Prairie wheat commissions question the impact of wheat prices on food cost

Alberta Wheat Commission

The Saskatchewan Wheat Development Commission (Sask Wheat), Manitoba Crop Alliance (MCA), and Alberta Wheat Commission (AWC) are concerned that a recent Canadian Press article inaccurately reflects the impact of the price of wheat on rising food costs in Canada.

The article reported on the projections in Canada’s Food Price Report 2021, which indicated that bakery products are likely to rise 3.5 to 5.5 percent in 2021. A quote within the article says that the cost of wheat rose 50 percent in the past 18 months, with this increase being a significant driver of food cost increases.

The quote does not reflect the reality of producer prices in Western Canada or food manufacturers’ costs. The most recent data from Statistics Canada shows that the average western Canadian price received at the farm gate for wheat (excluding durum) was 3.3 percent lower in October 2020 than it was in April 2019. The most recent data from Statistics Canada’s Farm Product Price Index also shows a decrease in the value of grains of 2.7 percent from April 2019 to September 2020.

“The price changes quoted in the interview are misleading and do not accurately reflect the on-farm prices wheat producers are receiving for their grain,” said Brett Halstead, Sask Wheat Chair. “Wheat producers appreciate that several factors influence store shelf prices, but the cost of wheat is not a major factor in the rise of food costs. Canadian consumers have one of the lowest costs for food relative to their incomes while enjoying one of the safest and highest quality food supplies in the world.”

The majority of Canadian-grown wheat is exported to global markets. Because Canada produces a large surplus of wheat each year, ample wheat supplies are available to meet the domestic market demand. The domestic price of wheat is based on the world price, and any fluctuations in domestic price are based mainly on global factors.

Data from the Saskatchewan Ministry of Agriculture shows that a bushel of #1 CWRS wheat was worth $5.66 in January 1975. In January 2020, a bushel of #1 CWRS was worth $6.22. Adjusted for inflation, the value of one bushel of wheat in 1975 should be worth $26.12 today. As wheat prices have not kept up with inflation, wheat production at lower real prices demonstrates our producers’ capacity to innovate in ways that continually increase their productivity and competitiveness.

In the future, it will be important to accurately reflect the impacts of various factors to food price changes when discussing the results, clearly illustrating the cost of wheat to food manufacturers as well as the returns to wheat producers.