By Joanne Dorr
The Haldimand Press
Food is essential, but as we emerged from the lockdowns and learned of the war in Ukraine, our grocery store visits became increasingly expensive. While the increase in food prices undoubtedly impacts consumers, this impact is first felt by farmers. As consumers reluctantly buy a $9 package of lettuce, farmers are struggling to reduce their costs to sell goods at prices that allow them to continue to operate.
Russel Hurst, Executive Director of the Ontario Agri-Business Association, says in a Grain Farms of Ontario (GFO) release on food supply concerns, “The tragic consequences of Russia’s invasion of Ukraine are creating great concern and uncertainty heading into this year’s planting season. Suppliers are facing several potential obstacles that could prove to be very disruptive for farmers.”
These disruptions are expected to cause farming input costs like fuel, fertilizer, packaging, and labour to skyrocket, forcing growers to initiate difficult but necessary price increase conversations. As an example, in another GFO release, the Ontario Ministry of Agriculture, Food and Rural Affairs indicates the overall cost of production has increased by 21.4% for corn and 23% for soybean growers since last year, with these increases likely being felt by consumers.
Dr. Simon Somogyi, a professor in the University of Guelph’s Gordon S. Lang School of Business and Economics, says in an article from the university on rising food prices, “Given the increases Canadians saw at the grocery store this past year, many are likely hoping to hear 2023 will bring some relief. But our models tell us that isn’t likely to happen just yet.”
One of many bracing for this reality is Brian Ricker, a Haldimand turkey farmer and the Chairman of Turkey Farmers of Ontario (TFO).
In addition to raising turkeys, Ricker grows corn and soybeans and says beyond the war in Ukraine, recent droughts in North America and Africa have exacerbated input costs for farmers as well. Ricker points out, “This resulted in an 80% increase in feed, and this does not include any of the other increases in the cost of logistics required to move your food from one place to the next.”
On top of the 80% increase in feed costs, Ricker explains that three years ago he bought nitrogen fertilizer at $300/ton and this year he bought the same amount for $900. These increases can be cost prohibitive for farmers, resulting in the farmer dropping that produce, lowering the supply available, and increasing the market value as demand remains the same. Ricker calls attention to this simple fact, “What drives up the cost of corn is the shortage of corn.”
To be proactive about input costs Ricker shares, “If I think diesel fuel is at a good price I can buy my diesel fuel for eight months out to try to decrease fuel costs. If I think the price of feed dips down I can lock down my feed price at what I think is a lower level. I also locked down the interest rates on my borrowing.”
While Ricker is aware that these measures are not without risk, he knows they generally help to reduce input costs.
Given the constant market volatility and sanctions on Russian products, Ricker says TFO negotiates pricing with processors like Maple Leaf and Sofina on a regular basis, sometimes as frequently as weekly. Ricker notes, “We don’t know what the retailer marks up our products by. We have no control over our prices at the retail level. We only negotiate with the processors, and the processors work with the retailers.”
Ricker says, “The Canadian Federation of Agriculture (CFA) is working with retailers on a grocery code of conduct so that they will be appropriately marking up the costs of our food.”
He adds that CFA is trying to hold the grocery chain to a 4% markup, adding that the CFA advocates for various measures but holds no regulatory clout to enforce their wishes.
Ricker knows food prices contribute to food insecurity, stressing the importance of making donations to local food banks: “Donate to food banks. We do that in the turkey industry because that’s where people go if they can’t quite make their grocery lists.”
To make a donation to Feed Ontario visit feedontario.ca or make a donation directly to your local food bank.
