Canadians Cautioned to Expect Higher Food Prices

CANADA - The University of Guelph is cautioning consumers to expect higher prices for everything from corn flakes to pork chops in the coming months, writes Bruce Cochrane.
calendar icon 1 May 2008
clock icon 3 minute read

Increased cost and reduced availability of food around the world, characterized by food riots in several countries and action to protect food security in others, have started to capture the attention of consumers.

Dr. Dave Sparling, the associate dean for research and graduate studies with the College of Management and Economics at the Univesity of Guelph, blames a combination of factors.

Dr. Dave Sparling-University of Guelph

We've got a lot higher production costs for food now.

Everybody looks at the rising gas prices and that affects farmers production, it affects the cost of processing food, the cost of moving food and costs are being pushed up from that direction.

Then things like fertilizer prices are going up so really it's costing more to produce food.

You've also got some new streams of demand coming on.

People are starting to turn corn for example into ethanol and that we haven't been doing before so that's putting a little more price pressure on grains.

Then there's a lot more demand for grains from China and India in particular because their economies are very active and very hot.

People are becoming better off in those countries and when people in developing nations become better off they tend to eat more who grains, more meat products and so there's even more new demand for grains.

So overall grain prices are going up and then, when grain prices go up, they start to push up the things that use grain, breads, pastas, meat, so on so we're seeing all of this happening.

Dr. Sparling notes Canada is a major food exporter so Canadians aren't experiencing any shortages and, because of the higher dollar and stiff retail competition, Canadians have not seen as much food inflation but he expects that to change in the coming months and certainly by the end of the year.

He says food prices in Canada will remain among the cheapest in the world but he expects food inflation to outpace general inflation over the next few years.

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