The 2026 FCC Food and Beverage Report states sales among food and beverage manufacturers are predicted to rise by 0.8 per cent while volumes fall by 0.7 per cent, the fourth straight year of decline. It notes sales growth will likely be driven by higher prices, not higher consumption.

WHY IT MATTERS: With trade tensions still disrupting global supply, prices could fluctuate this year, affecting consumers’ choices.

FCC chief economist Craig Johnston said this disparity speaks to the issue of consumer purchasing power.

“Higher food prices over the past several years are really weighing on households’ budgets,” he said in an interview. “They’re making more cost-conscious decisions.”

“This is actually a headwind for consumption and a headwind for volumes.”

He said any upstream changes will no doubt filter down to Canadian producers. Some challenges are shared across sectors.

“When we think about common elements, you can think about the tariffs, the elevated input costs, generally,” he said.

Margins are tight across the sector, including for farmers.

“We’re not seeing massive improvements on margins within the food and beverage manufacturing sector to pre-COVID levels, and we’re not necessarily seeing that filter through to a broad-based increase in margins for primary ag.”

“The industry in general is still going through this adjustment period” he said, “and we do expect that to continue to 2026.”

Trade tensions still a factor

Canada will continue to grapple with trade uncertainty this year, including the recent instability caused by the conflict in the Middle East.

Forecasts for costs of goods in the Food and Beverage Report were made before the crisis, “meaning that if the commodity price surge persists beyond just a few months, there would be upside risks to those estimates.”

FCC had expected pressures on some inputs, such as cattle and hogs, to ease from 2025 highs, but surging energy prices due to the conflict make that less likely.

Costs of production up

Production costs for food and beverage manufacturers increased by two per cent in 2025, driven mostly by raw material costs.

“The increase in raw material costs was driven by disruptions that constrained availability and raised prices,” the report states.

“Some examples from 2025 include avian influenza impacts on poultry … tariffs that increased the cost of imported aluminum packaging and historically low cattle herd sizes across North America.”

Costs across sectors

The report also breaks down costs associated with sub-sectors of food and beverage processing.

In grain and oilseed milling, sales were uneven in 2025 but improved by the fourth quarter. 2026 shows signs of a rebound in sales and volumes.

Large carryover of canola stocks is expected to keep prices under pressure in 2026. Canola prices are expected to fall by 3.1 per cent in 2026.

The report suggested demand for Canadian maple syrup and honey has continued to increase in the global market.

In the dairy sector, 2026 will likely see a 3.6 per cent increase of product manufacturing sales over 2025. Processors are also expected to pass along costs from the producer price increase for unprocessed milk to consumers.

In the meat manufacturing sector, FCC forecasts sales up 1.6 per cent and volumes down by 5.6 per cent.

Tight supplies of live animals, due largely to disease outbreaks, drove prices up in 2025. According to the report, “2026 will likely see another year where price, not volume, drives sales upward.”

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Sean Connolly, Conagra’s chief executive officer, was asked during a Nov. 12 session at J.P. Morgan’s U.S. Opportunities Forum in Miami what his thoughts were on Ardent Mills.

“We’re open-minded in the future with that business, whether or not it remains part of us or not,” he said.

Dating back to the joint venture’s creation in 2014, Conagra and Cargill have each held 44 per cent of Ardent Mills, while U.S. co-operative CHS owns the remaining 12 per cent.

Ardent Mills operates 30 wheat mills, a durum mill and a rye mill in the United States, where it controls 28 per cent of the milling market.

Ardent has the capacity to mill 21,240 tonnes of flour per day in that market. Ardent’s biggest competitor is ADM Milling Co., with 11,725 tonnes of capacity, according to Milling & Baking News’ Grain and Milling Annual 2026 publication.

Ardent’s Canadian facilities include mills at Mississauga, Montreal and Saskatoon.

Connolly said it is not lost on Conagra that Ardent stands apart from the company’s other assets because it is a branded, “pure play” company that is part of a joint venture.

“It’s a different animal,” he said.

However, it has been a good profit generator for the company.

“Listen, it has been a very nice hedge during the volatile times since COVID, and it has performed extremely well,” he said.

