Litany of reasons behind our rising food prices

Cowichan residents should be paying more for their groceries as the year progresses, according to Canadian economist. -
Cowichan residents should be paying more for their groceries as the year progresses, according to Canadian economist.
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There’s no simple reason why groceries are going to cost more this year, says a Vancouver Island University economics professor.

Seasonal, cyclical, political and international influences are all at play, Mark Loken said.

“The international reason is, of course, the recognition that the Middle East is in disarray, which contributes to higher prices for energy — not that we’re short of energy, but markets don’t like uncertainty, so they’re going to price in the probability that the new energy will cost more, and it probably will.”

There are also environmental factors: new policies recognizing climate change or global warming — such as carbon taxes — are driving prices up, Loken said.

And it doesn’t help that alternative fuels such as ethanol are using corn and wheat commodities.

“A lot of the price of food has to do with the 90 per cent increase in the last year alone in the price of corn, and something like 78 per cent in the price of wheat,” he explained.

“There are weather reasons, as well — fires in Russia, and drought in Australia, which has reduced international wheat supplies.”

But a big reason for higher domestic food prices, Loken said, has to do with food product marketing boards, which work to increase consumption — and prices.

“I think the last time I counted, there were 89 marketing boards in food products alone just in B.C., and the purpose of which is to guarantee higher prices for farmers, which means higher prices for consumers,” Loken said.

“It’s sort of silly that we’re capable of producing probably enough food for all of Vancouver Island and half of the Lower Mainland here in the Cowichan Valley, but we choose not to do that, and we actually subsidize hobby farmers to grow grapes at a loss so they can claim the losses under the Farm Income Assurance Program, instead of producing vegetables that people could eat.”

And the result is we’re more likely to eat apples from New Zealand than Duncan — and pay more at the till.

“So there are a lot of reasons,” Loken said of higher food prices. “Really, it’s amazing the price isn’t higher.”

Canadian economists are predicting grocery price hikes of up to seven per cent by the end of the year.

Some local grocery stores declined to comment or did not return phone calls for this article, but Country Grocer’s marketing manager said the store’s pricing structure will remain competitive.

“We’ll just have to ride the wave and see where it takes us,” Tammy Averill wrote in an email to the News Leader Pictorial. “Hopefully the impact of rising costs isn’t going to be as bad as predicted.”

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