FOOD PRICES ON THE RISE FOR 2021
Cook more, eat frozen, expert says
California wildfires, COVID-19 outbreaks at meat processing plants, the pandemic blow to restaurants and grocery store “hero pay” — the factors affecting food prices for 2021 reach much further than the shopping aisle.
“What impacts food prices is essential to so many different aspects of our existence,” says professor Simon Somogyi, Arrell Chair in the Business of Food at the University of Guelph and co-author of Canada's Food Price Report 2021.
“We talk about consumer demands, the rights of workers, fluctuations in exchange rates, plastics, waste. The way we get food itself is influenced by so many different things. But we all recognize that price is important.”
For 2021, Canada's Food Price Report forecasts an overall increase of between three and five per cent. A family of four, for example, is expected to spend $13,907 on food next year — an increase of $695 when compared to 2020 ( excluding food service), making it the highest increase the annual report has predicted.
Due to the pandemic, forecasting food prices presented unique challenges. In addition to the authors and advisers from Dalhousie University and the University of Guelph who regularly contribute to the report, the 11th edition also includes collaborators from the University of Saskatchewan and the University of British Columbia.
“This was the most work I've put into a report ever,” says lead author Sylvain Charlebois, director of the Agri-food Analytics Lab and professor at Dalhousie University. “We soon realized that this was going to be a complicated year, and felt early on this was the year to expand our breadth of knowledge (by involving institutions from the West).”
For the first time, the report highlights, one-person households are the most common type ( one in six adults live alone). To reflect the diversity of household makeup, this year's report allows people to piece together their own price predictions.
While overall prices are expected to increase by as much as five per cent in 2021, the authors anticipate several food categories will see greater change: bakery (up 3.5 to 5.5 per cent), meat (4.5 to 6.5 per cent) and vegetables (4.5 to 6.5 per cent).
Charlebois suspects that the projected increase in bakery is largely due to growing demand, while meat is cyclical. “Early on this year, beef was the big story, then pork went up a little bit and now it's chicken,” he explains. “The main driver is cost.” He attributes rising produce prices primarily to the California wildfires: “Because as soon as you take California off the table, it tends to get more expensive.”
The COVID-19 pandemic has made forecasting food prices “incredibly difficult,” says Somogyi. Largely because they've been changing so rapidly over the past 11 months, as the pandemic has affected every aspect of the food supply chain.
Food service especially, which Canadians would have typically spent 38 per cent of their food budgets on, has taken a hit. In May 2020, food service dropped to nine per cent of food budgets, according to the report. And while the authors estimate food service spending is now roughly 26 per cent, they don't expect it to bounce back to pre-pandemic levels in 2021.
Canadians may be spending less at restaurants, but this doesn't necessarily equal saving money. As grocers, restaurants and suppliers increasingly invest in e-commerce — “resulting in a more democratic and open food supply chain” — they could pass on the additional cost of digitizing food retail to consumers. Likewise, with various governments (such as Ontario and B.C.) planning to cap fees on food delivery apps — which can cost restaurants up to 30 per cent per order — customers could end up paying the difference, says Somogyi.
Even with food prices increasing at the highest rate the report has forecasted, there are ways for people to save money, Somogyi highlights. The first of which is something many people have been doing a lot of already — cooking more often for yourself. The second addresses one of the food categories expected to see the greatest price bump: vegetables.
“Our biggest increase that we predict is 4.5 to 6.5 per cent for vegetables. And that range is even a little bit conservative — during the coming winter, prices could be higher than that,” says Somogyi. “But people can remember that for a lot of the fruits and vegetables that can be bought from the frozen aisle — peas, corn, carrots, berries — they may not taste as good, they might not look as good, but they've been snap frozen at the point of harvest.”