Connolly noted that while Conagra might be open to the idea of selling its share in Ardent, it would not be an easy transaction.

“Don’t assume that it’s a snap of the finger to kind of exit a joint venture. It’s more complicated than that,” he said.

“When joint ventures are built, they are often built so that they are going to be there for a lasting period of time, otherwise it can be hard to draw joint venture partners into it.”

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G.S. Dunn Ltd. is investing approximately $30 million to expand its 22-acre mustard milling facility, aided by a $3.1 million Agri-Processing Investment Tax Credit from the Alberta government.

The facility brings in mustard seed from farmers, packages it for sale and sends it to 110 countries.

“The Alberta tax credit allowed us to add the milling operation to our facility where it did not exist before,” David Shields, plant manager for G.S. Dunn’s Bow Island operations, said in a video announcing the investment.

“Now, we are able to mill our products here in Alberta, closer to the source where it is growing. The process was very smooth. Working with the government, it helped us navigate some of the regulatory aspects of it. It helped us with our increase in the workforce and the ability to accommodate the staff here, with our infrastructure.”

The project has created 34 new jobs, and the expansion will also increase the facility’s purchasing power of raw mustard seed from $13 million to $44 million, with all seed coming from 300 rotated producers in southern Alberta and Saskatchewan.

The Bow Island expansion is the second phase of G.S. Dunn’s value-added mustard milling project. Since its initial expansion into Alberta, the company has increased capacity by more than 200 per cent. The current phase has increased processing capacity by approximately 70 per cent compared to pre-expansion levels.

The APITC program provides a 12 per cent non-refundable, non-transferable tax credit when businesses invest $10 million or more in a project to build or expand a value-added agri-processing facility in Alberta.

The program is open to any food manufacturers and bioprocessors that add value to commodities such as grain or meat or turn agricultural byproducts into new consumer or industrial goods. Up to $175 million in tax credits is available for each project.

G.S. Dunn has more than 150 years of experience and provides more than 250 value-added milled mustard products, making it the largest supplier in the world.

The company was set up by the British businessman of the same name, who opened his first Canadian mustard mill at Hamilton in 1867. Its Prairie seed procurement and cleaning operation was set up at the former Spitz sunflower seed plant at Bow Island in 2019.

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Degelman, in a release Thursday, said it recently bought the Lacombe, Alta. company for an undisclosed sum and will keep Renn’s existing employees and management in place.

In business for about 60 years, Renn’s product lines include grain baggers, grain bag unloaders, roller mills, hammer mills and bagger mills, which it sells through dealers across Western Canada and exports to over 25 countries including the U.S., U.K., Australia and Ireland.

Renn also serves as the Western Canada distributor for U.S. manufacturers including Wisconsin forage equipment maker H+S Manufacturing, Kentucky-based Ideal Post Pounders and Iowa grain conveyor maker Uni Tube.

Degelman, whose product lines include tillage equipment, granular applicators, rock pickers, heavy harrows, land rollers, rotary mowers, manure spreaders and bulldozer blades, noted in a statement last month that it’s had a “trusted supplier” relationship with Renn since 2008.

Degelman, which started in 1962 with farmer Wilf Degelman making rock pickers at Raymore, Sask., now has manufacturing plants at Regina and at Hillsboro, N.D., about 60 km north of Fargo. The addition of Renn’s Lacombe plant brings Degelman’s total staff complement from over 400 to over 500.

“This is a very exciting opportunity, and we look forward to welcoming (Renn) as a partner that aligns with our existing culture, as well as our future vision to further propel plans to grow the brand, and position for ongoing opportunities in both local communities and global markets we export to,” Degelman president Blair Flavel said in a release.

Doug Hilsabeck will remain vice-president for Renn and will “continue to work closely with Degelman to collaborate and enhance offerings and the overall customer experience,” Degelman said.

The deal “makes both Degelman and (Renn) more diversified companies while continuing to flourish as innovators and leaders in the agricultural sector on a stand-alone basis,” Flavel said. — Glacier FarmMedia Network

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Despite modest price increases over the past month, some western Canadian oat bids are less than half of what they were last year. In Alberta, the high-delivered bid for oats as of Tuesday was $5.32 per bushel, down $3.55 from last year, according to Prairie Ag Hotwire. In Saskatchewan, the high-delivered bid was $4.13/bu., a decrease of $4.94 from one year ago. In Manitoba, the high-delivered bid was $5/bu., lower than the $10.15/bu. reported in January 2022.

