strengths with consumer demand. Convenient value-added items will continue to grow in popularity and consumer tastes will keep changing.

Pressure on margins is expected to continue as retailers work to increase sales of private label products and as Efficient Consumer Response (for "just-in-time delivery") forces processors to tailor their delivery quantities to meet retailers' requirements.

To meet competition, processors are improving all aspects of their operations. Many have introduced "Total Quality Management" systems to stimulate innovative work environments and improve productivity as well as quality. Raw materials and transportation, in addition to in-plant operations, are among the factors of production addressed by total quality management.

With consumer preferences moving away from canned and toward fresh and frozen products, as well as toward more convenience and value-added items (in addition to new tastes and the changing ethnic mix), processors are juggling a vast array of variables in addition to the ever-present factors of quality and price. Consumer tastes are changing faster than in the past, and processors are having to adapt their product lines in response to domestic and import competition as the popularity of both new and traditional products quickly rises and falls. This marketplace is characterized by constant pressure to develop new products and to drop underperforming items.

MNEs generally produce well-known brands and have well developed distribution and marketing networks. As well, they tend to have greater financial capability to invest in new technologies, productivity and labour saving, making them more competitive in global markets. They tend to give product mandates to their plants that can make particular lines most efficiently.

SMEs, lacking economies of scale, may pay higher prices for packaging materials and other inputs. On the other hand, SMEs can have the advantage of flexibility. Shorter production runs can enable them to serve niche markets. Plant and line closures have occurred especially for manufacturers of undifferentiated or "commodity" products. Moreover, firms of all sizes involved in primary processing of vegetables can be expected to encounter continued price competition.

Agriculture and Agri-Food Canada Contact

Campbell Robertson
Food Bureau
Agriculture and Agri-Food Canada
Ottawa, ON K1A 0C5
Tel: (613) 759-7519
Fax:: (613) 759-7480
E-mail: robertsonc@agr.gc.ca

Other statistical information sources:

AAFC-MISB InfoHort Sources

• 1999-2000 Canadian Fruit Situation and Trends
• 1999-2000 Canadian Vegetable Situation and Trends
• 1999-2000 Canadian Potato Situation and Trends
• National Crop News Report

USDA-ERS Sources

• Fruit and Tree Nuts Situation and Outlook Yearbook
• Fruit and Tree Nuts Situation and Outlook Report
• Vegetables and Specialties Situation and Outlook Yearbook
• Vegetables and Specialties Situation and Outlook Report

USDA-NASS Sources

• Agricultural Statistics: Chapter IV Statistics of Vegetables and Melons
• Agricultural Statistics: Chapter V Statistics of Fruits, Tree Nuts, and Horticultural Specialties
• Commodity Report: Vegetables
• Commodity Report: Crop Production

USDA-FAS Sources

• GAIN Report: Guatemala, Product Brief, Processed Fruits and Vegetables, 2001

EU-Eurostat Sources

• Eurostat: Prime-UP12 and New Cronos-Classification Plan
• UN-Food and Agriculture Organization (FAO) Sources
• FAOSTAT database
• Trade Information Services, Inc. and Statistics Canada Sources
• World Trade Atlas

The Following Analysis Reports are Available from the Food Bureau:

Food & Beverage Processing Sector Analysis

• The Canadian Food and Beverage processing Sector - An Overview of Opportunities and Challenges at the Turn of the Century
• Historical Perspective of the Canadian Food and Beverage Processing Sector
• Analysis of the structure of the Canadian Agri-food Industry

Sub-Sector Profiles

• The Canadian Bread and Bakery Industry
• The Canadian Confectionery Industry
• The Canadian Wine Industry
• The Canadian Distillery Industry
• The Canadian Dairy Processing Industry
• The Canadian Red Meat Processing Industry
• The Canadian Feed Industry
• The Canadian Poultry Processing Industry
• The Canadian Snack Food Industry
• The Canadian Canned and Preserved Fruit and Vegetable Industry
• The Canadian Cane and Beet Sugar Industry
• The Canadian Flour and Related Products Industry
• The Canadian Soft Drink Industry
• The Canadian Bottled Water Industry
• The Canadian Frozen Food Industry
• The Canadian Tea and Coffee Industry *
• The Canadian Pasta Industry *
• The Canadian Brewing Industry *

* Titles marked with an asterisk are not complete at time of publication. Published profiles are available on the Internet

Readers can obtain data updates by accessing the electronic version of these reports on ACEIS.

Contact

We would be pleased to receive your views, and any comments or suggestions that would improve the substance of these reports. For additional information and/or to provide your comments, please contact:

Food Bureau
Room 501
Sir John Carling Building
Ottawa, Ontario
K1A 0C5
(613) 759-7556.

Les documents sont disponibles en français.

The Canadian Fruit and Vegetable Canning, Pickling and Drying Industry
NAIC^c 31142 Fruit and Vegetable Canning, Pickling and Drying, 1992-2003

^a Statistics Canada (CANSIM) and/or Annual Survey of Manufactures.
^b Annual Survey of Manufactures. 
^c North American Industrial Classficiation System
X denotes confidentiality
" Average Annual Growth

¹ Statistics Canada has reorganized its division of industry sectors. The Standard Industrial Classification (SIC) 1032 for Frozen Fruits and Vegetables has been put into a category with other frozen foods. The Standard Industrial Classification 1031 for Canned and Preserved Fruits and Vegetables has mainly become NAICS 31142. The Statistics Canada data in this profile including the appended table represent the most current data available at the time of publication.

Date Modified: 2006-05-02		Important Notices
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