I’ve written extensively about how disruptions in supply chains for essential products can lead to persistent challenges for Canadian families, including price inflation and even shortages of everyday essentials from favourite foods to children’s cold medication. While some conditions show signs of improvement, supply chain and inflation challenges continue - for example, with Canadian parents still having difficulty finding even such a critical product as infant formula.

Some may be surprised to learn that these shortages are not the result of any shortage in available ingredients for domestic production. In fact, it’s quite the opposite. Canada has a surplus of the main components needed to produce infant formula. What we lack is sufficient processing capacity. Instead of capturing the full value of these raw ingredients, Canadian farmers must sell them at lower prices as animal feed or simply let them go to waste as we do not manufacture products like infant formula in Canada anymore.

This shameful waste is just one acute example of the damage done to our domestic manufacturing and processing capacity over decades. FHCP has long raised alarm bells about Canada’s manufacturing capacity becoming more and more hollowed out over time. This leaves us out of critical value-added opportunities and leaves Canada dependent on manufacturing in other countries to meet domestic demand. While both domestic production and trade clearly have a role to play in meeting our market’s needs, we cannot rely only on international supply chains - which, as we’ve learned throughout the COVID-19 pandemic are particularly vulnerable to shocks.

In the case of infant formula, Health Canada was responsive to the situation and provided flexibilities that helped organizations get products to market through new import channels and into the hands of Canadians who needed them. Still, government, businesses, and families were all left scrambling. This should be seen as a sign of the urgent changes needed to protect against such shortages and Band-Aid solutions in the future.

Canada’s generally uncompetitive business environment, aging infrastructure and manufacturing base, and burdensome regulatory framework have played a role in exacerbating the global phenomena of supply chain challenges, shortages, and inflation. As one example, Canada’s outdated, inefficient, and unpredictable consumer health regulations put over-the-counter medications like pain relievers and cough medicine in the same category as prescription drugs - needlessly increasing barriers to access, affordability, and innovation. Health Canada acknowledged this problem in 2015 when it proposed “that lower-risk products be separated from the framework for prescription drugs, and be moved under a new framework for consumer health products.” Eight years later, we’ve seen no progress on this issue.

Correcting these long-standing constraints through regulatory modernization is of utmost importance. Whether for infant formula, over-the-counter pain and cold medication, or pantry staples, we must strengthen domestic manufacturing and supply chains to ensure Canadians have resilient, secure supplies of the essential products they rely on. 

FHCP’s recommendations to government include modernizing the Food and Drug Regulations to streamline the infant formula review process and following through on its 2015 proposal to create a consistent, risk-based regulatory framework for consumer health products that is separate from the prescription drug regulations.

Of course, we cannot underestimate the impacts of the highly-consolidated retail market. It’s well known that the Canadian grocery retail sector, in which 80% of food and drug store sales are controlled by just 5 companies, is intertwined with the pharmacy sector to a degree seen nowhere else in the world. As a result, the same issues of availability, price increases, and reduced consumer choice pervade both industries.

The good news is that FHCP and many partners across the food and retail supply chain are working together to advance concrete solutions like a Grocery Supply Code of Conduct. By ensuring transparency and predictability in relationships between large retailers and their suppliers, the Code will improve Canada’s grocery retail business environment and ultimately increase choice, value, and innovation that benefit Canadian families. But to be effective it must be a cultural transition of the relationship between the retailers and manufactures and needs to mirror the grocery retail landscape and the high integration of pharmacy into the grocery environment and the code must cover all categories in a typical grocery store. Food security is critically important but health security is also critically important and we do feel the implementation of the code will aid both of these needs. 

This op-ed was originally published on LinkedIn.