On the Chicago Board of Trade (CBOT), the March oat contract fell to US$3.2725/bu. on Dec. 8, the lowest price recorded since Dec. 7, 2020. On Apr. 11, 2022, the contract hit an all-time high of US$8.11/bu., preceding a 60 per cent drop in value over an eight-month span. Prices have stayed below its 100-day moving average since late June.

Ryan McKnight of Linear Grain Inc. at Carman, Man. attributed the price collapse to more acres, higher yields and therefore greater production. But he added that those who already have purchased oats have no interest in buying more.

“We’re seeing Manitoba farmers looking for ($5/bu.), Saskatchewan farmers looking for ($4.50-$5/bu.). If it’s compared to where the futures are, Canadian offers are extremely high from a basis standpoint,” McKnight said. “We have end users who are choking on high-priced oat contracts and inventory. They are quite slow to buy any additional (crop) over the past month or two.”

The Prairies accounted for 91 per cent of Canada’s oat production for the 2022-23 marketing year with the three provinces totalling 4.79 million tonnes with a 15-year high seeded area of 3.53 million acres, according to Statistics Canada (StatCan). Last year, from 3.22 million acres on the Prairies, only 2.39 million tonnes of oats were produced largely due to severe drought.

Scott Shiels, grain procurement manager at Grain Millers Inc. at Yorkton, Sask., said oats are in an oversold position as the supply-demand balance has favoured the former over the past four months. However, he added that demand for oats is “tremendously strong.”

“In the overall picture (with) people talking about a recession, looking for cheaper food ingredients, oats fit that bill as well as being a really healthy alternative to a lot of foods. Over the last decade, oats have been known to be a ‘superfood’,” Shiels added.

Paterson GlobalFoods (PGF) will open its new oat mill, O Foods, at the CentrePort Canada industrial port in northwest Winnipeg later this year. Last week, Swedish food company Oatly announced it sold part of its manufacturing capacity in the U.S. to Canadian food company Ya YA Foods Corp. Shiels believes these two developments will give a boost to demand.

“For us at Grain Millers, it has been a steady growth over the past 20 years and we’re not looking to slow that down any time soon,” he said.

However, lower oat prices could eventually turn into fewer growers considering the crop for seeding this spring.

“The expectation is for acreage to come down. The carryover is looking to be close to one million tonnes. If the carryover is down, we’ll likely be in a comfortable position with average yields,” McKnight said. “I ran some numbers recently with $5.50/bu. new-crop oats and $11/bu. new-crop wheat and oats were still good because wheat is slightly more expensive to grow. At the current price spread, it seemed OK.

“I see a lot of oats being offered out by farmers. The pricing is not what they’re looking for at the moment.”

Both McKnight and Shiels do not anticipate much price movement in the early parts of 2023, while also predicting that new crop in 2023 will be priced higher.

As for current prices, Shiels is cautious.

“It’s a concern, but it’s not keeping me awake at night… yet,” he said.

— Adam Peleshaty reports for MarketsFarm from Stonewall, Man.

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The company on Thursday announced it would start construction “immediately” on the new operation, to be housed in an expansion of its existing processing plant just east of Aberdeen, about 35 km northeast of Saskatoon.

Oat product lines at the new operation, which AGT said it expects to have up and running by the end of 2022, would include oat groats, flours and other milled products for plant-based foods, “specialty” ingredients and feed products.

A company spokesperson said via email Friday the new plant would have capacity to process up to 60,000 tonnes of oats per year.

“Oats are a major cereal crop for Saskatchewan with significant production levels, and AGT is already exporting thousands of tonnes of oats each year,” CEO Murad Al-Katib said Thursday in the company’s release.

“Combined with our expertise in value-added milling and the production of high-quality plant-based ingredient products, we have a real advantage in creating value for our producers in this new product area.”

