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Farm crisis not reflected in prices

For most urban dwellers, food is something found on store shelves – how it got there is the same kind of mystery behind the lights turning on when they flick a switch. In Woolwich and Wellesley townships, straddling the divide between rural and urban, agriculture remains an everyday part of life.

Anyone in the market for groceries – and that’s all of us, one way or another – will have noticed significant price hikes, the result, we’re told, of escalating commodity prices and the cost of transportation.
As with the oil companies, the major supermarket operators tell us they’re simply passing on increased costs.

While food prices have been increasing, many farmers are seeing lower returns. The current crisis in the pork industry is a case in point: farmers are losing $40 per hog, but prices in the supermarkets have hardly budged.

Statistics Canada reported this week that food costs continued to put significant upward pressure on prices, albeit to a lesser degree than in previous months. In the 12 months to July, food prices rose five per cent, compared with increases of 5.5 per cent in June and 6.4 per cent in May. Growth in food prices has been slowing since reaching a peak of 7.9 per cent in March 2009, due to the slowdown of price increases for fresh fruit and vegetables and meat.

The main factor was higher prices for food purchased from stores, which rose 5.6 per cent in July.

For consumers, the past couple of years have seen double-digit hikes on a variety of items at the supermarket, from cheese to pasta. Low-income earners have felt the pinch, but we’ve been sheltered from the kind of impacts seen elsewhere, particularly in the developing world.

Climate change, biofuels and political upheaval have played a role in reducing outputs and increasing the cost of the food we do produce. In North America, where food takes up 10 or 20 per cent of our incomes, the results have been noticeable; in countries where food takes up 60, 70 or even 80 per cent of earnings, the changes have been catastrophic.

Prices paid to farmers have been dropping, in some cases down 50 per cent from earlier peaks. We haven’t seen those kinds of drops on items found on supermarket shelves, so consumers continue to suffer even as farmers take a hit.

Although farmers feel unloved by governments – witness the increasing tendency for protests – casual onlookers may figure plenty is being done for the agricultural sector. Funding announcements have been frequent over the years since the mad-cow fiasco began in Alberta in May of 2003. But Canadian producers facing a hostile marketplace are not seeing anything like the support offered by the governments of two major competitors, the U.S. and European Union, where subsidies amount to tens of billions of dollars.

Experts now say the challenge for Canadian producers is to adopt new technologies, to innovate and to produce value-added products to remain ahead of international competitors.

The key here is research, particularly the government-funded variety. In that way, government money could be directed toward longer-term strategies to keep the agricultural sector alive and kicking, rather than going to emergency aid for a sector that seems to be lurching from crisis to crisis.

In the end, rural Canada will be much healthier. For urban shoppers, that will mean a continued stream of products to choose from at prices they can afford.

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