199761
201905
Writer-s-Bloc

Food inflation eases but some prices keep surging

Higher food prices

Statistics Canada is reminding Canadians every month this year how painful their trips to the grocery store are. The retail inflation rate is at an astonishing 9.9%, its highest point since 1981. And food inflation has exceeded the general rate since last December, which is why food prices are on everyone’s mind.

Allegations of “greedflation” are rampant, accusing the industry of gouging consumers stressed by an increasingly higher cost of living.

We’re seeing signs, though, that things are improving. Calmer seas are ahead as we head to autumn.

Food inflation is often about context. In July 1978, while inflation was at 9.4 per cent, food prices were increasing year-to-year by a whopping 20.2%. That’s by far the largest difference we’ve seen in the last 50 years. Things were out of control.

Canada’s situation is nowhere near what it was in 1978 or what it is elsewhere. In the United States, food inflation at grocery stores is above 13%, and the United Kingdom’s food inflation rate in July was 12.7%, again much higher than ours.

The good news is that our food inflation appears to have peaked or is at least under control, for now. Since April, our overall food inflation rate – 9.2% with retail and service combined – hasn’t reached 10%.

The highest month-to-month jump this year was in January, at 1.4%. That was the highest month-to-month jump since 2016. In June, it was 0.1%. July, however, saw another jump at 0.9%. But since 2011, we’ve seen month-to-month increases exceeding 0.9% a total of just 12 times.

The numbers are telling us that extreme volatility affecting food prices may be behind us. The impact of Russia’s invasion of Ukraine on commodity prices, which triggered a new inflationary cycle, has been mostly absorbed by food supply chains. Commodity prices peaked on May 17 and have dropped significantly since.

Supply chains are also dealing with more predictable conditions related to COVID-19 protocols. As governments continue to keep people safe, COVID-related rules and conditions are much more foreseeable, which is really helping the food industry, service and retail.

As consumers, we should expect more rebates, discounted products and loss leaders. It’s easier to offer deals when market conditions are more stable.

Consecutive last-minute lockdowns took their toll and made life a nightmare for many in the food industry.

There are, however, some trouble spots at the grocery store. The first is dairy, with the Canadian Dairy Commission recommending a second unprecedented increase of 2.5% to start on Sept. 1.

Dairy farmers are getting 11% more for their milk and butterfat than in February. It’s great for our farmers, but retail dairy prices have skyrocketed. Since February, according to BetterCart Analytics, fluid milk prices have increased by about 25%. Yogurt, cheese, sour cream and ice cream are all much higher since February, and we expect another jump in the weeks to come as kids go back to school. It couldn’t happen at a worse time.

With record-breaking increases this year, dairy is pricing itself out of the market, and some processors are adjusting. Lactalis Canada, the largest milk buyer in the country, recently converted its Sudbury, Ont., plant and will now solely manufacture plant-based products. This points to where the market is going.

While dairy farmers want more money, what seems to be under-appreciated is that we will lose more farms due to an anemic demand for more expensive dairy products.

We’ve also seen higher prices for bakery goods. For many years, bakery goods were a non-story. This year, with more consolidation in processing, it was expected we would see higher prices. Typically, the correlation between commodity and retail prices is weak, but this year’s market conditions with grain scarcity have made access to some ingredients challenging.

Canada’s Food Price Report released in December predicted higher bakery and dairy prices, so it’s not necessarily a surprise.

If you compare this inflationary cycle to a baseball game, we’re in the seventh-inning stretch.

Last week, we learned from Statistics Canada that grocery store sales have dropped three per cent since January, so the market is tightening. More consumers are visiting non-traditional grocers like Walmart, Costco, or even dollar stores to make ends meet.

The days when people flocked to grocery stores at the beginning of the pandemic are long gone. Food sales are earned more than ever. It’s a sign of the times.

Sylvain Charlebois is senior director of the agri-food analytics lab and a professor in food distribution and policy at Dalhousie University.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.



193972


Survey: Measuring integration of metrification across Canada

Canadians use of metric

The 1970s were a time of change in Canada, not just politically and sociologically but also in the way we measured things.