The Aberdeen plant was set up as Horizon Seed Processors in the mid-1990s, cleaning and packing lentils, peas and mustard for export. It was taken over by what’s now AGT in the mid-’00s.

AGT said its Abderdeen site is also in the midst of “Saskatchewan’s most productive oat growing region, where approximately 30 per cent of Canada’s oats are produced” and has direct access to Canadian National Railway (CN) track.

Canada overall booked a significant decline in oat production in 2021, with Statistics Canada most recently estimating a crop of 2.6 million tonnes, down from 4.6 million in 2020 and 4.2 million in 2019.

Oat acres in Saskatchewan alone were estimated to be down 11 per cent in 2021 from 2020. However, drought in 2021 knocked Saskatchewan’s estimated oat production further down to 1.1 million tonnes, compared to 2.3 million in 2020 and 2.2 million in 2019.

Oats are “very complementary to pulses in their amino acid profile, which increases their digestibility and gives them highly desirable characteristics for extruded products like snacks and pasta, bakery applications and the beverage industry,” Al-Katib said in Thursday’s release.

“With demand strong and growing for innovative plant-based products in the marketplace, and with a number of new products being offered in our system utilizing oats, including extruded flours and blends, snacks and pastas with oats and pulses, we expect that our existing and new customers will find our unique oat-derived products to provide significant advantages for their products as well.” –– Glacier FarmMedia Network

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Scoular Canada on Wednesday announced the opening of its “high-speed” flax line at Richardson, Sask., where it already processes and cleans lentils, peas and canary seed.

The company broke ground on the flax operation last winter as part of a $10 million investment at the site, which also included the recent addition of another pulse crop cleaning line.

“High-speed” refers to the “industry-leading” rate at which the plant can clean flax to the “high purity standards our customers require,” Jeff Vipond, Scoular Canada’s general manager for pulses, seeds, distilling and milling, said via email Wednesday.

That processing rate, he said, “will substantially increase our ability to grow our volumes into the high-quality ingredient space.”

The plant will produce whole and milled flax in the brown and golden categories for use in breads, cereal, bars, snacks and pastas as well as oils, supplements, pet foods and livestock feeds.

The flax plant “incorporates technology that enables it to deliver some of the highest-purity flax available on the market,” Scoular said Wednesday in a release, noting the plant is certified to Global Food Safety Initiative standards and has organic certification also.

Putting up the flax operation at Richardson was a matter of efficiency, Vipond said, as it allows the company to “leverage key personnel and a strong grower base across both sites.”

This week’s opening “coincides with a strong flax market and record-high prices for Canada,” Scoular said, as drought in North America, tight supplies worldwide and demand for pet food and flax oil have supported farmgate prices. Consumer awareness of flax as a non-GMO source of omega-3 fatty acids and fibre, meanwhile, has lifted demand.

Omaha-based Scoular dates back to 1892 but has been in Canada since 2015, when it took over the pulse and special crops division of Legumex Walker.

Its space in Canada remains mainly in the West, where it has offices at Calgary and Saskatoon, processing plants at Winkler and St. Jean Baptiste, Man. and Saskatoon and Tisdale, Sask., and grain handling sites at Brooksby, Sask. and Petersfield, Man. plus a transload site near Calgary. In the East, it has two warehouses in southwestern Ontario and one in New Brunswick.

The company in 2020 expanded its Winkler sunflower plant when it moved its Winnipeg birdseed operations there. That year it also stepped out of the Prairie edible bean business, selling the former Roy Legumex processing plants at Plum Coulee and Morden, Man. to a Michigan bean grower co-operative. — Glacier FarmMedia Network

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While most of his customers were still taking delivery on existing contracts and not yet in the spot market, Ryan McKnight of Linear Grain at Carman, Man. noted Canadian mills and other end-users were already stepping up their pricing.

Oats prices have seen a steady rise over the summer, with bids topping out at $6 per bushel in Manitoba and nearing $5.75 in Saskatchewan.

“The mills will need (oats) but some other non-milling markets will fall away,” McKnight said.

While some feed demand was inelastic, the high prices will limit that buying interest; some feed markets have already been cutting back their purchases.

Yield and quality this year were extremely variable, according to McKnight, and he expected anything that wasn’t super-low on test weight would go for milling.

