Consumers pay more, farmers get less

Hey there, time traveller!
This article was published 11/9/2009 (4188 days ago), so information in it may no longer be current.

Opinion

It's been hard to ignore the rising cost of groceries in recent months.

While everyone's grocery bill is a little different, research recently commissioned by Keystone Agricultural Producers (KAP) has shown it's costing an average of 3.2 per cent more to put the same food into the grocery cart as it did last year.

But despite last year's relatively high commodity prices, the same study showed farmers received 1.7 per cent less from that shopping spree than they did a year earlier. "In the end, the consumer was paying $6.01 more for groceries, the farmer received $0.86 less, and the middleman received $6.87 more," the organization reported.

The annual food survey is based on Canada's Food Guide to Healthy Eating for two adults, a teenager, and a child. This year, the survey found the total food cost (before taxes) was $194.23, which is up from $188.22 in 2008. There were some striking differences between the farmers' share for the different food groups. Grain products returned a paltry five per cent to the producer, while dairy products returned as much as 53 per cent. About 25 per cent of the cost of fruits and vegetables goes to the farmer, while 22 per cent of meat purchases finds its way back to the farm. On average, the farmer got just over 26 per cent of the consumer's food dollar. But for every dollar farmers receive, 86 cents goes to operating expenses, leaving 14 cents for living expenses and reinvestment in their farms.

KAP president Ian Wishart said the study underscores the merits of supply management, which is the system under which dairy, poultry and egg products are produced and marketed. Those industries focus solely on reliably supplying the domestic market and the volume they can produce is strictly controlled. In exchange, these farmers are guaranteed a price that takes into account production and living costs.

The system has its critics, namely those who believe consumers would see lower prices under an open market. But studies comparing Canadian and U.S. dairy products over time don't show a significant difference in the prices consumers pay. Meanwhile, the U.S. dairy producers careen from income crisis to income crisis, despite ongoing government support -- much like open market commodities in Canada.

This is not to say all of Canadian agriculture should adopt supply management. Canada can be an important contributor to world food security and there may indeed be loads of profits in servicing export agricultural markets. It's just that no one has figured out yet how to consistently make money doing it.

The KAP study also highlights the growing importance of local marketing for farmers. As a rule of thumb, the shorter the value chain via transportation and processing, the greater the return to the farmer.

As it turns out, the same goes for consumers. Buying what's available seasonally and locally is not only better for the budget, it is better for our health (ie: nutritionally dense potatoes instead of frozen french fries).

Local food is catching on, not only from a health angle but a cultural angle. Bob Acton, a Calgary-based entrepreneur who is in the process of establishing a web-based brokerage to help producers market food regionally, says the movement is in part driven by an urbanized society's desire to reconnect with its community roots.

"I think people are feeling distanced from their neighbours," said Acton, who is a psychologist by training. Interactions while sourcing one's food are a way to rekindle that sense of community. The website he is developing at http://www.localcanadianfood.com/ will provide a budget-friendly, regionally searchable platform for direct farm vendors to tell potential buyers what they produce and how they do it.

Consumers' growing interest in buying local hasn't been lost on major retailers, whose flyers and television marketing are now riddled with testimonials to their buy local commitments.

That's all well and good. But there are limiting factors. The majority of farmers are poorly positioned to direct market their production due to their remote locations, the scale of their operations and limited time. While there might be extra dollars to be made, the amount of time a conventional farmer has for interacting with customers is dictated by the weather and the seasonal demands of their operations.

There are other issues that arise from bypassing the mainstream marketing and handling systems, such as the inspection system in place to ensure food safety. Direct-from-the-farm purchasers need to arrange their own quality specifications with their supplier.

None of these barriers is insurmountable and it is unlikely they will stall the momentum building behind the buy local movement. As Acton aptly sums it up, "I just see it as a great opportunity all the way around."

Laura Rance is editor of the Manitoba Co-operator. She can be reached at 792-4382 or by email:

laura@fbcpublishing.com