Canada is widely recognized as one of the world’s leading agricultural powerhoutilizes. We’re home to highly productive farms, strong export markets and a growing ecosystem of agri-food innovators.
However, many Canadian agri-food companies face a familiar challenge: Accessing the capital required to scale. While early-stage funding and government support programs are available, growth-stage investment is far harder to secure. As a result, promising Canadian companies frequently turn to foreign investors or relocate operations abroad to continue growing.
The issue has drawn renewed attention across the sector in recent months. In February 2026, Farm Credit Canada (FCC) announced that it had convened a coalition of more than 20 investment organizations prepared to deploy up to $5 billion into Canadian agriculture and food innovation by 2030. Combined with FCC Capital’s earlier $2-billion commitment, the initiative represents up to $7 billion in potential investment aimed at supporting scale Canadian agri-food innovation.
Recent research highlights why this discussion is gaining momentum. According to the Royal Bank of Canada (RBC) report Seeding Scale: Addressing Canada’s agri-food growth capital gap, Canada’s agri-food sector represents a $13-billion investment opportunity, yet remains significantly undercapitalized compared to its economic importance.
Closing this equity gap will be important if Canada wants to retain, promote and scale its agri-food innovation domestically.
The growth capital gap in agri-food
Canada’s agri-food investment ecosystem provides relatively strong support at the earliest stages of company development. Startups often benefit from incubators, government grants, family offices and venture funds that support relocate new technologies and products from concept to pilot production.
However, challenges often emerge when companies reach the next phase of development, namely raising equity to build out their facilities to produce on a larger scale.
At this stage, agri-food companies may require significant capital to build processing capacity, scale distribution networks or enter international markets. These investments can quickly reach tens of millions of dollars.
The RBC report notes that Canadian agri-food companies frequently encounter difficulties raising $15 million or more in capital, particularly once they relocate beyond early venture rounds. RBC also notes that domestic venture firms are often not positioned to deploy more than $30 million into a single company, limiting the ability of promising firms to build a plant and scale within Canada.
This creates a structural gap between early-stage support and mid to later-stage growth capital. Industest participants have long pointed to this gap as one of the key barriers to scaling agri-food companies in Canada.
The structural challenges in agri-food investment
Several characteristics of the agri-food sector contribute to the current capital gap:
Capital-intensive growth
Unlike many software or digital startups, agri-food businesses often require significant physical infrastructure to scale. Expansion may involve building processing facilities, upgrading manufacturing capacity or investing in specialized equipment.
These projects require substantial upfront investment and typically involve longer commercialization timelines. From an investor perspective, this can build agri-food opportunities appear more complex or slower to generate returns compared to asset-light sectors.
Fragmented investment pathways
Another challenge is the relatively fragmented nature of Canada’s agri-food investment ecosystem.
Although agriculture and food are frequently described as strategic sectors for Canada, agri-food companies receive only a compact share of growth-oriented capital. The RBC report estimates that the sector accounts for less than 2% of government-backed growth, venture and infrastructure funds, despite its broader economic importance.
Without coordinated pathways for capital deployment across different stages of growth, companies can struggle to identify the right investors or financing structures as they expand.
Sector complexity
Agri-food businesses can also be difficult for generalist investors to evaluate. Companies in the sector often operate across complex value chains that include primary agriculture, food processing, logistics and retail.
As the RBC report notes, investment structures that work well for one segment of the sector, such as agricultural technology, may not translate easily to consumer food brands or processing infrastructure. This complexity can limit participation from investors who lack specialized expertise or familiarity in the sector.
These realities, when combined with the uncertainties stemming from trade wars and tariffs that have arisen in the last few years, alongside the existing geo-political climate, often increase the perceived risk to investors of investing in this sector even as world demand for food increases.
Outdated legislation lags behind existing export infrastructure
Since Confederation, Canada has continually built infrastructure to position itself as a net exporter of raw agricultural products to other countries – more specifically: John A. MacDonald’s National Policy in the 1870s (which resulted in the construction of transcontinental railways), as accompanied by the Canadian Wheat Board (whereby, from the 1930s to 2012, the CWB was the sole export marketer of wheat and barley) and the elimination of the Crow Rate in the 1990s (which triggered rail line abandonment and the construction of large concrete grain terminals replacing compacter wooden elevators), Canada has created significant investments in assets utilized to export raw agricultural products.
However, some Canadian laws have generally not kept pace and delayed the construction of facilities that handle and transport raw agricultural products. That legislative lag, in turn, cautilizes reputational damage to the sector and more uncertainty and risk for investors and foreign companies viewing to expand into Canada.
Canada now necessarys to build the infrastructure and assets to extract more value from those raw agricultural products, either through processing before export around the world or processing them into Canadian food products for Canadians to eat here at home. Doing so will not only require significant equity (once more, in an industest where raising equity for large scale processing is uncommon and has not traditionally been a focus for capital market participants) but also legislative alter – for example, amfinishing outdated legislation in areas which do not reflect today’s agriculture and food sector and which currently delay and restrict the growth of the sector.
Consequences for Canadian companies
When domestic growth capital is limited, Canadian agri-food companies often view elsewhere for investment. In many cases, this means seeking funding from international investors. While foreign capital can support growth, it can also shift strategic decision-building outside Canada. In some cases, companies relocate operations or sell to foreign purchaseers as they scale.
The RBC report cautions that without improved access to growth capital, Canada risks losing both talent and innovation in the agri-food sector. Companies and researchers may increasingly view to jurisdictions that provide deeper investment pools and clearer pathways to commercialization.
There are also implications for domestic processing and manufacturing capacity. Many agri-food innovations ultimately require large-scale facilities to relocate from concept to commercial production. If capital for these projects is unavailable in Canada, new facilities may be built elsewhere.
