Glacier FarmMedia – Rising food prices have been drawing the ire of the Canadian public, but the bulk of that frustration and anger is not directed at farmers. Not yet, at least.
While food retailers are viewed unfavourably, according to the latest consumer trust survey results from the Canadian Centre for Food Integrity, farmers remain one of the most trusted demographics in the food system.
That trust is at risk.
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Canadians are increasingly concerned about lack of transparency at all levels. Combined with an increasingly volatile world, the perception of opaque food systems could eventually have negative repercussions for farmers.
Most of the current concern Canadians have about food involves its cost. Out of more than 20 “life issues” provided in the CCFI survey, cost of food has reached an all-time high.
That concern is echoed in current discourse around inflation and food affordability.
Inflation has slowed in recent months. Statistics Canada put September grocery prices at 5.8 per cent higher, year over year, compared to the start of the year, when monthly grocery inflation topped 10 per cent.
However, the cumulative impact has been significant. Canada’s Food Price Report, an annual joint report from Dalhousie University, the University of Guelph, University of Saskatchewan and University of British Columbia, put last year’s food inflation at 10.3 per cent as of September 2022.
Earlier this year, a report from Food Banks Canada cited over 1.9 million visits to Canadian food banks during March. That report, titled “HungerCount 2023,” noted those numbers were a 32 per cent increase over March 2022 and 78.5 per cent higher than in 2019. Food Banks Canada said they were, “the highest year-over-year increase in usage ever reported.”
Financial strain in other areas, such as housing, interest rates and general inflation, has made the issue of food cost more acute.
Pointing fingers
When the CCFI asked respondents why they thought the cost of food has increased, farmers were not mentioned. Supply chain issues were the top perceived cause, which is generally in line with previous CCFI surveys, although this year’s results suggest that is being displaced by concerns over food company profiteering.
“As of this summer we saw trust is steady for farmers, but that affordability piece is really a risk,” said Ashley Bruner, CCFI interim chief executive officer and research manager.
“People don’t seem to understand the impact of severe weather events, labour issues, global conflict. There are some pieces where we’re not communicating or getting the story out well. Farmers would be a really good mouthpiece.”
Fewer people are blaming system-wide issues, Bruner said. Instead, the CCFI notes “an increase in pinpointing profit-driven actions.”
Bruner also said perceptions of transparency have dropped across the board. She called the trend a “canary in the coal mine” for any trusted food system stakeholder.
“One surprising thing we’ve seen the last couple years is the environment piece is off people’s radar as cost of food goes up. There’s a general feeling there is no public incentive or will to tackle climate change. That’s one big back burner issue.”
It’s also an issue where farmers are on the cutting edge, she noted.
“It’s very much on our shoulders … We need to keep trying to bring food prices down by being more efficient and sustainable.”
The reality of retail
Some primary producers have taken action in the face of grocery prices, notably a delayed 1.77 per cent per litre farmgate milk price increase from the Canadian Dairy Commission. This increase will occur in May 2024 rather than February as originally announced, in response to a Dairy Farmers of Canada recommendation to acknowledge food price inflation.
Retailers have also been under significant pressure to reduce prices.
They are dealing with the public relations aftermath of bread price fixing, a scandal that reappeared in June with the announcement of a $50-million fine levied against Canada Bread.
Other issues, such as a federal push for a grocery code of conduct and major grocers called to Ottawa to explain high food prices, kept retailers in the public eye.
John F. T. Scott, a veteran economist specializing in food distribution and former head of Canada’s largest retail grocery association, said the “number of scoundrels” who try to take advantage of Canadian consumers is small.
The reality is that Canadian grocers face fierce competition to offer the best quality and safest food for the lowest price, he said. Each company is competing to acquire product for less cost. From labour issues to fuel costs, many factors contribute to higher prices, which are passed on to the consumer.
Looking ahead, this trend will be hard to buck beyond a handful of seasonal items. Some retailers are “going hard on value discount,” which indicates the industry knows long-term management strategies are needed, said Scott.
The simple answer to rebuild trust in a complex system is “for retailers to provide consistency and value,” he added. “If you’re consistent in values, you’re ultimately known and trusted for that.”
