New data shows Canadians really are getting hosed on food costs

Inflation has allegedly been the cause behind skyrocketing food prices in Canada. But new data has revealed high costs are due to corporate greed and market concentration. 

The cost of food in Canada was affected by the dual crises of the global pandemic and the war in Ukraine, but unlike other places around the world, prices just didn’t recover.

In November, Statistics Canada noted that food costs in 2021 had risen well beyond the country’s inflation rate and reached a shocking 41-year-high in the month of October. 

In December, Dalhousie University’s Canada’s Food Price Report 2023 suggested that the situation would get worse and predicted major increases in costs across the board. 

The report suggested that Canadians would see consumer costs in grocery stores rise another 5% to 7% with products like vegetables, meat, and dairy being most affected. 

“To say that it’s been a challenging year for Canadians at the grocery store would be an understatement,” said the director of Dalhousie’s Agri-Food Analytics Lab Dr. Sylvain Charlbois.

What’s caused the high costs in Canada hasn’t been clear. In March, top executives from the three largest grocery chains were summoned to the House of Commons to speak about the prices in their stores and explain why product prices kept rising. 

"For those who say grocers are profiteering, the math just doesn't add up," testified Galen Weston jr., the president and executive chairman of Loblaws, who said that his company only made $1 dollars profit on a basket of groceries worth $25 at checkout. 

Weston said that none of Loblaw’s record-breaking profits were coming from higher margins on its food and insisted the company's prices had not risen faster than costs. 

"So no matter how many times you read it on Twitter, the idea that grocers are causing food inflation is not only false, it's impossible,” Weston said, but new evidence suggests otherwise. 

In late April, the National Farmers Union provided data to the same House of Commons Agricultural Committee that interviewed Canada’s grocery giants and showed that retail prices for food in the country were rapidly decoupling from associated production costs. 

“There has never been so much money in the Canadian food supply system, but there has never been a smaller portion making it back to farmers,” said National Farmers Union President Jenn Pfenning in a statement from the group.

The problem outlined by the National Farmers Union explained that prices in Canada are at record highs but that money is not making its way into the pockets of farmers.

According to the union’s data, supply management is not the cause of food inflation but rather the concentration in the processing and retail sectors which are pushing up prices that have no relation to the actual cost of food leaving Canadian farms.

One great example used by the union was the profit of bread from one bushel of wheat in retail stores versus the cost to produce one bushel of wheat for farmers. 

“Farmgate prices for wheat did increase in 2021 and 2022, potentially driven by the war in Ukraine and other factors,” the National Farmers Union report read.

“However, they did not come close to narrowing the gap that has steadily widened since the beginning of this data series,” the report continued before explaining wheat prices.

The cost to produce one bushel of wheat has remained relatively stable since 1981 at far below $25 dollars, rising slightly in 2021 but remaining below $25. 

One bushel of wheat can produce 45 loaves of bread which had a net retail value of below $50 in 1981 but had risen to between $125 and $150 dollars in 2021. 

The union looked at prices for bacon, eggs, corn, and butter and found the same trends. The cost for farmer production remained relatively the same while prices skyrocketed…

“This means that while grocery store prices reach record highs, the farmers who stock their shelves are not seeing any of those profits—and a small group of processing and retail corporations are lining their own pockets,” wrote The Breach’s Emma Paling. 

Unfortunately, it's difficult to parse where the additional costs are being added, but it doesn't take a genius to figure out that grocery stores with record-breaking profit years might be taking advantage of Canadian consumers.