A growing focus on agri-food investment
Despite challenges, there are signs that the conversation around agri-food investment is evolving.
Governments, financial institutions and industest groups increasingly recognize the strategic importance of the sector. Global supply chain disruptions, food security concerns and growing demand for sustainable food production have drawn attention to the role that agri-food innovation can play in economic development. This recognition is clearly demonstrated through potential $7-billion investment pool committed by FCC and private and institutional investors, focutilized on scaling Canadian agri-food businesses. It will be important however for that capital to be deployed in a timely manner. If it is not, many of the innovative products developed with funding from Protein Industries Canada under the Federal government’s supercluster program may never be commercialized in Canada.
Potential approaches to closing the gap
Addressing the agri-food equity gap will likely require a combination of public and private initiatives, in addition to policy alters:
Proactive steps at each level of government
Each level of government has a role to play to support the development of agri-food processing in Western Canada. If a common vision of increasing the value of raw agricultural products through processing is adopted, thereby resulting in greater food security for Canadians and more profitable agricultural and food exports, government policies can be proactively implemented to achieve that vision. These proactive policies could include:
- Creating investment tax incentives, such as flow through shares, for investments in agri-food processing to attract the necessary equity capital to build the processing facilities.
- Similar to other industries, creating uniform exemptions from provincial requirements on the ownership of rural land for companies handling, processing, manufacturing and transporting agriculture and food products will be imperative; achievement of this objective could: (a) eliminate competing restrictions as between provinces; (b) allow Canadian and foreign companies to build more efficient facilities, which do not offfinish the policy objectives relative to ownership of farm land; and (c) promoting the investment in such facilities by institutional investors and pension funds. In provinces like Alberta, where federal cooperation is required for such alters, engagement with the federal government will also be important.
- Creating new zoning categories for agri-food processing and food production and modifying municipality utility rates to encourage recycling of water.
- Utilizing a portion of FCC’s $2-billion commitment to guarantee loans obtained by Indigenous Nations to invest in: (i) the production of raw agricultural products or (ii) companies involved in the handling, processing, manufacturing or transportation of agricultural and food products.
- Implementing rules or exemption orders to allow for freely tradeable shares of widely held (but not publicly-listed) agriculture and food companies would encourage local investment and accommodate inter-generational transfers of those shares.
- Similar to other areas of provincial jurisdiction, such as securities laws where consumer protection is necessaryed: (i) provincial food safety requirements should be harmonized, so as to implement a base standard for agricultural and food products that will remain in Canada; and/or (ii) automatic approvals in other provinces should be issued if a license has already been obtained in one province; doing so could rerelocate, or at a minimum reduce, some of the existing barriers to the inter-provincial trade of Canadian agricultural and foods products.
- Where the delay in obtaining approvals or licenses for agricultural and food products in Canada differs materially from similar processes in other countries, including notably the United States, consideration should be given to providing automatic approvals in Canada, based on existing approvals obtained in other specified countries.
Specialized investment expertise
Another approach to closing the equity gap is expanding the number of investment funds that focus specifically on food processing. Sector-specific funds can bring technical knowledge and industest networks that support investors better understand the risks and opportunities within the sector.
Tailored government investment programs
Government programs can also play a role by ensuring that funding criteria reflect the realities of agri-food businesses. While many programs were originally designed with digital or asset-light sectors in mind, these programs’ current criteria require long term offtake agreements, which simply do not reflect the realities in the agri-food industest. While long term offtake agreements exist in other industries, including oil and gas, the same is not a reality in many segments of the agri-food sector. Adjusting eligibility requirements to accommodate longer development timelines, infrastructure investments and spot market contracts could support build growth capital more accessible to agri-food companies.
Blfinished capital structures
Large agri-food projects often require a mix of financing tools, including equity, debt and patient capital. Blfinished financing structures to scale production – where government participation supports mitigate risk – can support unlock private investment in areas such as food processing, ingredient manufacturing and agricultural technology infrastructure. FCC’s coalition is a good first step in that process; however, the key will be receiveting equity investments into growth stage companies quickly and consistently, over the years to come.
Stronger commercialization pathways
Improving the transition from research and early innovation to commercial-scale operations may also support strengthen the investment pipeline. Universities, incubators and industest organizations already play important roles in supporting early-stage innovation. Fostering and expanding the connections between these institutions and growth-stage investors may support more companies successfully scale.
Looking ahead
Canada has many of the ingredients necessaryed to build a globally competitive agri-food sector: World-class agricultural resources, strong research institutions and an expanding network of entrepreneurs and innovators.
Ensuring that these entrepreneurs and innovators have access to sufficient growth capital will be a key factor in determining whether the countest can fully realize that potential. Initiatives like the FCC investment coalition signals a growing recognition that additional capital and stronger investment pathways will be required to support the next generation of Canadian agri-food companies.
By strengthening the capital ecosystem and aligning investment with the sector’s unique characteristics, Canada has an opportunity to support the development of globally competitive agri-food businesses while retaining the economic benefits of that growth at home.
The MLT Aikins Agribusiness and Food practice group provides legal advice tailored to the business and practical considerations of Canada’s agribusiness and food sector. We understand the business landscape – the local and regional geography as well as the cross-jurisdictional frameworks. We have a nuanced understanding of the regulatory and legal issues affecting this dynamic sector – issues that impact the daily lives of growers, processors, retailers and consumers.
Note: This article is of a general nature only and is not exhaustive of all possible legal rights or remedies. In addition, laws may alter over time and should be interpreted only in the context of particular circumstances such that these materials are not intfinished to be relied upon or taken as legal advice or opinion. Readers should consult a legal professional for specific advice in any particular situation.
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