Vegetable prices have dropped 13 per cent over the past year, according to Statistics Canada. (Seth Perlman/Associated Press)

Canadian consumers have been protected at the supermarket checkout from surging food prices over the past year, according to a Statistics Canada report that also found farmers stand to benefit from the global grain shortage.

Consumer prices for food rose a modest 1.2 per cent from April 2007 to April 2008, according to the report released Thursday. By comparison, grocery prices in the European Union and the United States have increased 7.1 per cent and 5.9 per cent respectively. Prices in China have increased 22 per cent.

"Canada is uniquely positioned to weather the storm of sharply rising prices for grains and rice," said the report.

"The absence of price increases for these other food products reflects factors such as the lower cost of food imports after the exchange rate appreciated and the relatively small role that commodities play in what consumers buy."

Prices have increased for just over 10 per cent of the food products sold in grocery stores. But as 70 per cent of food Canadians consume is produced within the country, prices for most other foods and beverages are stable or falling, the report noted.

According to the report, the following price changes have been observed:

• Dairy prices have increased 3.4 per cent.
• Vegetable prices have dropped 13 per cent.
• Fruit prices have fallen four per cent.
• Bread and cereal products have increased 10 per cent.

"The absence of price increases for these other food products reflects factors such as the lower cost of food imports in the wake of the rising Canadian dollar, and the relatively small role that commodities play in what consumers buy," the federal agency said.

Farmers expand crops

Meanwhile, food and agricultural exports in 2008 totalled a record $34.6 billion as the price of wheat and canola surged. Meanwhile, the agricultural trade surplus reached record first-quarter levels in 2008. Farmers in 2008 have increased their crops by 3.5 million acres, the report said.

"Intended plantings for canola also hit a high-water mark. One measure of the enthusiasm of Prairie farmers to boost grain output is that the amount of land lying fallow in 2008 is at its lowest level since the First World War," the report said.

"The marked increase in seeding by farmers in Canada and around the world in 2008 helps explain why wheat prices recently have retreated from their February high, although they remain well above their 2007 average and twice their 2006 level."