World food prices fall 14.5%, even as Canadian food prices climb

The average price of food in global markets has fallen by 14.5 per cent in the last year as wholesale prices fell for oil, grains and other food products, but Canadian food prices are up more than four per cent.

Low dollar partly to blame, but Canada also has lost its food processing capacity

Average food prices in Canada increased by four per cent from January 2015 to January 2016. But the rest of the world is paying less for most foodstuffs. (Paul Chiasson/Canadian Press)

The average price of food in global markets has fallen by 14.5 per cent in the last year as wholesale prices fell for oil, grains and other food products, according to the UN FAO Food Price Index.

That is a marked difference from Canada, where food prices rose four per cent in the year to January, according to the most recent Consumer Price Index from Statistics Canada.

Prices for fresh vegetables in Canada were up 18.2 per cent in the 12 months to January, while meat prices rose by five per cent.

The food price inflation in Canada is mainly tied to the value of the dollar, which has fallen 15 per cent since this time last year.

Since 81 per cent of fruit and vegetables sold here are imported, that has had a direct impact on the price of produce.

Low dollar, harsh climate, big country

The UN's food price inflation measure and Canadian food price inflation have been "decoupled" for many years, said Sylvain Charlebois, director of the Food Institute at the University of Guelph in Ontario.

"Our economic and geographic realities are catching up to us," he told CBC News. "The fact that that we live in one of the largest countries in the world with 35 million people only. It's hard to distribute food efficiently no matter where you live in the country."

Worldwide, people are paying less for dairy products, cereals, sugar and vegetable oil as commodity prices, which are usually in U.S. dollars, decline. Even meat prices have fallen on an annual basis.

The price of canola oil is down 11 per cent and wheat prices have fallen 15 per cent on commodity markets in the past year.

But even these products, which are grown in Canada, are often processed elsewhere, Charlebois said.

What happened to local processing?

Canada has no national food policy and allowed big processors such as Kellogg in London, Ont., and Quality Meat Packers in Toronto, to exit the country without planning to rebuild processing capacity here, he said.

With the dollar low, some entrepreneurs are considering investment, but there must be a focus on efficiency and productivity, as well as access to venture capital to re-establish processing capacity, Charlebois said.

"In the last few years, we've seen small processors emerge, but not the large-scale ones we need to regain control over prices," he said.

Canadian farmers are looking to move away from grain and oil crops, perhaps shifting production to vegetables because of low commodities prices. But they face higher prices on seeds, fertilizer and the new equipment needed for different harvesting methods because of the high U.S. dollar.