The process of metrification took more than a decade and ultimately saw Canadians abandoning the imperial measurement system and embracing the international metric system.

Metrification had its challenges from the start. Not all Canadians were thrilled with the notion of having to convert from miles to kilometres. There was even a peculiar protest by Progressive Conservative members of Parliament, who established a “freedom to measure” gas station in Ontario that sold gas in imperial gallons.

Research Co. and Glacier Media asked Canadians about the way they measure things in their daily lives and found a significant proportion of the country’s residents who continue to look to the Empire before figuring out how to operate an oven or how fast to drive a vehicle.

Across the country, 74 per cent of Canadians say they measure a person’s weight in pounds, while only 24 per cent rely on kilograms. No region of the country focuses primarily on the international metric system for this endeavour. The popularity of pounds is indisputable, from a high of 91 per cent in Atlantic Canada to a low of 72 per cent in Alberta.

More than four in five Canadians (84 per cent) use litres to measure liquid in a container, while only 16 per cent prefer to focus on quarts and gallons. There is a significant age gap on this issue. While the proportion of Canadians aged 18 to 34 and aged 35 to 54 who think of quarts and gallons is negligible (nine per cent and seven per cent, respectively), the numbers jump to 32 per cent among those aged 55 and over.

When it comes to heat, the country appears to be fond of both systems in different moments. We see that 77 per cent of Canadians measure the temperature outside their home in degrees Celsius. Again, Canadians aged 55 and over are more likely to look at degrees Fahrenheit (30 per cent, compared to the Canadian average of 23 per cent).

One could assume that Canadians would maintain their fondness for Celsius when cooking, but the numbers flip. Only 41 per cent of Canadians measure the temperature of their oven in Celsius, while a majority (59 per cent) rely on Fahrenheit – the same unit that is not abandoned for weather.

Among Canadians aged 55 and over, reliance on Fahrenheit for cooking food reaches 68 per cent. Canadians aged 18 to 34, who have lived their entire lives after metrification was completed in 1985, are divided: 53 per cent look at Fahrenheit before placing food in an oven, while 47 per cent prefer Celsius.

One of the key components of metrification was, as the name clearly states, metres. Few Canadians have embraced it. Only one in five of us (20 per cent) measure a person’s height in metres and centimetres, while a huge majority (80 per cent) look at feet and inches.

When measuring speeds and distances, Canadians are more likely to steer clear of the Empire. More than four in five (82 per cent) measure a vehicle’s speed in kilometres per hour and practically three in four (74 per cent) rely on kilometres when figuring out the distance between two places. As expected, Canadians aged 55 and over are more likely to resist the international metric system in each of these two matters: 26 per cent still measure speed in miles per hour and 40 per cent measure distance in miles.

When Canadians are asked about going back to the imperial measurement system, a majority (56 per cent) think this is something that should not be considered, while about three in 10 (29 per cent) would welcome the change.

Majorities of Canadians across all three age groups believe this is not the time to abandon the international metric system, but views are more nuanced regionally. Ontario leads the way in resistance to change (62 per cent), followed by British Columbia (58 per cent), Alberta (57) and Manitoba and Saskatchewan (55 per cent). The proportions are lower in Atlantic Canada (50 per cent) and Quebec (48 per cent).

On the political front, there is no extreme desire from the governing party or the Opposition to go back to feet and inches. Majorities of Canadians who voted for the Liberal Party of Canada (56 per cent), the Conservative Party of Canada (55 per cent) and the New Democratic Party (NDP) (54 per cent) in last year’s federal election are not ready to abandon the international metric system.

Decades after metrification was completed, few Canadians believe the country should go back to imperial measurements. Still, as outlined by the variety of responses when we ask about daily activities, people are doing what they think is best, regardless of its official status. Many of the oldest Canadians continue to think about miles, feet and gallons, even if this baffles their younger counterparts.

Mario Canseco is president of Research Co.

Results are based on an online study conducted from August 1 to August 3, 2022, among 1,000 adults in Canada. The data has been statistically weighted according to Canadian census figures for age, gender and region. The margin of error, which measures sample variability, is plus or minus 3.1 percentage points, 19 times out of 20.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.



