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Despite the many uncertainties created by the current pandemic, a new report released today is offering good news when it comes to Canada’s food supply and costs.
“We wanted to reassure Canadians that the food industry remains robust and functional, and that things haven’t really changed despite the pressures that the industry is under right now,” said the report’s lead author, Dalhousie University professor Sylvain Charlebois.
“I think a lot of people think that COVID has been very disruptive for our food systems. Of course they are absolutely challenged right now, but they are delivering and we do expect the food industry to continue to deliver despite all of the challenges.”
Tuesday’s report was issued as an update to Canada’s Food Price Report for 2020, a collaboration between Dalhousie University and the University of Guelph. The tenth edition of that annual report was issued on Dec. 4 and suggested overall food prices would increase by 2% to 4% in 2020, with the average family paying $487 more on groceries when compared with 2019 figures.
Researchers at both universities collaborated on the food price report’s COVID-19 update in light of concerns that have arisen since the arrival of the novel coronavirus in Canada.
“We were getting a lot of questions about access to food amid COVID. People were asking are we going to have food, and then of course the second thought was are these products going to be affordable moving forward,” Charlebois said.
“We started to look at farm gate prices, we started to look at labour and energy costs, and when you look at the portfolio of factors, macroeconomic factors that could influence food prices, we see little or no evidence that food prices or COVID is going to change the forecast.”
That initial food forecast issued in December anticipated a 4% to 6% increase in meat prices, 2% to 4% hike for seafood, and a 1% to 3% increase for dairy products. It also predicted a 1.5% to 3.5% bump in the cost of fresh fruit and a zero to 2% increase for bakery products.
The new update suggests that bakery products and vegetables are the only two food categories likely to face an upward swing when compared with December’s report.
The university researchers stated the oil price war between Saudi Arabia and Russia was impacting the Canadian Dollar and is expected to have an impact on some food prices.
“A weakened Canadian Dollar versus the Greenback led to the cauliflower situation we experienced a few years ago. If the Dollar drops further, many items we import will cost more, from produce to canned goods, to many other processed foods we purchase regularly,” researchers noted.
Fluctuations in oil prices, currency exchange rates, and other market indicators since the onset of the COVID-19 pandemic were reflected in the updated report.
Charlebois said the fact that prices are likely to remain more or less as forecast in December is good news for consumers.
“We are still expecting prices to go up by no more than 4% this year. Now that is a little over what I would consider the food inflation sweet spot for Canadians, but it’s not 15 or 20% based on some of the reports I’ve seen in recent days,” Charlebois said.
“It’s not like that at all. In fact, we are expecting food prices to remain under control until the end of this year at least.”
That doesn’t mean there aren’t challenges. The update notes the food service industry is “being decimated” by the pandemic as restaurants saw revenues cut almost overnight after they were limited to delivery and pick-up services only.
“We estimate that $40 to $50 billion worth of food is now purchased through food retail. That is a massive amount of food that grocers must sell, in addition to their regular business and new online challenges,” the report notes. “We are expecting to continue to receive reports of empty shelves, but the situation will likely improve.”
The wave of consumers rushing to order their groceries online has also created challenges for grocers who were unprepared for the influx. Charlebois said 9% of Canadians who never ordered groceries online are now doing so.
He said a recent Angus Reid survey conducted in partnership with Dalhousie suggests that more than 70% of Canadians now consider a visit to the grocery store “an inherent risk to their health.”
Charlebois said that comes on the heels of data he received Monday indicating that 47% of Canadians are “avoiding or intend to avoid” grocery stores for the foreseeable future.
On March 3, less than a month ago, that figure was just 18%.
“So it’s a huge shift, and that’s bad for business. That’s why they’re going to be capitalizing a lot more on e-commerce from now on,” Charlebois said.
“It was there to counter the Amazon threat for the longest time and provide convenience, and now it’s more about keeping people safe.”
Lower Sackville resident Charlene Whitlock is one of those customers who has embraced online grocery shopping for the first time.
Her 82-year-old mother happened to be visiting from Ontario when the pandemic began making waves in Canada. Her mother has health issues putting her at increased risk should she contract the virus, and she’s now staying with Whitlock for an undetermined amount of time. In addition, Whitlock’s husband is in the military and was required to self-isolate in the event he’s called on for deployment.
That means her entire household is in self isolation.
“My daughter-in-law just did groceries and she says it is very eerie, that it just feels surreal going into a grocery store. I haven’t been in one for two weeks so I don’t know,” Whitlock said.
“I just don’t trust that Nova Scotians are using common sense and isolating themselves for the 14 days, doing social distancing and all of that. I don’t trust it…I think this is a long tunnel so I can see this (online groceries) continuing for five or six months.”
Charlebois believes COVID-19 will change the food industry and the way we buy food “forever.”
“There is a new normal being designed as we speak for the grocery business and for food services as well. In the middle of it all is our kitchen, which is becoming busier, and this is a phenomenon that we’ve never seen before,” he said.
“Most people in the grocery industry will have to redefine their business model. Instead of just waiting for the money to come into their store there are different things they are going to have to think about. Whether it’s meal kits, e-commerce, it is not cut and dry. It’s not going to be simple.”
The updated report also highlights the presence of far fewer in-store promotions.
“I’m sure Canadians by now may have noticed their weekly flyers are much, much thinner now. This is not surprising to us,” Charlebois said.
“It’s basically to offset some of the extra costs that grocers have to absorb. Security shields to protect customers and employees, new cleaning protocols, e-commerce, there are so many extra costs right now to absorb that we’ll have access to fewer sales.”
Charlebois said while price gouging is more likely to occur among individuals online and in smaller local venues, it’s unlikely at larger chains because grocers are aware of the “reputational risks” of increasing prices without justification. Particularly during a pandemic when governmental emergency measures are in effect.
The update also highlighted the increased wages of anywhere from 5% to 15% for grocery store workers. Researchers estimate that more than 250,000 employees working in more than 5,000 stores across the country have received a pay increase since the outbreak began.
Although most employers have committed to maintaining these increased salaries until early May, Charlebois believes they could become the norm. This is due to the fact employees are being required to undergo extra training related to sanitation coupled with a much broader public recognition of the essential service they provide.
“It’s not just about punching keys on a cash or making sure that stock is on shelves. It’s about reassuring people, it’s about cleanliness, and frankly it is going to be about analytics, managing things much more efficiently, predicting demand for certain types of products,” Charlebois said.
“As for the increased recognition from the public? It’s about time. I know these people are working hard for little money.”
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