Solution to high food prices not so easy to find
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The Canadian Federation of Agriculture this week used a much more empathetic approach than usual to highlight what it dubs “Food Freedom Day.”
That’s the day when the average Canadian household has earned enough to pay its food bill for the entire year.
Surprisingly, given all the reports about inflation lately, Food Freedom Day arrived Feb. 9, just one day later than in 2022. The CFA says the average household spent 11 per cent of its disposable income on food in 2022, up from 10.7 per cent in 2021.
However, the use of the word “average” throws this metric out of whack for many people. The median household income doesn’t reflect the reality for the vast majority.
A Statistics Canada analysis of the impact of rising prices on Canada’s most vulnerable, also released this week, puts the annual average after-tax income of Canadian families at just under $63,000 per year. That is three times higher than the 14 per cent of Canadians living in the lowest income category, where after-tax income stood at $21,000.
In 2019, which is well before inflation began wreaking havoc on the cost of living, these Canadians were spending 51 per cent of their disposable income on food.
The CFA analysis is based on a different set of data but reaches a similar conclusion. People with the lowest incomes are disproportionately affected by rising food prices. Increases cut into their budgets faster and hit harder than they do for those with higher incomes.
There is only so much wiggle room in how much or little you can spend on food.
High-income households had 500 per cent more disposable income than those in the lowest income category but only spent 39 per cent more on food and beverages, the CFA release says.
“With food prices rising consistently and more quickly than overall inflation, we cannot ignore the challenges that many Canadians are facing when it comes to food affordability,” CFA president Mary Robinson says in a release.
“While our food costs are low when compared to global standards, Canadians are seeing their disposable income shrink as it is taken up by the increasing costs of essential products.”
That point is arguable. Canadian food prices aren’t low relative to other parts of the world; what’s low is the proportion of our incomes spent on eating. Looking at the World Economic Forum website, consumers living in Kenya spend 46 per cent of their income on food, but the annual expenditure amounts to US$543, about one-quarter of a North American food budget.
But the CFA makes a valid point when it says farmers aren’t the ones to blame for food price inflation. Their share of the food dollar amounts to about 17 cents.
Despite record cash receipts, farmers’ margins are being squeezed tighter by the same inflationary pressures affecting our food budgets. A near-doubling of inputs such as fertilizer and energy costs means farmers are carrying more risk for less return.
There’s been lots of sputtering lately about yet another increase in the price of milk as another cash grab by dairy farmers operating under the protective shield of supply management.
However, there are also reports of individuals being stopped at the border, smuggling eggs from Canada into the U.S. in recent weeks. Prices here are lower right now. However, in some parts of the U.S. it’s hard to find eggs at any price.
Avian influenza has impacted the highly centralized industrial egg supply chain in the U.S. much more severely than the Canadian poultry industry, which under supply management consists of more barns that are geographically dispersed, making the supply chain less vulnerable.
While any system, regulated or not, has its foibles, the question for all of us is this: Is the cure for high prices at the grocer’s really going to come from lower prices for farmers?
Just as every Canadian should be able to afford a nutritious diet in spite of inflation, Canada’s food security depends on farmers who earn enough to stay in the highly volatile business of food production.
Laura Rance is vice-president of content for Glacier FarmMedia. She can be reached at email@example.com
Laura Rance is editorial director at Farm Business Communications.
Updated on Saturday, February 11, 2023 10:40 AM CST: Updates Byline