The overall cost of basic consumer goods in Canada may seem to be rising slowly, but increased food prices mean the cost of living is shooting up faster for many people.
Anybody who’s shopped for groceries recently has been hit with sticker shock. Prices rising up to $10 for a cauliflower and $5 for celery in major cities in January are some of the most extreme examples. Overall, prices for fresh fruit and vegetables rose 13 per cent in 2015. In 2015 families faced beef price increases of up to 30 per cent, and double-digit increases for other foods, like pasta.
According to Statistics Canada, the cost of an average family’s food basket increased by 4.1 per cent in 2015, almost four times the average rate of inflation. Food prices are expected to outstrip inflation again this year, rising by between two and four per cent according to the University of Guelph Food Institute. The institute forecasts higher prices for meat, fruit, vegetables and nuts.
Higher food prices hit middle and lower income families hard, because they spend a much larger share of their budget on essentials like food. Households in the lowest income group are hardest hit, because they spend about twice the share of their budget on food as households in the top income group. Although gas prices dropped by about 16 per cent last year, the average family spends about four times as much on food as on gasoline. So food price increases have exceeded what most people have saved from lower gas prices.
What’s driving up food prices? The falling Canadian dollar is an obvious culprit – the loonie lost 15 per cent of its value in 2015. Canada imports 81 per cent of the vegetables and fruit we consume, most from California and Florida.
Our increasing dependence on imported food has made us more vulnerable not only to exchange rate changes, but also to environmental problems. Climate change is causing large fluctuations and increases in the price of food with droughts and floods creating greater uncertainty and reducing supplies – and that’s a world-wide phenomenon.
Free trade has increased our dependency on imported food. With fewer protections for local growers, many large food processors have moved south. Between 2006 and 2014, 80 food manufacturing facilities closed in Canada and 34,000 fewer hectares of land were devoted to vegetable production.
There’s also increasing concentration in the food supply and retail industry, with a few large companies and supermarket chains squeezing out independent operators. Just three companies – owners of Loblaws, Sobeys, Metro, Safeway, Extra Foods, Thrifty Foods and associated retailers – control over 60 per cent of all food sales in Canada, with five companies controlling 80 per cent. These corporations are also tightening their control of supply lines and distribution, making it very hard for independent retailers to exist.
With greater control over the market and reduced competition, supermarket chains are raising prices even higher. Profits at Loblaws and Metro increased by 17 per cent and 14 per cent respectively in the third quarter of 2015. Profits for these corporations are expected to continue to grow – while Canadians, especially low-income families, pay more.