Canada will have grown 3.07 million tonnes of oats in 2021, which would be down by 33 per cent from the previous year, according to the latest Statistics Canada estimates.

The smaller crop will also likely cause exports to slow down, with some eastern buyers possibly importing oats from Europe to meet their demand, McKnight said.

— Phil Franz-Warkentin reports for MarketsFarm from Winnipeg.

Correction, Sept. 3, 2021: Oat bids reported in the third paragraph are in fact “per bushel,” not “per tonne” as written previously.

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The Winnipeg company said Thursday it will buy 100 per cent of the shares in Italgrani USA Inc., whose assets include a mill, elevator and Mississippi River barge-loading facility at St. Louis; three grain elevators in northwestern North Dakota; and a commodity trading desk in Minneapolis.

Privately-held Richardson didn’t release a dollar figure for the deal, but said it expects its purchase agreement to close “immediately” after regulatory approvals are received. Richardson said it would also “retain the current workforce” for the St. Louis-based company.

“This acquisition is fully aligned with our long-term strategic goals of diversification, geographic expansion, and an increased presence in food processing — having gone from canola to oats and now to durum processing,” Richardson CEO Curt Vossen said in a release.

“The significant scale of processing capability of the Italgrani plant, combined with origination opportunities and crop inputs retail facilities… will further enhance the services we will be able to offer to our producer customers, both in Canada and the U.S.”

Italgrani in 2018 completed a major expansion at the St. Louis facility, adding an 8,000-hundredweight capacity milling unit that brought its daily processing output to 28,000 cwt of semolina and/or durum flour — which before grinding translates to about 1,800 tonnes of durum wheat.

Italgrani’s North Dakota elevators — which along with durum handle spring wheat, flax, sunflowers, peas and other crops for domestic and export sales — are within relatively short reach for growers in southeastern Saskatchewan and southwestern Manitoba.

Those three elevators, which also include retail crop input facilities, are at Powers Lake, about 90 km south of Estevan, Sask.; Tolley, about 75 km south of Carnduff, Sask.; and Benedict, about 150 km south of Lyleton, Man.

Italgrani, which bills itself as “Italian family-founded and -owned,” is today majority-held by Progetto Grano, a Milan-based holding company that bought its controlling stake in 2006.

Italgrani started out of a Minneapolis office in 1979 and expanded to include the St. Louis mill and elevator by 1987. It bought its Mayco Export grain trading and brokerage subsidiary in 1988 and started investing in North Dakota grain handling space in 1989.

“We are confident that Richardson will understand and nurture the unique culture and business qualities that made Italgrani so successful over the years and will contribute to the further growth of the business,” Progetto Grano CEO Ruggero Benedini said Thursday in Richardson’s release. — Glacier FarmMedia Network

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There were also year-to-year increases in the other categories tracked by the federal agency, while whole wheat and graham flour production decreased.

Of the total wheat milling, durum made up a small percentage in 2020, accounting for 7.2 per cent of the wheat processed. However, there was a greater increase in the amount of durum milled from year-to-year than over the last few years. The 235,150 tonnes of durum milled was up 7.8 per cent over 2019, while previous year-to-year increases since 2017 have been 0.3 to one per cent.

Excluding durum, wheat milling came to nearly 3.032 million tonnes in 2020 — a 1.6 per cent rise over that in 2019.

The amount of total flour produced bumped up 1.5 per cent from 2019, at about 2.489 million tonnes. When durum is excluded, the wheat flour produced in 2020 was approximately 2.308 million tonnes, for an increase of nearly 1.2 per cent over the previous year. Flour made from durum only rose six per cent in 2020 at 181,058 tonnes.

Whole wheat and graham flour produced saw a notable step back in 2020, dropping 30.7 per cent at 87,718 tonnes.

At just below one per cent, total millfeeds (a byproduct containing flour along with bran and germ) produced saw an increase in 2020, coming to 748,197 tonnes.

The total amount of all wheat milled in Canada in 2020 represents 9.3 per cent of total wheat produced in the country. When compared to the last few years, the amounts of total wheat and total flour produced has increased, but the gains in wheat production outpaced those for flour produced.

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