The struggling Canadian currency, climate factors and consumer trends will all play important roles in the rising price of food in 2016, says professor Sylvain Charlebois, lead author of the sixth annual Food Price Report from the Food Institute of the University of Guelph.
Overall, the researchers expect price increases averaging two to four percent above the general rate of inflation. “This means the average household will likely spend $345 more than in 2015 for the same exact food,” says Charlebois, of the Marketing & Consumer Studies department.
“The biggest factor could be the Canadian dollar. For every cent the dollar drops, foods that are imported likely increase one percent or more. 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.”
In 2015, the sudden currency drop led to fruits, vegetables and nuts increasing in price by nine to 10 percent. The researchers anticipate that those prices could increase in 2016 by up to 4.5 percent.
One potential improvement is more rain forecast for the United States in 2016 due to the effects of El Nino.
“This could mean more supply from those states where farmers had struggled in recent years,” says Charlebois. “It could also help U.S. cattle and pork producers, though inventories will take some time to rebuild.”
Meat prices, which rose five percent in 2015, could rise by 4.5 percent in 2016.
The researchers do not expect Canadian grocery shopping patterns to be affected by a statement from the World Health Organization that processed meats increase cancer risk. But they say higher food prices could make a difference. A 2015 survey by the Food Institute found that higher beef prices led one-third of consumers to seek alternative protein sources.
“Consumers will likely look to chicken, fish, lentils and chickpeas more if beef prices move out of range,” says Charlebois. Food Institute researchers expect only minimal price increases for seafood. Canada is a net seafood exporter.
Consumer demand for more supply chain transparency might have a more immediate impact, says Charlebois.
“People want to know what is in their food and the animal welfare conditions. Social media facilitates consumers’ influence, and companies have noticed. For example, McDonald’s is focusing more on animal welfare. One current trend is the demand to use less antibiotics in animals.”
Predicted food price increases for 2016:
- meats – 2.5-4.5 percent
- fish and seafood – 1-3 percent
- dairy and eggs – 0-2 percent
- grains – 0-2 percent
- fruits and nuts – 2-4.5 percent
- vegetables – 2-4 percent
- restaurant food – 1.5-3.5 percent
- overall food expenditures – 2-4 percent
The Food Price Report 2016 also involved University of Guelph professors Michael von Massow and Erna van Duren (Hospitality, Food and Tourism Management); Evan Fraser (Geography); Francis Tapon (Economics & Finance); Paul Uys and Maggie McCormick (The Food Institute), and graduate students Leila Kamal Abyaneh and Amit Summan.