Alberta’s agri-food industry needs innovation and marketing expertise – and some imagination

by Andrew Mah
photography by Kelly Redinger

WINNING RECIPE: Jerry Bouma sees a healthy agri-food industry emerging if a more innovative and imaginative approach is taken to marketing efforts and product development

Alberta’s agri-food industry is at a crossroads, unable to live up to the promises of product diversification and bountiful new markets, or predictions of a growing, thriving manufacturing sector. Rather than gain critical mass, the industry has become a splintered patchwork, and a shakeout of lesser and marginal companies has not provided a competitive edge or contributed strength to those left standing.

Clearly, Alberta’s agri-food industry is not where it could be. In 2003, Alberta Agriculture and Rural Development (AARD) released a growth strategy that made a bold prediction: the province’s value-added agriculture and food industry, riding a wave of “unstoppable” trends, would achieve a target of $20 billion in sales by 2010. However, the province’s preliminary 2009 figures show food and beverage manufacturing well short at just $12.3 billion.

Jerry Bouma, a senior marketing consultant with expertise in agricultural issues, says there are plenty of reasons that the industry has not gained altitude. But prime among them is a failure to innovate. Bouma is the co-founder of Alberta-based Toma and Bouma Management Consultants, and has worked extensively within the province’s agriculture and food sector. Bouma suggests the primary reason for stagnation in the industry is “commodity-based” thinking – that is, a profit-shrivelling focus on selling raw or lightly processed, undifferentiated products and ingredients.

“If you operate in a strictly commodity world, there’s only one strategy: low cost,” Bouma says, adding that it is difficult for Alberta manufacturers to compete on this drive-to-the bottom-dollar playing field when cost inputs for labour, energy and transportation remain inherently high.

There is a growing realization within its ranks that Alberta’s agri-food industry is not making gains. Ted Johnston, president of the Alberta Food Processors Association (AFPA), gives an uncomfortable laugh and offers a frank assessment when asked if Alberta’s agri-food manufacturing sector is realizing its potential in regards to growth and market share: “Quite simply, no.”

Meanwhile, Kathy Bosse, a new-venture specialist with Alberta Agriculture and Rural Development, gives a more diplomatic reply, “Some may be, some may be not.”

The reasons for this failure to launch are manifold. Some are endemic by nature, such as the province’s low population density and high distribution costs; others, like the soaring Canadian dollar, global recession and fluctuating commodity prices, are beyond our control. Still, industry insiders believe there are solutions and success stories – demonstrated by companies that have bucked the trend, taken advantage of opportunities and proven that growth is possible even in the oft-embattled and sometimes embittered agri-food industry.

It would be unfair, though, to paint Alberta’s agri-food sector as a neglected stepchild. At $12.3 billion, the industry is 24% bigger than in 2001 and has almost doubled compared to its $6.3 billion value in 1995. With oil and gas sales plummeting in 2009, agri-food has leapt up from its traditional position as the province’s third-largest manufacturing sector into first place. It represents 22.3% of Alberta’s total annual manufacturing sales. At 13.3% of the total output, Alberta is also the third-largest food and beverage maker in the nation after Ontario and Quebec.

While this growth is positive news, few believe the province is anywhere close to its food-making capacity. In a province that is a breadbasket of primary food products like wheat, barley, beef and canola oil, and home to significant pools of capital and agricultural expertise, it is perhaps surprising that Alberta cannot boast of any homegrown McCain or Maple Leaf Foods. AARD’s own forecasts and failure to meet them would seem to bear out the assertions of people like Bouma who say, “We are vastly under-realizing our potential.”

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