Today, approximately 3,800 Ontario food and beverage processing companies provide crucial resources to both local and international consumers. The province continues to be an ideal location for business owners in the food and beverage industry based on access to natural resources, innovation, and skilled labour. In 2016, Ontario’s agriculture sector increased its total output by 3% and contributed over $40 billion towards the provincial economy. However, there is still room to improve the sectors rate of growth and development throughout 2017.
Food and Beverage Ontario released a 2016/2017 report highlighting the various market trends that agri-food processors should consider when implementing business development strategies. The report also outlined the sector’s top priorities and challenges for 2017 and how businesses can address these issues over the coming months.
To sustain the industry’s success, Ontario food and beverage processors must be conscious of these emerging trends and adopt new practices/processes to address barriers within the sector. Fortunately, businesses in Ontario can access several government funding options to tackle projects that address some of latest industry trends.
Emerging Market Trends for Ontario’s Food and Beverage Industry
Ontario’s food and beverage industry continues to be the province’s number one employer within the manufacturing sector and currently supports over 139,000 workers. To support the sectors continued growth, the Government of Ontario is advocating for the creation at least 120,000 new jobs by 2020. However, businesses must consider some of the current industry trends to successfully expand their operations in today’s domestic and international markets.
Food and Beverage Ontario (FBO) recently released its annual report underlining some of the major trends or areas of concern within the sector. The top four challenges food and beverage processing businesses face, include:
- Workforce development and access to skilled labour;
- Provincial electricity costs;
- Regulatory issues; and
- Implementation of growth strategies.
Each of these challenges may affect businesses in different ways, however it is important to understand what role they may play and the current barriers they create.
Despite being Ontario’s top employer, the food and beverage industry is currently facing a shortage of skilled workers. By 2030, demand for labour could support over 1.16 million opportunities within the industry. However, labour supply is expected to increase by only 167,000 jobs, which will create approximately 137,000 job vacancies.
Additionally, FBO’s report highlights how businesses will undergo severe consequences in regards to investments and job loss, if recommended changes to the Employment Standards Act and Labour Relations Act are pursued by the provincial government.
Provincial Electricity Costs
In Ontario, unpredictable electricity rates are impacting food and beverage processing businesses, leaving them subject to permanent and structural damages. Some companies have reported a 55% increase to their monthly rates, making it difficult to invest in business improvement projects.
Recommendations have been made to remedy the situation by removing the Global Adjustment from commercial and industrial electricity bills. By reforming electricity prices, businesses will have additional cash flow to improve products, invest in technology, hire and train employees, and expand into markets outside of Ontario.
Overcoming Regulatory Issues
Over the next three years, the Government of Ontario will try to reduce some of the barriers food and beverage processors face. During 2016’s Red Tape Challenge, Ontario food processors identified a total of 107 opportunities for improvement. To improve operational costs and jurisdictional competitiveness, the government will address issues such as:
- Refining communication of pest control rules and regulations;
- Balancing food labelling requirements;
- Regulating food inspection methods;
- Upgrading the apprenticeship certification process; and
- Reducing the amount of time required to obtain a commercial vehicle operator’s license.
However, some businesses will be feeling the burden of these rules and regulations until they are formally addressed. It’s important for Ontario food producers and processors to unite and advocate on behalf of the sector for change during events such as the Red Tap Challenge.
Implementing Growth Strategies
With more than 190 countries serving as export destinations for Ontario-based food and beverage products, businesses are well positioned for domestic and global growth. Foreign demands continue to increase and businesses should look for ways to take advantage of new investment opportunities.
FBO reported that networking events and trade shows continue to provide significant growth opportunities for food and beverage processors in Ontario.
However, many of Ontario’s agri-food businesses need access to financial assistance in order to expand, increase capacity, and improve competitiveness. Thankfully, government funding is available to help these businesses carry-out investment projects such as workforce development, facility expansions, and retrofits.
Ontario Government Grants for Ontario Food and Beverage Processors
In Ontario, businesses within the food and beverage sector can access a range of government grants and loans to support their strategic growth strategies. Some of the government funding options that Ontario food processors should consider, include:
Funding for Workforce Development
The Canada-Ontario Job Grant (COJG) supports Ontario-based employers by providing training grants to help businesses invest in strategic workforce development initiatives. Eligible businesses can access Ontario small business grants to enhance their workforce by upskilling new and existing employees. Government funding can be used to offset third-party training programs that support operational and productivity improvements.
The program provides up to 66%-83% of eligible third-party trainer costs to a maximum contribution of $10,000 in Ontario government grants per trainee.
Energy Efficiency Grants
Ontario-based businesses can reduce the costs of energy efficiency projects through the IESO saveONenergy program. Businesses can reduce monthly electricity costs by accessing incentives to offset energy conservation audits, lighting upgrades, retrofits, and demand response initiatives.
Additionally, the CME SMART Green Fund provides Ontario government grants to help businesses adopt greenhouse gas (GHG) reducing technologies. Ontario-based manufacturers can access funding to offset process improvement projects that will allow the business to implement energy conversation strategies and become more efficient.
Eligible applicants can access up to 50% coverage of project expenses to a maximum $500,000 per facility or up to a maximum of $1.5 million for upgrades in up to five facilities.
Ontario Business Expansion Funding
Ontario food processors can access business expansion programs such as the Eastern Ontario Development Fund (EODF) and the Southwestern Ontario Development Fund (SWODF). Both programs provide Ontario small business grants to reduce the cost of large-scale capital investment projects such as facility and equipment upgrades. Agri-food and beverage processors can access Ontario government funding to improve productivity, increase capacity, and create new job opportunities.
Ontario government funding contributions are determined based on specific project budgets:
- Projects Under $10 Million: Up to 10-15% coverage to a maximum $1.5 million in Ontario government grants.
- Projects Exceeding $10 Million: Up to 10-15% coverage to a maximum $1.5 million in grants, plus the option to receive up to $3.5 million in repayable government funding.
Ontario Government Funding to Boost Your Business Growth and Development Projects
Staying competitive requires small and mid-sized food and beverage processors to invest in continuous improvement projects. Despite the high cost of sustaining growth activities, government funding is available to offset a portion of these costs.
Agri-food companies can begin the process of applying for government grants and loans by contacting Mentor Works. In addition to confirming your eligibility for top agriculture funding programs we can also help simplify your application preparation and submission.
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