Politics
Scott said political opportunism has played into the schism between retailer and consumer. He believes the federal government’s demand earlier this fall that retailers stand before a committee and reveal their merchandising plans was a ludicrous and unnecessary action based partly on a lack of understanding about the industry.
Other people in the agriculture sector are more critical.
Stewart Wells, a Saskatchewan farmer and vice-president of operations for the National Farmers Union, says his organization has long been fighting for greater transparency on where food dollars go and on long-term trends in farm gate returns.
A research brief published by the NFU earlier this year argues three main points:
The gap between farmgate and retail prices has steadily widened in recent decades. Thus, while the current period of food price inflation is particularly stark, the underlying problem is a chronic trend that started long before the COVID-19 pandemic, the war in Ukraine and other recent supply chain disruptions.
Supply management is not the cause of food price inflation. Price increases are occurring in both Canada and the United States for both supply-managed and non-supply-managed goods. In fact, supply management is functioning as designed to avoid drastic changes in food prices.
The real causes of food price increases are retailers and processors taking ever-larger portions of Canadians’ food dollars. The NFU says that trend is made worse by increasing corporate concentration, where a handful of large companies exert their power over markets.
“Proportionally, over time, the price to consumers is continually going up and the share of the food dollar going back to farmers has been continually going down. It’s a long-term trend,” Wells said.
Regarding public perceptions of farmers specifically, he doesn’t believe there has been a palpable change or increase in frustration or mistrust, “but there certainly is a lot more interest in where the food dollar is going. How is it shared throughout the system?
“We are completely in favour of that. We are in favour of transparency. I’m not sure the average consumer would know the NFU has been advocating for this transparency for decades.”
What is trust, really?
From a more macro level, Scott says food inflation sits well below the general rate of inflation, although this fact can get lost in the political uproar.
Mike von Massow, associate professor in the department of food, agricultural and resource economics at the University of Guelph, agrees. He cited reduction in some food costs, although he admitted Canada’s current affordability issues are hard to ignore.
“Even if we get inflation down to zero, which we are unlikely to do, everything is much more expensive than it used to be,” he said.
“That struggle many people are having will continue. It just won’t necessarily continue to get worse. I think that’s an important distinction.”
He expects to see more disruption and many more peaks and valleys over both long-term food cost and general inflation than what would previously have been considered normal.
“We don’t have a diversified supply chain,” he said.
“That affects resilience. For example, if 90 per cent of lettuce in October and November comes from California and the West Coast, if there’s a virus outbreak – which we are anticipating this year – prices will go through the roof as people compete for what’s left and don’t have another supply.”
A more volatile supply environment could have significant impacts on primary producers when combined with general lack of understanding about how food is produced and how it reaches store shelves.
Where knowledge is lacking, Canadians will fill the gaps with what they do know – that land values are very high, for example, and that farmers complaining about low commodity prices are simultaneously sitting on a lot of potential cash.
Pleading poverty when food prices are already high, or not being upfront about practices that some might find hard to stomach, could induce a sense of betrayal, says von Massow.
Should that happen, the lofty position farmers currently occupy in the minds of Canadians will quickly crumble.
“Where we have risk is consumers feel pretty good about what farmers (are) doing, but have no real idea what you’re doing. To me, we need to get into a conversation with consumers to say, ‘here’s what we’re doing and why,’ and be willing to change it if they’re uncomfortable with that,” he said.
There are challenges. Von Massow used the example of a particularly effective and humane industry-standard method of euthanizing piglets. Anyone getting on a stage in downtown Toronto to champion that cause would be faced with a tough audience, even if it’s the best way of going about the task, he said.
Thinking everyone in such an environment would be OK with such practices, even if they are humane and effective, is “dreaming in technicolour.”
Wells also thinks some commo industry practices could eventually come back to bite primary producers if left unaddressed.
“My experience in farm country, in small communities, is there is growing angst about the number of large operations … Where is this money coming from? This money is not coming from the productive value of the land,” he said.
He criticized lenders and successive governments for maintaining insurance and other farm sector policies which, from his perspective, disproportionally benefit large landholding businesses.
“I am very unhappy about taxpayer dollars going to programs which increase consolidation and hollow out the small communities.”
– This article was originally published at Farmtario.
