Canada is the world's number one exporter of dried peas. Over the last five years, 88 percent of those peas have been exported as a raw commodity. Canadian farmers grow it. Foreign processors turn it into finished ingredients. Canadian manufacturers buy it back at a premium. And Canadian consumers pay for the round trip at the grocery store.
Dried peas are just one example of a consistent pattern across the food system. Canada is one of the world's largest agricultural producers, but the midstream processing that turns those raw commodities into the food on store shelves — the extraction, formulation, packaging, and value-added work — happens disproportionately outside our borders.
That dependency has a price tag. Grocery costs have risen roughly 22 percent since 2022, nearly double broader inflation. The Bank of Canada identified import costs as the primary driver of 2025's food price increases — and with a weak Canadian dollar, every ingredient, component, and finished product sourced internationally costs more. These pressures take six to nine months to work through the supply chain. Current trade uncertainty hasn't even fully arrived at the checkout line.
Canadian innovators replacing imported ingredients
The fix starts with closing that loop — processing Canadian-grown inputs into finished ingredients domestically instead of exporting them raw and buying them back at a premium. Canadian manufacturers are increasingly sourcing from domestic innovators to do exactly that. Vancouver’s Maia Farms produces mushroom mycelium and pea protein that directly replaces textured proteins typically imported from the U.S. or Asia — at a cost below both beef and chicken mince per serving. Maia already supplies Canadian processors like Big Mountain Foods and Sprague Foods, and a recent partnership with Alberta-based Phytokana Ingredients is building the upstream capacity to match, processing Canadian-grown fava beans into shelf-ready product at a new 30,000 metric tonne facility.
On the opposite coast, RFINE Biomass Solutions converts spent coffee grounds into a food-grade cocoa extender that replaces imported cocoa products whose prices have surged — turning a waste cost into a domestic ingredient source.
Many more food innovators like Maia and RFINE are building new processing capabilities that didn't previously exist in Canada. On the operator side, McCain Foods shows what investing in tech-enabled processing capacity looks like at the largest scale. The company's $600-million expansion of its Coaldale potato processing plant — the largest investment in its 65-year history — doubles the facility's size and adds two tech-enabled production lines. It's a straightforward demonstration of the value: more domestic processing capacity, more jobs, more value kept in Canada.
Why small food processors can't do this alone
McCain can commit $600 million to a single facility, but they are the rare exception. Of Canada's roughly 6,900 food and beverage processing establishments, 92 percent are small and medium-sized businesses with fewer than 100 employees. They operate on thin margins with manual processes and minimal automation — and capital investment in machinery and equipment across Canadian SMEs has declined 16 percent over the past decade.
The innovators are building solutions. The largest processors can afford to adopt them. But the thousands of small and mid-sized operators who make up the backbone of the food system — the ones whose costs flow most directly to consumer prices — are largely on their own. The technologies to close the processing gap exist. Whether they reach the businesses that need them most is a question of ecosystem support: validation, deployment infrastructure, and the kind of sustained investment that lets solutions scale beyond early adopters.
That's what makes this a policy problem, not just a market one. Canada's food sector won't modernize firm by firm. It needs coordinated investment in getting proven technology to the operators who can't navigate the process alone.
Read the full report — and get the tools to act on it
This article covers one dimension of Canada's food supply chain vulnerabilities — how missing domestic processing capacity is driving grocery prices higher. Our latest CFIN+ report, Building Resilient Food Supply Chains Through Canadian Innovation gives the full picture — which technologies are reducing costs across processing, operations, and logistics, how companies are deploying them, and what it will take to build a more resilient food sector that better serves all Canadians.
Alongside report access, a CFIN+ membership also arms small and mid-sized food businesses with resources they can't easily get alone: NielsenIQ data across 30+ CPG categories, support from Regional Innovation Directors to find the right technology partners and funders, six other original reports on Canadian foodtech, and over $3,000 in partner discounts.