There is a stronger emphasis on diversification and sustainability in the industry.

The supply chain for produce in Canada is healthy and evolving, as members deal with challenges of inflation, globalization, and the changing demands of consumers.

What’s happening in the Canadian produce supply chain is somewhat different than what’s happening in the U.S. — take the example of Canada’s proposed plastics ban — but a lot of similarities exist.

In response to the inflationary pressure on food that has been a factor in the produce industry in the U.S. as well, Loblaw Companies Limited, Brampton, Ontario, has introduced a new supermarket concept to deliver low-priced mainline food. Characterized by the company as a pilot, “No Name” will operate in three Ontario markets.

In introducing the No Name store concept, Melanie Singh, president of Loblaw’s hard discount division, says the No Name store will be up to 20% less than the regular retail price of a comparable product at discount grocers in that local area, and the stores will have a limited selection of 1,300 products.

DIVERSIFICATION A NEW STANDARD

Ron Lemaire, president of the Canadian Produce Marketing Association, says inflation continues to have an influence on how shoppers spend, but many consumers are finding ways to cope, including focusing on retailers who can help them meet budgets.

“Discount banners have been very successful in meeting consumer demand, and retail is adjusting,” he says.

Lemaire mentioned No Name as among the initiatives Canadian supermarket operators are trying. “It’s in these innovations where retail is listening and meeting the Canadian market.”

“I see optimism as we see where the next year is going to take us, but all of that could change quickly with a wildfire, a flood, a drought,” he adds. “Even on that, what’s exciting to see is how the pandemic has taught us to improve the diversification of our supply chains.”

In the post-pandemic period, Lemaire explains, Canadian businesses have reengaged locally, but with more emphasis on nearshoring, as they look at what the U.S., Mexico, and South America might provide.

At the same time, Canadian tastes have become more diversified, he says.

Weather incidents prompted Canadian produce suppliers to broaden their approach to sourcing. For example, citrus from Israel is getting attention, as they make backup plans to keep the supply chain humming.

“Over the past 12 to 24 months, there has been a shift with Canadian consumers toward value. That is seen in the data across the entire store, but has been especially pronounced in the produce aisle,” says Hutch Morton, senior vice president, J.E. Russell Produce, Toronto. “Consumers have moved from premium store banners down toward value and low cost.”

Although price has become a more important factor, Lemaire says it’s quality that’s really driving the market.

“Because we’ve done such a good job on the discount banners and driving quality and freshness through discount, the goal now is ensuring that the spec and the shelf life of product is meeting a very stringent consumer expectation,” he says.

Dr. Sylvain Charlebois, senior director of the Agri-Food Analytics Lab at Dalhousie University, Halifax, Nova Scotia, says the produce supply chain in Canada appears to be “evolving with a stronger emphasis on diversification and sustainability, particularly in response to consumer demand for locally grown and organic options. Crops like greenhouse-grown vegetables and berries are gaining prominence in many parts of the country, while climate adaptation is influencing crop choices toward those better suited to changing conditions.”

Although consumer demand and food retail economics tend to drive supply chain development, Charlebois says, from a government policy perspective, the development of a carbon market requires new thinking about freight and transportation.

CONTINUED COST SQUEEZE

“There’s a lot of optimism in the industry right now,” says Stewart Lapage, vice president of supply chain and logistics at Oppy, Vancouver, British Columbia. “With so much attention on food scarcity and rising costs, people are really focusing on where our food comes from, and how we can control costs. I think we’re seeing more energy around things like sustainability and precision growing to manage those pressures.”

At the same time, cost has become a greater challenge and one that businesses are forced to address, says Lapage.

“Every link, from growers to retailers, is feeling the pinch on costs,” he says. “Input costs, labor, transportation — it’s all adding up and everyone’s working hard to find efficiencies. So, it’s not that the supply chain itself is changing drastically, but there’s a constant push to control costs and keep things running as smoothly as possible.”

Charlebois points to fuel price fluctuation, regulatory fees and tariffs, which “significantly impact the movement of produce and the development of cross-border supply chains.

“Rising fuel costs directly increase transportation expenses, while varying tariffs and regulatory standards across these countries add complexity and potential delays, affecting the efficiency of trade routes,” Charlebois adds.

PRODUCT MOVEMENT

The Canadian produce supply chain is vast, but also fairly consolidated, with major retailers and wholesalers as dominant forces. The major importers in Canada are the big food retail chains, including Loblaw and Sobeys, says Lemaire, followed by major importer/exporter wholesalers, such as Courchesne Larose, Canadawide Fruit, North American Produce Buyers, Fresh Direct and Thomas Fresh.

Beyond that, the major wholesalers on the terminal markets in Toronto, Montreal and Vancouver are substantially involved in import/export operations. And some companies operate across borders, such as Oppy.

“Canada’s biggest exports are still root crops, greenhouse vegetables, pipfruit and berries,” says Lapage. “On the flip side, we’re importing a lot of tropical fruits, citrus, leafy greens, avocados and berries. It’ll be interesting to see if those trends hold with rising costs and inflation.”

Morton of J.E. Russell Produce says a change that continues at the Ontario Food Terminal “is the increase in how far afield the import business is moving. It is no longer just our North American neighbors to the south that feed Canadians. We are seeing produce from just about every part of the world coming.

“It speaks to the multi-cultural society in Canada and the stores that serve them, but also to the improvements made in freight and logistics. These are improvements that ultimately serve the consumer with more options and better access.”

He says wholesalers on the Ontario Terminal Market and elsewhere need to unlock opportunities.
The complexity of the Canadian supply chain means all companies must remain ready with a response to changing conditions.

“Innovation in technology helps us find efficiencies, and we implement them into our processes to ensure we’re operating as smoothly as possible,” says Julian Sarraino, chief operating officer at Fresh Taste Produce, Toronto. “Government policy/regulation sometimes changes. This is something that we all have to adapt to. Weather challenges are still the wild card. This is what plays the biggest role in product security and fill rates.”