Farming is losing to misguided urban politics

Threats to farming

Most Canadians have never been on a farm, let alone lived on one, which makes more than 98 per cent of our population agriculturally illiterate.

For many Canadians, crop production is an unknown concept. Because of this, it’s relatively easy to use fear to influence public opinion on any food-related issue involving agriculture. Activists know this well.

Our great rural-urban divide has always fuelled food politics, and that’s not going to change anytime soon. But now, agri-food policies are increasingly being urbanized by an agenda that’s pushing the entire Western world toward the precipice of a food security catastrophe.

The Trudeau government wants a 30 per cent reduction in emissions by 2030, which doesn’t necessarily include fertilizer. But producers claim that reducing nitrous oxide emissions can’t be achieved without reducing fertilizer use.

Most common fertilizers contain nitrogen, phosphorus and potassium. Nitrogen is the issue. Surpluses of nitrogen in the atmosphere can produce pollutants such as ammonia and ozone. Too much nitrogen will contaminate soils, and waterways and, of course, harm our health. Policy-makers have every right to be concerned.

But the federal government wants an absolute reduction in emissions, regardless of productivity or efficiency of fertilizer use. For many crops, Canadian farmers’ ability to grow anything will be severely compromised unless they use more land.

This is all happening as food security concerns around the world are rampant. The Netherlands is witnessing massive protests from farmers as they face similar emission targets, even fertilizer bans, by 2030.

And make no mistake: Canada could be next to adopt outright fertilizer bans.

It’s unclear how food prices would be impacted. But producing food on a large scale would likely become much less cost-effective. The correlation between commodity prices and food retail prices is typically not that strong, but a wide-reaching policy impacting an entire industry all at once could very well make it stronger.

Canada produces food for the world, not just for Canada. Aggressive emission targets will likely lead to more people, not fewer, experiencing famine worldwide, none of whom will be Canadian. Since we trade with the rest of the world, mainly with the United States, our crops would likely become less competitive. With lower supplies, input costs for food manufacturers and grocers would likely increase significantly, pushing food prices higher. This is one aspect of the emission reduction issue in farming.

The needs regarding food production vary widely from region to region and between crops. Supply-managed commodities like dairy, eggs and poultry will be spared, receiving more for their products no matter what. Most of these commodities are produced in Ontario and Quebec.

Grain production, on the other side, won’t be so protected. Suggested emission targets will again transfer more wealth from some sectors to others by compromising the livelihood of many internationally-focused farming businesses. And those farmers come from across Canada. Free-market livestock sectors like cattle and hogs are also affected by all of this.

This is all happening for one reason, beyond the focus on emission targets. The government is already imposing a 35 per cent tariff on Russian fertilizer, even if tariffs aren’t actually punishing the Russian regime. This only impacts our farmers as our government wants to discourage the use of fertilizers for its own convenience.

The Canadian fertilizer emission reduction plan also points to how farming is losing to urban politics. The signals have been there for a while, with “No Mow May,” bees on cereal boxes and city councils ruling on pesticides. Activists are successfully using urban-centric artifacts to influence policy issues, which could spill over to agriculture. Cities essentially want farmers to treat fields like city lawns. But the stakes are much higher for farming.

This has been happening as activism has become institutionalized in recent years. Interest groups, even academics who have become advocates, will weaponize science to support a narrative that fits with a biased view of what farmers should and shouldn’t do. This is beyond dangerous. It’s a reckless way of dictating policy.

Virtue signalling – supporting ideals over fact – is practised by those who likely see their quality of life being affected. They’re also dead wrong. This goes for all issues, but food and energy policies are the ones that will be felt most acutely.

The federal government wants to make agriculture greener and more sustainable. There’s nothing wrong with that; the sector can always do better. Many are speaking about regenerative agriculture and the circular economy. Those concepts have merit and can help our agri-food sector become more efficient.

But what is not appreciated is how farming has evolved in just the last five years, adopting more sustainable practices. Crop rotation schedules, biodiversity considerations and the no-till approach have all made agriculture more sustainable, helping farmers reduce emissions.

Farming is a business, and cutting costs is part of doing business. Farmers don’t want to overspread expensive fertilizers since this would make their business less profitable. Most farmers hire soil scientists to ensure they can rely on reusing natural resources to make a living.

