Some might think the low Canadian dollar might make 2016 a good year for local produce growers. Not necessarily, say two experts in the field.
“The talk I’ve heard is that high food costs will normalize farmers’ markets or direct-market sales. These might have cost a little bit more before. Our cost of production is higher. That’s the reality of it,” said Rob Spencer, commercial horticultural specialist with Alberta Agriculture and Forestry, Stettler.
If the price of food is higher in the grocery store, consumers might decide to spend their money on local produce, since that money can have more of a direct impact in the local economy.
“It’s not going to be the big difference between the low cost in the supermarket versus the high cost at the farmers’ market. It will be more comparable,” said Spencer.
The profile of local food continues to rise. In a couple of months, Spencer will conduct a price survey for fruit and vegetable growers, and will get a read on what producers will be charging in the province. He’s curious to see whether producers will lower prices, keep them steady or raise them.
“I’m not 100 per cent sure what will happen and I’m curious to see how that goes,” he said.
Imports will continue to play a big role in Alberta, just because there is such a short growing season and a lot of produce can only be grown seasonally.
Exchange works both ways
Rod Bradshaw, a vegetable grower from Innisfail, has weathered the low Canadian dollar before.
“On the sales side, it does make your potential gross a lot higher, but realistically, a lot of the stuff we do is based on U.S. pricing. So your inputs, your chemical, your fertilizers have a U.S.-based price in it,” said Bradshaw.
“A lot of the food in our grocery stores is based on the U.S. price because lots of our food is coming through there and from there. There is always a U.S. dollar component to our food industry, but we have to remember that that is not the biggest component of what we are doing either,” he said.
Bradshaw, who co-owns Beck Farms, knows a machinery representative who is charging $1.41 exchange rate because all the equipment is based in the United States.
Input costs will be higher. Fuel costs are less of a component of vegetable growing, since many growers have moved to a reduced-till system. The only cost thing that might not be affected is in labour.
Bradshaw, whose farm is one of five farms that co-operatively markets with the Innisfail Growers Co-op, isn’t sure if consumers will be willing to support local food if it ends up costing more.
“In our group alone, we have talked about pricing and we’re very concerned about pricing, given the current economy in Alberta. Right now, from what I’m seeing in the news and a little bit of press that I’ve been reading, restaurants are suffering. But people seem to be buying food and treating themselves to a good meal at home,” he said.
In tough times, consumers may try to get the most bang for their buck and choose not to support a higher-priced local grower. Certain items that were once popular may be considered luxury items, and people may choose to go without.
“We have to be really cognizant of the buying power of the consumer. Pricing will become a concern,” he said. “We have to make sure we don’t alienate the consumer. You can’t be seen to be price gouging. You have to be in touch with what the economy is doing, and be aware of what you can ask for your produce.”