Canada’s $3.2 Billion Food Security Strategy – A Real Plan or a Placebo?

Canada’s New National Food Security Strategy (the “Strategy”) sets out a comprehensive ten-year plan to combat long-standing challenges in Canada’s food system. The new Strategy proposes more than three billion dollars in new and existing investments to make food more affordable and accessible for Canadians, strengthen domestic food production, and increase competition in the grocery sector.[1]

While the Strategy presents significant policy aspirations, many underlying questions and specifics concerning the Strategy remain unanswered. Perhaps most importantly, whether this Strategy sufficiently addresses the underlying barriers that limit competition in Canada’s grocery industry and contribute to higher grocery costs, remains at the forefront of small and medium sized industry participants’ minds.

The Rationale for the Strategy:

Food affordability, accessibility, and domestic food production continue to be pressing concerns for Canadians. Previous market studies have revealed that there are five major grocers that dominate nearly all of the retail food market, with Loblaws controlling 17% of the market, Sobeys controlling 14% of the market, Metro controlling 6% of the market, Costco controlling 15% of the market, and Walmart controlling 13% of the market. That leaves only (approximately) 35% of the market open to other players in the industry. Because the grocery market is highly concentrated at the distribution and retail levels, there is little room for emerging and established true independent grocers to compete, as most rely on the major retailers for some or all of their inventory, the cost of which is mandated.

The Strategy:

To address these challenges, the Government of Canada has committed to invest more than three billion dollars over the next decade to strengthen Canada’s food system. As described below, the Strategy aims to increase competition, expand domestic food production, improve food distribution, build infrastructure, and reduce regulatory barriers that contribute to higher food costs.[3]

Food Terminals and Food Hubs:

A central component of the Strategy is a one billion dollar investment through the new Food Link Fund to expand food terminals and food hubs across Canada.[4] The investment is intended to help farmers and businesses grow more efficiently, enable independent grocers to purchase more competitively priced products and establish more independent supply chains.[5] By expanding food terminals, independent retailers will gain greater access to locally produced food without needing to rely exclusively on supply chains controlled by dominant grocery retailers, in turn fostering a degree of competition and price stabilization.[6] The Strategy anticipates that stronger local distribution networks will reduce transportation and distribution costs and allow independent grocers greater access to more affordable products, without relying on larger retail chains.[7]

Where food terminals are not feasible nor practical, the Strategy proposes the establishment of commercial food hubs operated by independent retailers and cooperatives.[8] These hubs will serve as regional distribution centres by facilitating the collection, storage, and delivery of locally produced food to retailers, restaurants, institutions and consumers.[9] Food hubs are intended to consolidate supply and lower costs (including costs related to logistics and distributions) by delivering competitively priced products. The Government expects to establish up to 40 food hubs, creating additional alternatives to major grocery supply chains, where food terminals are not feasible.[10]

Strengthening Competition Enforcement:

The Strategy will also provide ongoing funding of $12.9 million annually to strengthen the capacity of the Competition Bureau and the Competition Tribunal.[11] The additional funding is intended to increase the Bureau’s enforcement capacity as well as promote competition throughout the agriculture and agri-food supply chain. The increased enforcement capacity of the Bureau will attempt to create greater consumer savings through increased investigations and dedicated enforcement of anti-competitive behaviour.

The Government’s Proposed Timeline:

The Government has established measurable targets, including:

• Reaching an agreement with the Province of Ontario by the end of 2026 to expand the Ontario Food Terminals;
• Beginning construction of two additional food terminals by the end of 2028;
• Establishing or expanding 10 additional food hubs by the end of 2028;
• Increasing by 15% the number of independent grocers who purchase food from food terminals or food hubs by 2030; and
• Increasing local food sales by small and medium sized food producers by 25% by 2030; and
• Increasing Competition Bureau investigations by 10%, resulting in consumer savings of approximately $350 million annually.[12]

Farm Credit Canada (“FCC”) is supporting the Government’s Strategy through a new $1 billion Agri-food Project Finance Fund.[13] Such fund aims to finance eligible agri-food infrastructure and food processing projects, including projects that have previously struggled to receive funding..[14] The Agri-food project Finance Fund will complement FCC’s existing commitment to invest two billion dollars into food and agriculture innovation by 2030.[15] Together, these funds will assist in financing capital intensive agrifood infrastructure and processing projects.

Increasing Local Food Production:

The Strategy proposes substantial investments to expand Canada’s food production and processing capacity. The funding commitments include:

• Up to $350 million in funding, made available through the Strategic Response Fund (“SRF”), for eligible agri-food projects with new contributions up to $50 million.[16] The Government calls on industry leaders inviting them to put forward proposals for projects that will improve the self-sufficiency of food processing. Proposals should focus on building new infrastructure, modernizing existing capacity and strengthening support infrastructure;[17];
• $150 million in existing SRF funding to support food-related innovation ecosystems;[18]
• $150 million through new funding to the Regional Economic Growth through Innovation program for agri-food projects;[19]
• $150 million in new funding for the Food Security Fund to expand domestic processing, storage, distribution, and delivery capacity;[20]
• $100 million in new funding for Canada’s Collaborative Food Innovation Fund. This Funding will help companies commercialize IP, increase demand for Canadian value-added ingredients and food production, and expand the scope of production; and[21]
• $750 million over the next seven years to increase year round production of fruits and vegetables, through building more greenhouses and other controlled growing environments.[22] $650 million of the $750 million will be dedicated to support producers as they incorporate technology to reduce operating costs. The remaining $100 million will be dedicated to expand local food production in rural and northern communities.

