National | Media Release

Grocery Prices are Rising and Farmers’ Share Declining as Corporate Processors and Retailers Take More and More

Swift Current, SK—Retail food prices are rising. To explain these increases, many commentators point to rising prices for farm products and cite drought, other production problems, the pandemic, or supply-chain issues. This is not an accurate explanation. Public data shows that corporate food processors and retailers have relentlessly, for decades, pushed up retail prices even as the prices paid to farmers remained largely stagnant.

“Consumers need to know that less and less of the money they spend on food actually makes it back to the farmer. Retail food prices are high because meat packers, other large processors, and big retailers are taking ever larger shares. For most food products, the farmers’ share continues to shrink,” said Stewart Wells, NFU Vice-President of Operations and Saskatchewan farmer.

“Big processors, packers, and retailers are charging consumers more, paying farmers as little as possible, suppressing workers’ wages, and taking more for themselves. That’s why retail food prices continue to increase, not because of rising grain or livestock prices, COVID-19, or supply issues. It’s important that policymakers and all Canadians know who’s behind the rising cost of food,” added Wells.

NFU President and Ontario farmer Katie Ward explained that “Governments’ misplaced priorities have facilitated food sector concentration and paved the way for the high retail prices we’re seeing. Federal approvals for waves of packer, processor, and retailer mergers and the closures of processing plants have increased the power of these corporations. Food price increases are just one effect of this rising corporate power. Another effect, as the pandemic and supply-system shocks have revealed, is that our highly concentrated system is fragile—lacking resilience, diversity, and adequate local and regional capacity and access.”

This first graph shows retail prices for bacon and pork chops and farmers’ prices for hogs. (Sources: Stats Can.) In contrast to the modest increase in farmers’ prices over the forty-year period, note the doubling and tripling of retail prices. Grocery store price increases are the result of the dominant packers and retailers taking more, and this trend is decades old.

 

The second graph shows wheat and bread prices. (Source: Stats Can and Gov’t of Sask.) It reveals that wheat prices are not the cause of bread price increases. But the graph hides a more striking fact: through most of the 1980s, Canada still had a two-price wheat policy. While the graph shows that in the 1980s farmers were receiving about $5 per bushel for their wheat—a blended price representing export and domestic sales—Canadian millers and bakers were paying about $7 per bushel for wheat they made into flour and bread. Thus, in the 1980s, millers, bakers, and retailers were turning $7 per bushel wheat into $1 per loaf bread. In recent years, they’ve been turning $7 wheat into $2.75 bread. The farmers’ share is about a third of what it was forty years ago.

 

This third graph shows the relationship between prices of slaughter cows and ground beef. (Sources: Stats Can and AAFC.) Over the past forty years, cow prices have roughly doubled. Over the same period, however, retail ground beef prices have more than tripled. The farmers’ share of the grocery store ground beef dollar is falling, as is the case for most farmgate-retail price pairs. (Note that throughout this analysis, prices are not adjusted for inflation. If cow prices were so adjusted, they would be down, not up.)

 

This final graph compares prices of corn flakes and corn. (Sources: Stats Can and Canada Grains Council.) Farmers’ corn prices have roughly doubled over the past forty years. Over the same period, the price of corn flakes has quadrupled. Farmers’ share today is half of what it was. Kellogg’s recently announced another large quarterly dividend for its shareholders but remains unable to come to an agreement with striking workers.

NFU President Katie Ward concluded: “Processors and retailers are overcharging because they can; mergers and concentration have multiplied their power. This is creating many negative effects: on farmers, workers, the environment, the climate, animals, and, as rising retail prices show, on all Canadians. To reverse these negative effects, we need smaller scale, local and regional processing, and we probably need the breakup of the largest packers, food processors, and retailers. Rising market power and declining competition has led to steadily rising retail prices; governments must intervene to curb all of these damaging trends.”

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For more information or comments, please contact
Katie Ward, NFU President president@nfu.ca (613) 797-0601
Stewart Wells, NFU Vice-President for Operations toews.wells@sasktel.net (306) 773-6852
Darrin Qualman, NFU Director of Climate Policy qualman@nfu.ca (306) 230-9115

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