Farmers are the most responsible environmental stewards in the world. Incentivizing farmers using productivity-based metrics linked to fertilizer would be more appropriate – and less foolish.

The government can look at other sectors to hit targets but messing around with our food system can be quite perilous.

Sylvain Charlebois is senior director of the agri-food analytics lab and a professor in food distribution and policy at Dalhousie University.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.





A looming chickpea shortage is on the way

Chickpea prices climbing

Since the start of the pandemic, we have heard about shortages countless times. Most sections of the grocery store have been hit by tightening supplies for one reason or another. But the latest headlines we are seeing are about chickpeas.

Many analysts are expecting chickpea inventories to drop significantly in months to come. For westerners, chickpeas are primarily associated with hummus, an increasingly popular source of fibre for curious consumers wanting to experiment with new ingredients and dishes. But a looming chickpea shortage is likely on the way.

According to Reuters, chickpea crop yields are expected to drop as much as 20 per cent this year due to inclement weather in many parts of the world. India is the largest producer of chickpeas globally, followed by Turkey and, of course, Russia. Canada is number nine in the world, and most of our production is for export markets. Canada’s seeded areas for chickpeas dropped this year, going from 185,500 acres last year to 177,800 this year.

Prices for other commodities were more interesting for farmers. The same happened in the U.S. Russia and Ukraine are usually top exporters of chickpeas, but not this year. While Ukraine is short at least 50,000 tons of chickpeas this year, which would normally end up in the European market, Russia is impacted by trade sanctions resulting from its invasion of Ukraine.

Chickpeas are a cheap and efficient source of plant protein. Not everyone eats them, but consumers do love them. In North America, chickpea prices have already increased 12 per cent from last year, according to NielsenIQ.

Chickpeas are generally used in hummus. Chickpeas might also be popped and eaten like popcorn or ground into flour and used in many vegetable protein-based products we find at the grocery store. Chickpeas are also commonly used in soups, stews, and chilis.

Chickpeas are nutritional powerhouses for consumers who don’t necessarily opt for animal proteins regularly or can’t afford them. Chickpeas are naturally low in sodium and sugar and are cholesterol free. And for people living with celiac disease and who need gluten-free products, chickpeas are a godsend.

Last week though, the world received some good news. Well, sort of. Ukraine and Russia finally signed a deal in Turkey committing to let tons of vital grain supplies ship out from long-blockaded southern ports in Ukraine. Some of the grains stuck at ports are wheat, barley, and, of course, chickpeas.

But the port of Odesa was bombed just 24 hours after the deal was announced.

Russia’s track record in easing commodity pressures is not reassuring. There is still hope, but it’s a bit of a wait-and-see scenario. If executed, a food security crisis won’t be averted in parts of the world, including North-East Africa and the Middle East, but it will lessen the blow in many regions.

For the West, commodity prices have been dropping steadily since May. Wheat prices have fallen from a record $13.38 on May 17 to under $8 a bushel. Corn, canola, sunflower oil, rice, and soybeans are all much cheaper than just a few weeks ago. The Ukraine-Russia grain deal is helping, but prices would still be lower regardless. Procuring ingredients for food manufacturers is getting less expensive by the day, which helps our food inflation situation.

In other words, looming deficits are baked into commodity prices already, and buyers have bought what they need for the fall, albeit at a premium. But they at least have some ingredients for their customers. The commodity supercycle appears to be over, thank goodness. Market conditions are much more predictable, which helps companies plan and anticipate demand. This will likely benefit us all as consumers.

As our agricultural production in North America and Europe concludes in the coming weeks, we should expect to see more reports of grain shortages. So, we need to brace ourselves. Previous reports have already targeted mustard and sunflower seeds. Chickpeas are just the latest one.

North America won’t be short of anything as it can buy itself out of a food security pickle. But other poorer regions won’t have as much luck. We are starting to see signs of civil unrest in many regions of the world. While our food inflation situation is calming down here at home, the worst is yet to come for many other parts of the globe.

Sylvain Charlebois is senior director of the agri-food analytics lab and a professor in food distribution and policy at Dalhousie University.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.



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