Collectively, these investments, as well as other funds promised by the Government are intended to strengthen Canada’s domestic food supply and reduce reliance on imported goods and services, including foreign processing capacity.

Regulatory Reform and Internal Trade:

The Government commits to reduce regulatory barriers that increase costs in the food supply chain. These barriers are generally believed to increase costs, discourage investment, and limit growth throughout Canada's food system. On June 18, 2026, Parliament enacted Bill C-30, which amended the Canadian Food Inspection Agency Act and Pest Control Products Act to require greater consideration of food security and affordability.[23] These amendments aim to provide growers and livestock producers with greater access to lower-cost production inputs (including seeds, feed, and fertilizers), by reducing regulatory delays and approval backlogs.[24]

To improve interprovincial trade, another goal of this Strategy, the Government will provide provincially licensed food establishments with further guidance to help them satisfy federal food requirements. To achieve this goal, the Government will be giving abattoirs a time-limited exemption from the Safe Food for Canadians Regulations. By doing so, local famers and rural Canadians will be able to make meat more accessible, given the regional shortages of slaughter capacity. This is said to reduce the federal administrative burden by leveraging provincial and territorial food rules. In turn, the Government expects these measures to improve market access for Canadian procedures, including the purchasing of domestically-produced foods.[25] This initiative is supported by a $12 million investment over three years, followed by an additional $3 million annually on an ongoing basis.[26]

Do These Initiatives Improve Competition in Canada?

The Strategy acknowledges that Canadians continue to face serious food affordability challenges. Through these initiatives, the Government expects to strengthen competition and expand domestic food production. However, despite the more than $3 billion commitment over the next ten years, the Strategy lacks focus and adopts an extremely broad approach that distributes funds over many initiatives, rather than concentrating on certain targeted priorities. The Strategy provides approximately $320 CAD million annually, or roughly $7.80 CAD per Canadian each year.[27] By comparison, the United States Farm Bill invests an estimated $75 USD to $120 USD per person annually toward comparable objectives, which is substantially higher per capital support for these initiatives.[28]

Commentators have also noted that Canada’s food security challenges do not revolve around availability, but rather affordability driven by, among other factors, limited competition and increased consolidation.[29] Rather, Canada’s primary issue relates to insufficient competition within the grocery sector, where a small number of dominant retailers continue to control most of the market.[30] This results in a market where food prices remain high and unaffordable, with little pressure to find meaningful solutions to lower costs and produce locally.

In addition, this Strategy gives relatively little attention to Canada’s supply management system. Dairy, poultry, and egg production account for approximately one-fifth of Canada’s farm cash receipts.[31] Yet, the Strategy contains few substantive proposals addressing this crucial sector of the market. Similarly, the Strategy does not adequately engage with the issue of restrictive property controls, which continue to prevent independent grocery retailers from entering many local markets.[32] The Competition Bureau’s 2023 Grocery Market Study identified restrictive property controls as a significant barrier to competition.[33] The Competition Bureau consequently launched an investigation into this matter on March 1, 2024. Despite these findings, Manitoba remains the only province to have prohibited this practice thus far.[34]

Recommended Action:

While the Strategy contains several promising initiatives, additional reforms are needed to meaningfully increase competition within Canada’s grocery sector. The $12.9 million ongoing funding towards strengthening the capacity of the Competition Bureau is only a drop in the ocean and is unlikely to make a substantive difference. Rather than adopting a broad, system-wide approach, a more targeted investigation of each stage of the food supply chain should be undertaken. Addressing unique competitive barriers affecting food production, processing, distribution, and retail would likely produce more effective and lasting improvements than the Strategy’s current high level approach. In our view, the following items are necessary:

1. Give stronger power to the Competition Bureau to challenge anti-competitive mergers and conduct;
2. Prohibit practices that exclude competitors, including stronger prohibitions on restrictive property controls and exclusivity clauses;
3. Support financially independent wholesalers and buying groups, such as co-operatives;
4. Provide funding to independents to upgrade technology; and
5. Eliminate Interprovincial trade barriers.

The Competition Bureau is accepting public feedback through this online form on the barriers to competition in the grocery industry until July 31, 2026.[35]

Sotos LLP advises independent grocers, suppliers, distributors and other food-sector businesses on competition, regulatory and commercial matters. We can help businesses understand how the Strategy, its funding programs and developments in competition law enforcement may affect their operations and growth. Contact our team to discuss what these developments could mean for your business.

About the authors:

John Sotos and Jason Brisebois lead Sotos LLP’s grocery practice.

John is widely regarded as the dean of franchising, licensing and distribution bar. He has been recognized by Chambers Canada, the Canadian Legal LEXPERT Directory, Lexology Index: Canada, and Best Lawyers in Canada. John can be reached at 416.977.9806 or jsotos@sotos.ca.

Jason Brisebois advises clients on franchising, distribution and commercial matters, with a particular focus on the grocery sector. He received the 2024 Lexology Client Choice Award and has been recognized by the Canadian Legal LEXPERT Directory, Lexology Index: Canada, and Best Lawyers in Canada. Jason can be reached at 416.572.7323 or jbrisebois@sotos.ca.

Aly Weiss is a 2026 summer student at Sotos LLP and contributed to the research and preparation of this article.