A new report from the University of Guelph’s Food Institute predicts consumers will pay an additional $345 on their food bill this year.
That’s an increase over the $325 additionally paid for food in 2015 when a low Canadian dollar saw price increases for many food products, but especially meats, fruits, nuts and vegetables, the sixth annual report says.
Last year, food prices in stores rose by 4.1 per cent, which was significantly above inflation. For 2016, the forecast is for slightly smaller food price increases — anywhere from two to four per cent.
The report’s lead author, marketing and consumer studies professor, Sylvian Charlebois, cited Canada’s struggling dollar as the biggest influence on prices.
“For every cent the dollar drops, foods that are imported likely increase one per cent or more, Charlebois said in a news release. “For fruits and vegetables, unlike with meats, it’s more challenging to find substitutes in Canada, so shoppers will have to cope with higher prices.”
The cost of foods such as fruits, vegetables and nuts jumped by as much as nine to 10 per cent last year and it is expected retail prices for these foods could go up by as much as 4.5 per cent again this year if the Canadian dollar continues to decline as expected.
However, climate change and consumer trends also play key roles in food pricing.
Climate change will remain one of the most significant, unpredictable influences, the report says.
El Niño could have a positive benefit, bringing more rainfall to southern and western regions, and potentially boosting production for drought-affected crops such as fruits, nuts and vegetables.
More rainfall isn’t expected to make a significant dent in beef prices, however, because cattle inventories will remain at current low levels for a while yet, the report said. “Since rebuilding inventories is a very long process, this could keep beef prices high but not at record levels as we saw in 2015,” it said.
Meat prices rose five per cent in 2015 and could rise again by 4.5 per cent in 2016.
The Guelph researchers said high meat prices are likely to prompt more consumers to seek out alternative protein sources more often.
Last year a survey by the Food Institute found higher beef prices led one-third of consumers to seek alternatives to meat. International Year of Pulses in 2016 will continue to influence consumers’ explorations of other proteins, it adds.
Major trends for 2016 alongside a quest for vegetable proteins and improved “gut health” are consumer demand for supply chain transparency and expressed ongoing concern for animal welfare, the report said.
“Supply chain transparency will continue to be a focus in 2016,” the report says, citing 2015 examples of food businesses revisiting their procurement strategies and ingredient lists. More consumers want to know where their foods come from, how it was made and under what conditions, the report said.
“The good news is that the industry is showing signs of its will to adapt,” it says. “The not-so-good news for food corporations is that the revolution has only begun, and it will become more complicated.”
Consumers’ curiosity “has now moved up the food chain of the industry, probing into the practices of processing plants and farms,” it said.
“The adage suggesting that consumers believe food just shows up on store shelves is passé,” it said.
The report notes the ongoing conversation agriculture will continue to have with regard to transparency as it relates to animal welfare.
“A commitment to transparency goes a long way in the age of instant information, especially when the intent is to reduce concerns about the practices of an industry that is remotely located from 98 per cent of the population,” it says.