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Canadians to pay more for food in 2013, say researchers


December 7, 2012
By University of Guelph

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Dec. 7, 2012, Guelph, ON – Canadians can expect to pay more at the grocery store in 2013, especially for meat and eggs, according to a forecast by University of Guelph researchers

Price hikes for staples such as meat, bread and cheese are also expected to drive record numbers of people to food banks in the coming year.

At the same time, the Guelph experts predict Canadian households will waste more food than ever, throwing out nearly 40 per cent of what they purchase.

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“Retail food prices are expected to grow faster than inflation and to increase steadily in the coming years,” said Prof. Sylvain Charlebois, associate dean of research and graduate studies in Guelph’s College of Management and Economics.

Charlebois, an expert on food distribution and safety, is the lead author of the 2013 Food Price Index, an annual examination and discussion of Canadian retail food prices. Last year, the index had predicted an overall increase of no more than 2 per cent, which accurately reflected real Canadian retail prices.

Predictions are based on factors affecting retail food prices, including climate, economic risks, energy costs, currencies and trade, and Canada’s food distribution and retail landscape. They also considered domestic fundamentals such as consumer debt and inflation.

As last year, climate is expected to be the most unpredictable economic driver of food prices. The North American drought —the most devastating in recent history for the region — pushed 2012 food pieces above expectations, especially for corn and soybeans.

“The coming year may see climate impacts on food prices incur bigger effects,” said Francis Tapon, a U of G economics professor who also worked on the forecast. Current markets lack adequate reserves to safeguard against unforeseen shortages or demands, he said, and must be rebuilt in 2013 to help mitigate consumer food prices. “Any sort of production disruption without quality buffer stocks will be felt much more strongly on Canadian wallets.”

Overall, the Guelph researchers predict general food expenditures will increase between 1.5 and 3.5 per cent in 2013. Their predicted price increases for various foods:

  • Beef and pork: 4.5 to 6.5 per cent increase, due to rising grain prices for cattle feed and higher production costs in the pork industry;
  • Eggs: 3.5 to 5 per cent, due mostly to increases in animal welfare-based technology.
  • Grain: 1.4 to 2.7 per cent; and
  • Fresh vegetables, fruit and nuts, fish and seafood, and vegetables: one to three per cent.

The researchers expect that competition in Canadian food retailing — specifically the arrival in Canada of Target stores — will create a price war and eventually drive down food prices.

They also hope more awareness of rising prices will help reduce food waste, now at about 38 per cent of food purchased by Canadian households. “Restaurants are not doing that much better, with nearly half of all food purchased going to waste,” Charlebois said.

The 2013 Food Price Index also involved Guelph hospitality professors Erna van Duren and Michael von Massow; marketing and consumer studies graduate student Warren Pinto and economics and finance researcher Rachel Moraghan.

The full 2013 Food Price Index can be found here.


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