Canadian households are going to pay more for food next year, but for the agriculture industry the telling point is what they’ll be spending their money on.
Canadian households can expect to see a 3.5 per cent increase to their overall food bill next year — spending about $411 more — according to Canada’s Food Price Report 2019 released last week.
But bigger news contained in the report relates to what Canadians won’t be spending so many food dollars on.
For the first time since the annual Canada Food Price Report began nine years ago it is forecasting Canadians will buy less meat and seafood next year, which, in turn, is expected to drive down meat prices by as much as three per cent.
Why it matters: Meat prices are expected to decline as more consumers opt for plant-based protein in their diets.
This is the effect of more Canadians lowering their meat consumption by switching to plant-based protein alternatives, said the report’s lead author Sylvain Charlebois, a professor in the faculties of management and agriculture at Dalhousie University.
Dalhousie and the University of Guelph jointly released the report December 4.
“We believe that there’s going to be a lot of supply, particularly for beef,” he said.
“Demand per capita is slowing. That’s been a trend for 30 years but it seems to be accelerated.”
A survey conducted by the same universities earlier this year found that 32.2 per cent of respondents were considering reducing meat consumption.
This is on top of what’s the now 94 million fewer kilograms of beef eaten annually, compared to 2010. The report says it is expected that meat prices will continue to spiral downwards until 2020, as even more consumers reduce or eliminate meat from their diet.
The rollout of a new Canada Food Guide next year will be another influential factor, the report notes, as it is expected it “… will likely prioritize consumption of plant-based foods.”
Charlebois said consumer interest in plant-based diets is something the livestock sector needs to be paying very close attention to.
“Some producers are in absolute denial. They don’t want to see what is happening. But there is a significant proportion of producers who know what’s going on, and what I tell them is to befriend the enemy, and not necessarily advocate for your commodity, but to accept the fact that meat is now part of a much larger portfolio of protein sources.
“Coexisting with other (protein) sources is going to be key going forward.”
Cost of vegetables
Where Canadians can expect to pay more is in the fresh produce aisle; the report is forecasting the price of vegetables to rise anywhere from four to six per cent.
There is potential for an impact from El Niño creating drying growing conditions in regions such as Mexico and the southern and western U.S. and Mexico where typically a lot of Canadian produce comes from.
Where Canadians will pay more for food is at the restaurant. Eating out now accounts for over a third (35 per cent) or $4,000 of annual household food budgets, the report notes, and increased labour costs, brought about by new minimum wage laws, plus favourable market conditions will see more increases in restaurant prices, the report says.
In the 2018 report, all food price forecasts were accurate, except that the price of fruit did not go up as much as models projected.
A number of factors influenced food prices in 2018, including interest rate hikes by the Bank of Canada, and international trade uncertainty with the replacement of the North American Free Trade Agreement (NAFTA) by the United States–Mexico–Canada Agreement (USMCA) and a new Congress in Washington.
Canada’s unpredictable relationship with its largest trading partner to the south remains a concern, said Charlebois.
“Globally, trade wars between the U.S. and China affect the entire food supply chain in Canada, but we’re also seeing new opportunities, especially in Europe and Asia, under new trade deals,” he said.
This year’s forecasts bring the cost of food to a projected total of $12,157 per household in 2019. That’s still a very low price to pay for food, said Charlebois, and it’s worth reminding Canadians of that.
“We have access to the fifth most affordable food basket in the world, relative to our income in Canada,” he said.
“Canadians are well served.”
The report also notes a trend to watch in 2019 will be the legalization of cannabis and the arrival of edible cannabis products on the market. It’s expected that processors will begin to add cannabis as a value-added feature to food products and charge premiums for it.