While Canada will be spared the kinds of double digit food price increases that have caused rioting in developing countries, the record price of fuel and other factors is starting to have an impact on grocery and restaurant bills.
The Canadian Federation of Independent Grocers, which held a conference in Vancouver last week, acknowledged that there would be price increases over time but that they would be manageable and likely in the single digits for most products. For staples like flour, where prices are set by global markets, the increase may be in the double digits but Canadians will still enjoy some of the lowest food prices in the world.
The average Canadian family spends 10 to 20 per cent of their annual income on food, and families that spend more than 60 per cent of income on food are considered to be living below the poverty line. And while food prices have been increasing for years in step with fuel prices, the higher dollar has insulated Canadians from the effects of higher food production prices until recently.
In comparison, residents of developing countries spend 70 per cent or more of their income on food, while in the most impoverished countries in Africa it’s closer to 100 per cent, and hunger is common.
While a double-digit increase in the price of flour might inconvenience Canadians slightly, any increase in food prices forces residents of poorer countries to eat less.
The United Nations put out a plea this week for wealthy nations to boost the World Food Program after its own costs increased by more than 50 per cent for staples like cereals, dairy, meat, sugar and oils. Canada answered the call with an additional $50 million in food aid, bringing the total for 2008 to $231 million. The largest recipient will be Africa, although goods will also be sent to countries like Afghanistan and Haiti.
Several factors are being blamed for what the UN is calling a global food crisis.
The main factor is the rising price of fuel, which has increased the cost of food production and distribution — Canadian farmers are about to experience those higher prices as they plant this year’s crops.
Another major factor is the changing diets of increasingly wealthy countries like China that are importing more grain to feed livestock for meat production.
The biofuel boom and globalized food market has also been blamed, driving up the cost of feedstock as biofuel producers compete against meat producers, and farmers grow crops intended for fuel production instead of food. In the U.S., roughly 30 per cent of corn is now feeding the biofuel industry.