Ottawa-Attempts to blame farmers for higher grocery bills for Canadians overlooks some important facts, says the National Farmers Union.

Prices paid to farmers in recent years have matched the inflation rate unlike grocers that have raised prices faster than inflation rate increase, the NFU said.

“Canadians are upset about higher grocery bills, but most farmer incomes have not kept up with inflation. So what is driving prices up at the grocery stores?

“While Canadians have had to spend more for less across a variety of commodities since 2020, inflation in the retail grocery sector continues to be higher than in other sectors,” the NFU said.

Grocery store revenues increased despite a decrease in the volume of food purchased by Canadians. “Canadian retail grocers continue to see higher profit margins compared with pre-pandemic levels. Grocers are able to take advantage of inflationary periods to increase profits because of the market power they have: five grocery chains control 75 per cent of the market.

“Shoppers have few choices, making it easier for retailers to raise prices without losing customers.”

The NFU noted that Retail Council of Canada told a Parliamentary committee that “The combined roles of cost spikes for feed, fuel and fertilizer, compounded by supply chain disruptions, labour shortages and climate events have been the real drivers of food price inflation and higher costs.”

Were that true, prices paid to farmers should have increased more than the general rate of inflation. The NFU said the data shows they did not.

“Over the past 30 years the retail price of bread has increased 50 per cent, while Canadian farmers have not seen an equivalent increase in the price of the wheat that they sell at the elevator.

“The value of farm products have decreased relative to other consumer items. It takes more bushels of wheat to buy a pair of work boots or a house than it did 50 years ago.”

The retail price of ground beef has doubled since 1994 while the price farmers receive for cull cows used to make hamburgers has increased by just 40 per cent. While the farmers’ price for steers is increasing, the increase in the retail price of steak continues to outpace growth in farm prices.

The farm price of hogs compared to bacon and pork chops shows a similar pattern. For all these commodities, the consumer is paying more while the farmer is receiving less.

However, supply management provides more stability and better outcomes for both farmers and consumers, the NFU said.

“Retail prices for milk have increased more slowly than other grocery prices. Compared to other products like bread and ground beef, milk prices rose by only 27 per cent over the last 30 years.”

For supply managed products, consumer prices have risen slower than for other foods, while the farmer’s share has remained consistent, even though retailers set their own prices after. Farmers have no control over prices after the product has left their farms.

Supply management shows it is possible to provide a fair share to farmers and a fair price for consumers. Under supply management, a formula using data from a survey of actual farmers’ production is used to determine a price that covers production costs, ensuring farmers can stay in business producing the food Canadian consumers need. 

In non-supply managed sectors prices are not determined by their cost of production. Traders buy from farmers at the lowest price possible. Because individual farmers do not have bargaining power they are exposed to big companies’ market power. These companies keep commodity prices down in order to keep their profits up.

Grain, beef and pork farmers are at the mercy of the margin-maximizing ‘buy low – sell high’ strategies of commodity traders. Increasing market power allows ever-larger traders to take a bigger bite out of food processors’ bottom line, who in turn pass on this cost increase to wholesalers, and then to retailers.

Farm prices are not driving grocery costs, corporate greed is. Farmers deserve a fair share of food prices. The success of supply management provides clear evidence that this is possible.

This news report prepared for National Newswatch