Cheap Food: Any Variation on That Theme Screams Headlines

Screaming HeadlinesDepending on whom you believe, Canadians spend from 10 to 16% of their disposable income on food.  So it is not a major issue for the vast majority of Canadians.  Despite that, over the last few days’ Canadian newspapers have been full of stories about food inflation and the rising cost of food commodities. It’s like the urban media have discovered agricultural commodities and they want the world to know.

For those of us who live in Chatham-Kent we don’t need that education.  In this part of the province we have a unique combination of good soil and the warmest climate in Canada.  That combination means that we can grow a wide divergence of crops and generally get the highest yields versus anywhere else in Canada.  There are variations on the theme and I’m sure our friends in the lower mainland of British Columbia would like to disagree with me but southwestern Ontario lives a charmed existence when it comes to growing things.  We don’t take those crops for granted down here. Everybody has a general idea on how the farmers are doing.

Of course our greater Canadian society is nothing like that.  Canada is not as urban as a place like Australia but make no mistake about it, modern Canadian society has lost its rural roots.  Most Canadians live in urban areas, with Montreal, Vancouver and the greater Toronto area taking in most of them.  So food prices in those great cities tend to rise and fall behind a huge wall of indifference.  Consumers of food have their own problems and they want it as cheap as they can get it.  So now, when we see agricultural commodities rising close to the 2008 record levels, there is some concern on the frozen tundra about food prices.

Let’s be clear.  If for whatever reason starvation came to southwestern Ontario, what would you be able eat off a local farm?  You certainly could eat some vegetables and maybe some fruits but if you sat down to a bowl of soybeans and corn, it wouldn’t taste too good.  If you sat down to a bowl of wheat, you could scarf that down, as it is only a short process away from being bread.  In other words there’s a big difference between agricultural commodities and food commodities.  One is usually processed into food and the other is very close to being food itself.  In some countries of the world where incomes are much poorer, the higher prices of food commodities can bring great difficulties to those societies.  Imagining the same types of things in Canada is almost preposterous to think about.  At best it is a minor inconvenience for most Canadians.

Interestingly enough, many urban journalists often turn to the use of grain in the making of biofuels.  In fact the argument is often made if we didn’t turn corn and wheat into fuel, prices would be much lower and so would food costs.  This is not necessarily true but it is not necessarily false either.  There are two sides to this equation but invariably at a time when agricultural commodity prices are rising, truth gets thrown out the window.  Nine times out of 10 you’ll hear from biofuel critics decrying the use of grain for fuel when there is a whiff of food prices rising.  It’s like asking a used car salesman if you should buy a new car.  The answer is always no.

When you go into the modern supermarket, it’s like Disneyland.  There are a myriad of products for sale, most of them highly processed to reflect the needs of modern society where people choose not to take time to cook.  Much of these new food products are processed in China and other low-cost countries.  Most of the cost of this food comes from the packaging, transportation and delivery.  However, despite that, much of the media will blame it on corn being used for ethanol.  Tell that to the poor Chinese person who is processing Pacific salmon from Canadian waters sent to Nova Scotia and labeled with a famous Canadian label. Simply put, when it comes to food economics, trying to make sense of this world is an endgame.

So if you see headlines regarding food inflation and rising food prices, take it with a grain of salt.  At the present time agricultural commodity prices are near record levels but they surely will come back soon. Check the label of those foods you pick up in the supermarket and think hard about that’s getting the money.  It’s not about biofuel; it’s not about some moribund agricultural policy in places like Ottawa and Washington.  At the end of the day, it’s all about cheap.  Any variation on that theme is usually temporary and it screams headlines.