A number of intersecting forces have contributed to the loss of mid-scale regional food system infrastructure, especially processing, including:
- a general lack of investment in domestic processing capacity resulting in an only marginally favourable balance of trade surplus in processed food that is not commensurate with Canada's large balance of trade surplus in raw commodities;
- corporate consolidation in food processing (including mergers, acquisitions and foreign ownership of previously domestic firms), inputs and transportation;
- declines in the number of farm-production system combinations in certain regions;
- automation and reductions in the need for labour;
- changes to food safety rules that favour scale increases;
- changes in investor expectations of profitability that favour scale increases; competition from large international firms operating in Canada or importing;
- and changes in consumption and demographics.
All these forces are linked to centralization, specialization, reduced competition and homogenization of production. Although obviously not without controversy, many critics of free market capitalism argue that its rules, in combination with institutional failures, have led us inexorably to this point, that the incentives of capitalism produce the outcomes we're experiencing (cf. Albritton, 2009; Piketty, 2014).
The loss of small scale local infrastructure is a long standing process. When transport and perishability made it difficult to move foods around (dairy, meat, etc), then most communities had cheese plants and small abattoirs. As refrigeration, pasteurization and packaging made longer distance movement of goods possible, then many small operations closed their doors. Declines in the numbers of larger food processors became particularly noticeable from about 1990 (cf Beaulieu and Trant, some attributing the process to the negotiation of the the Canada-US Trade Agreement (later NAFTA and the USMCA). Mergers and acquisitions were a bigger part of this decline. By employees, only 0.5 % of food processing firms are large, about 5% are mid-sized and the rest are considered small, but over half employment comes from meat, bakery and beverage, suggesting gaps in coverage. The 0.5% of firms are responsible for nearly 50% of the value of production (see also Corporate concentration) (Finnigan, 2021).
There are also significant spatial anomalies across the country. Some regions are still well served, others are not. Saskatchewan provides a telling example. Small scale abattoirs have been disappearing resulting in capacity limitations. The province has not had a federally inspected plant since 2010 and there are only a dozen small plants for the entire province under provincial inspection, meaning that they cannot handle meat destined for export out of the province (Briere, 2021). Regina is surrounded by crops and livestock and used to have many food processing plants, but most have closed down with production consolidated in a few very large plants, primarily in other provinces and cities (Qualman et al., 2013).
Large firms are not interested in small farms because they are designed for scale. A common complaint, for example, among small beef and pork producers is that large abattoirs won't allocate them "hooks" or slots for their animals to get processed. This is especially the case for those doing value-based production in areas where there are not abattoirs dedicated to those values.
The supply managed commodities have fewer problems than non-supply managed ones because there is more co-ordination among producers and processors and prices are set or negotiated to assure reasonable returns for both actors. However, the historical allocations within supply management across the different provinces has resulted in limited numbers of facilities in some regions which results in some degree of potentially unnecessary cross border movements (relative to a more demand equitable distribution) (see also Goal 2 Demand Supply Planning and Co-ordination).
