Rising production costs play a small part in grocery price increases. Ottawa-Adoption of a Grocer Code of Conduct is needed to rein in food price increases, says the Canadian Federation of Agriculture (CFA). The prices farmers receive for their crops and livestock have very little relation to what shoppers are paying in grocery stores, CFA said in a statement. “In fact, the gap between farmgate and retail prices has been growing long before COVID and other current disruptions.” Even when farmgate prices were stagnant, food prices continued to increase, CFA said. “There is a complex supply chain involved in getting products to grocery shelves, with rising costs, supply chain disruptions and the need for profitability at all stages of the supply chain factoring in.” Canada will benefit from resilience in the food supply chains, which is why CFA supports the development of the Grocer Code. It has been in development for more than a year and more should be known about it this fall. Although Canada boasts one of the lowest inflation rates among G7 countries, food price increase have consistently exceeded general inflation for more than a year. When the Arrell Food Price Report predicted a 7 per cent rise in food prices last year, that forecast was initially met with skepticism and described as “alarmist”, CFA said. The actual increase was 10.3 per cent. This year, the Arrell Food Price report forecasts another 5 to 7 per cent increase. The cost of producing food has increased tremendously over the past few years as fuel and fertilizer “have skyrocketed in price and are only now beginning to decline. 2022 was labelled as the most expensive growing season in Canada's history.” While many believe higher production costs are a large factor in recent food inflation, that is not the case, CFA said. “At the end of the day, farmers are one part of a long and complex supply chain, and we all benefit from more transparency, commercial certainty, and fair dealings to drive greater resilience,” CFA said. Inflationary pressures have been steadily mounting, and its impact on farmers and food prices in Canada is increasingly evident. “Intuitively, many believe that this rise in the cost to produce food is a large factor in recent food inflation, but that is not the case. “While the farmgate prices have remained relatively stagnant, the gap between retail and farmgate has steadily increased. This is a clear example showing that increasing retail food prices are not correlated with increasing farmgate prices.” There was a small increase in farmgate prices in 2021, driven by rising input prices, the war in Ukraine and supply chain disruptions. “This coincides with a much sharper rise in retail prices at the same time.” Last month's meeting of federal and provincial agriculture ministers received an update on the Grocer Code consultations and work being done to implement it by year's end. The ministers were also briefed on the plan to establish an office, which will provide training, education, dispute resolution services and oversight, as well as send a signal to Canadian consumers that the grocery sector is improving its transparency. The ministers said they were willing to discuss how governments can support the Code's development, including short-term financial support for the creation of the office to administer the Code. Grocery store competition is under study by the Competition Bureau of Canada while the federal government has also announced an investigation into food prices that could lead to measures that can help address practices that are driving the increased food costs.