Lower raw material prices expected to ease pressure on processors in 2026
After several years of rising expenses, Canadian food and beverage processors may finally see some financial relief in 2026. New forecasts suggest that costs for many major raw material inputs are expected to decline, easing pressure across the processing sector.
According to projections from FCC Economics, six of the ten most valuable raw material inputs used by food and beverage processors are forecast to record lower prices in 2026. Two additional inputs are expected to rise at a slower pace than in 2025. Together, these ten inputs account for about 40 percent of total raw material costs, making the changes highly significant for the industry.
Figure 1.Processors Will Record Cost Relief Starting 2026
Sources: CGC, AAFC, FCC Economics
The largest benefits are expected for processors that rely heavily on hogs and cattle, as these inputs are forecast to see notable cost declines. This is positive news for meat processors that have faced high livestock prices in recent years. Grain and oilseed users are also likely to benefit, although gains may be more moderate compared to livestock-related inputs.
Canola, cattle, and milk remain the most important raw materials by value, each accounting for roughly seven percent of total raw material costs. While not all prices are expected to fall sharply, the overall raw materials price index is forecast to decline in 2026. This signals broader cost relief for processors across different food categories.
Additional optimism comes from slower price growth in other important inputs such as cocoa, sugar, and natural gas. These trends suggest that cost pressures may ease beyond agricultural commodities alone, supporting more stable operating conditions for food and beverage manufacturers.
Despite these positive signs, costs remain high when compared to levels seen five years ago. There is also ongoing risk that prices could rise again due to factors such as changing trade policies or global market disruptions. As a result, processors are encouraged to focus on strategic sourcing, efficiency improvements, and productivity gains.
Overall, while challenges remain, 2026 could mark a turning point for Canadian food and beverage processors as easing input costs provide much-needed breathing room after years of financial strain.
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