Wednesday, July 17, 2024
Chris Judd

Food prices vs costs to produce

January 2023 has been a challenge for most people trying to juggle high interest rates, inflation that now may be starting to cool off, fuel prices that we have never encountered before and high food prices.
Many of us are old enough to remember the early 1980s when inflation hit 10 per cent or higher and interest rates peeked at 21 per cent. Over a period of a year, the interest rate began to slack off but the rate of inflation also reduced to a rate similar to the interest rate.
During that year, many homes, business and farms were lost. For those high paid individuals who work in the money market, they say “it’s only a correction.” For some of us it’s a pretty severe correction.
We have witnessed some roller-coaster price swings in fuel or gas prices. But, if you watched the profits of the major oil companies, you have noticed they had some very good profit margins. When we think of all the products that are made from oil (like synthetic clothing, foot-ware, plastic bags, car and machine tires, most of our electronic devices, a huge percentage of car parts and dozens more things that you can think of.) The cost of fuel used in transporting almost everything we use contributes greatly to the cost of the product. Our minimum wage has just been increased, but it still leaves many hard working people trying to live below the poverty line.
High food prices do not seem to be coming downs. There is a self-proclaimed expert on Canadian food prices who was taking aim at supply managed foods like eggs, poultry and all dairy products. My son talked to him several times and educated him with regard to his need to do a lot more research on how those products are price based on a “cost of production formula” which the government economists, dairy food processors, retailers, restaurateurs association and the consumers association all go through with a fine tooth comb before the government allows any increase or decrease in price change to the producer or processor.
Other foods are sold on the open market system where the price is determined by what the consumer accepts to pay. Most fresh fruits and vegetables are grown many miles south and the increased cost of fuel has greatly increased retail prices of these products.
A shortage of labour and increased labour costs has and will cause increases in many food products. The grains like wheat, corn, oats, rice, soybean, canola, etc. are grown with fertilizer, chemicals and diesel fuel that were as much as three times the price they were a year or two before.
Milk, meat, eggs, poultry, etc. were produced by feeding those higher priced grains and forages but only came to market several months or even years after the crops that they ate were grown. It will take several months or even years before the prices of those foods will level off. During that time, the processors, retailers and transport industry will absorb much of any reduction in the cost to produce, if any. Because the farmers who sell direct at farmers markets can adjust prices as they change quicker because of many less hands for the produce to go through, the consumer may notice that farmers market prices as well as freshness are more appealing this year.
Farmers have always been very close to the soil, water and nature. They will also be leaders in addressing the changes in our climate and by reducing their dependence on chemical fertilizer sprays and the use of fossil fuels.
It will take some re-education in sustainable agriculture and a real challenge to maintain the prices that consumers have been used too. As we adjust, it will become ever more apparent that the nutritional value of farm produced food will beat factory produced fast food every time. Don’t take my word for it, check it out.


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