Food prices are set to rise in 2021 — and farmers, food-insecure people will take a hit
Food prices are expected to increase between three and five per cent next year, according to a new study. The researchers also noted that small farms serving local markets saw high demand in 2020 because of the pandemic.
By Marc Fawcett-Atkinson, Local Journalism Initiative Reporter, Canada’s National Observer
Dec 08, 2020
A Canadian family of four can expect to spend almost $700 more on food next year, according to a report released Tuesday. That’s about a five per cent increase compared to 2020.
The annual study, a collaboration between food researchers at four universities now in its 11th year, uses economic data, observed market trends and AI to predict food prices. Their analysis shows that meat, baked goods and vegetables will likely see the greatest increases, reflecting the pandemic-related challenges — from COVID-19 outbreaks in processing plants to low oil prices — that have faced Canada’s still-resilient food supply chain this year.
“With the exception of some short-term hoarding of high-demand food products, the various supply chains continue to function remarkably well,” said James Vercammen, project co-lead and professor of land and food systems at the University of British Columbia.
“But consumers need to understand that Canada imports a sizable fraction of its fresh fruits and vegetables from the U.S., Mexico and other countries. The potential exists for significant disruptions in these imports if there (are additional waves) of the COVID-19 pandemic.”
About 78 per cent of produce eaten in B.C. is imported, mostly from the U.S., according to a report commissioned by Metro Vancouver this year. And while those supply chains have remained relatively intact, they’re not immune.
For instance, record-low oil prices at the start of the pandemic pushed down the value of the Canadian dollar. That made it more expensive to bring vegetables, fruits and other food into Canada, a trend Simon Somogyi, project co-lead and a professor at the University of Guelph, expects will continue into 2021, with fruits and vegetables costing about two to four per cent more.
A global wheat shortage will also probably push up the price of wheat, he noted. That will directly impact the cost of baked goods, which are expected to cost up to two per cent more next year.
Meat will also see a price increase of between four and six per cent. Canada’s meat processing system, which is highly consolidated (three abattoirs process 95 per cent of the beef eaten in Canada, for example), was hit by several outbreaks early in the pandemic and needed to shut down. The cost of those closures and subsequent purchases of personal protective equipment (PPE) will likely be passed on to consumers, said Somogyi.
Overall, these increases will result in higher food prices across the board. According to the report — which breaks down the anticipated increase by age category and gender — Canadians can expect to pay from $2,016 for a child between one and three years old up to $3,974 for a teenage boy.
A woman between 31 and 50 can expect to pay about $3,193, while a man of the same age can anticipate spending about $3,559.
“Families with less means will be significantly challenged in 2021, and many will be left behind,” said Sylvain Charlebois, project lead and director of Dalhousie University’s Agri-Food Analytics Lab. “Immunity to higher food prices requires more cooking, more discipline and more research. It’s as simple as that.”
Or perhaps not.
“We already had very high levels of food insecurity in Canada” before the pandemic, said Hannah Wittman, professor of land and food systems at the University of British Columbia. “If you want to increase food security, simply focusing on food prices isn’t going to resolve it.”
About 3.8 million Canadians were food insecure before the pandemic, according to Statistics Canada. That number had risen by about four per cent, to 5.3 million, by May 2020 and is expected to continue rising as the pandemic drags on.Women, Black people, Indigenous people, people of colour and families with children — the same groups that have borne the brunt of the pandemic — are most at risk, Wittman said.
Researchers at PROOF, a research project on food insecurity based at the University of Toronto, have noted that wages are the main source of income for roughly 65 per cent of food-insecure Canadians. Low-wage jobs and precarious work situations, including many that have been proven essential during the pandemic, are to blame, they say.
Valerie Tarasuk, the lead researcher at PROOF, also pointed out that many people struggling to make ends meet don’t have time to go to a food bank, let alone spend more time on cooking and planning.
The annual income for someone working full time at the minimum hourly wage — from $12.15 in Newfoundland and Labrador to $16 in Nunavut — is $27,600.
Assuming they have no children or other dependants, an adult could expect to spend, on average, 12 per cent of their income on food, according to the report’s estimates. If they are supporting a child or teenager, that could climb to 22 per cent, or $6,072, on average.
But hungry people aren’t the only ones struggling with Canadian food prices, which are among the lowest in the developed world, according to the World Economic Forum.
“Farmers are also really suffering with some really low food prices,” Wittman said.
About 14.6 per cent of each food dollar goes to farms, according to United States Department of Agriculture (USDA) data, and the situation is similar in Canada. However, the majority of this profit goes towards the costs of production, explained Darrin Qualman, director of climate crisis policy at the National Farmers Union, because a handful of companies control the market for seeds, fertilizers and other inputs.
This has contributed to skyrocketing levels of farm debt in Canada, which reached $115 billion this year. Meanwhile, net income has dropped, hovering around $10 billion annually since the mid-1980s, rates unseen since the Great Depression.
Meanwhile, Canada’s three major grocery chains — Loblaws, Sobeys and Metro — control 63 per cent of grocery stores in Canada. That gives them a consolidated hold on the industry, which makes it difficult for farmers and processors to negotiate more financially sustainable prices.
“Part of why our food is so inexpensive in comparison to other countries is that we’re downloading costs onto farmers, many of whom aren’t making a living, and we’re not including social, public health and environmental externalities, which are borne by the public,” Wittman said.
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“We need a whole system change where we improve people’s income so they can afford to pay higher food prices that actually reflect the true cost of production — including social, health and ecological externalities.”