B.C. FOOD INDUSTRY MILKS LOW DOLLAR
Fewer B.C. shoppers are crossing the border, and that’s good news for local dairy and cheese producers
Deal seeker Henry Tenby is one of many B.C. residents giving up his cross-border milk run in the wake of the Canadian dollar’s plummet.
“We haven’t done any shopping in the United States since September,” the Vancouver man told The Province. “Everything is now 20 or 30 per cent more expensive than it was a year ago.”
Data released by the Canadian Border Services Agency shows fewer Canadians crossed the border this February than in previous years — with about 50,000 fewer people travelling through the Peace Arch border crossing on a Canadian passport in February 2015 compared to February 2013.
Traffic at the Pacific Highway crossing over the same time was down by about 68,000 Canadians.
Tenby said he was in Blaine, Wash., a few weeks ago and popped into a store to check cheese prices.
“It was so close, I thought why bother?” he said.
While it’s bad news for cross-border shoppers, the dollar’s dive — from above 90 cents between 2009 and 2014, to around 80 cents in the months since last summer — has been good news for some of B.C.’s agriculture industries.
B.C. Dairy Association executive director Dave Eto said milk producers don’t have access to sales figures from stores such as Costco, but there are several indications demand for B.C. milk is on the rise. In 2014, farmers were given an eight per cent increase in the milk they can produce, while local processors are saying demand is strong.
Adjusted for volume and a 80-cent exchange rate, a four-litre jug of milk sold for an average of $3.71 Cdn in Seattle in February, according to a U.S. Department of Agriculture and Markets survey.
At the Burnaby Costco, four litres of milk was selling for about $4.39.
“Dairy is one of the items (U.S.) border towns use to attract people,” said Eto, adding the price near the border is often lower than it is inland.
Maple Ridge cheesemaker Jenna Davison said the increase in demand for her products has been greater than expected over the past year, although there has been growth throughout the 3½-year history of Golden Ears Cheescrafters.
“It’s not necessarily a cheese boom, but a movement of local food,” she said. “People want to know how their food is made and where it’s coming from.”
Eating locally made products is “huge” right now, she added.
“I think people are sick and tired of having so many different products in their grocery store and looking at the list of ingredients and saying, ‘I have no clue what these ingredients are, why is it in my food?’”
Costs are higher for Canadian dairy products because they’re not subsidized like U.S. or European competition, said Davison.
Rather, Canadian dairy production is controlled by marketing boards, which limit milk supply through a quota system.
Critics argue the quota system creates inefficiencies in the market and hurts consumers, while advocates say it protects small family-run farms by giving farmers a fair price for their products, while preventing the market from being flooded with surplus American milk.
Canadian dairy is also subject to tighter controls on the use of steroids and antibiotics.
“We are very scrutinized over what we can and can’t do,” said Davison.
Along with dairy products, American eggs and chicken also feature prominently on the grocery lists of cross-border shoppers.
In the aftermath of the avian flu in both B.C. and the U.S., the border has been closed to poultry products.
But the exchange rate has also brought average egg prices closer to each other on both sides of the border, said Al Sakalauskas, executive director of the B.C. Egg Marketing Board.
Other B.C. foods are also benefiting from increased demand, though not necessarily because of the low Canadian dollar. B.C.’s agriculture ministry reported an 11 per cent increase in agri-food exports in 2014, reaching a record total of just under $3 billion.
The U.S. is by far the top export market for B.C. agriculture and seafood products.
The benefit to B.C. farmers could have negative implications on U.S. retailers, particularly those that depend on Canadian shoppers.
According to an Insights West poll from 2013, 49 per cent of Canadians travelling by car to the U.S. said they regularly bought groceries there.
Ken Peacock, chief economist and vice president of the Business Council of B.C., said he was recently speaking to a business group in Bellingham and heard stories about decreased business and layoffs.
“The old story about the Costco parking lot being full of B.C. licence plates isn’t true anymore,” he said.
Peacock said the reversal is “entirely expected” given the 20 to 25 per cent price increase created by the lower Canadian dollar. The economist said he would expect to see the benefit to Canadian retailers “fan out” on a geographical basis, affecting those closest to the border the most.
There is also some evidence the cross-border shopping trend could be reversing, with more Americans coming north to experience greater buying power.
The CBSA figures show 9,500 more Americans entered Canada at the Peace Arch crossing in February 2015 than in February 2013. At the Pacific crossing, it was 4,500 more Americans.
Those numbers could increase during the summer holidays.