Food Demand Changes Continually and So Do The Conduits

I enjoy going grocery shopping.  Now I don’t enjoy it as much as I enjoy watching basketball, but it is a mundane task that I do not mind doing.  I enjoy it because being in the business of agriculture I produce food and I think that’s very important.  So when I go to the grocery store I always like to look at the label and see where food comes from.  Luckily for me, I’ve been able to do that from the far corners of the earth.  That can make grocery shopping very intriguing venture.

There is no question I have a bias when it comes to my grocery shopping.  I like to see food products produced in Canada and even better if they are from my local area.  Nothing makes my mood turn more than seeing a food product imported from far away.  Simply put, that means cheap food wins again.  Cheap is always the biggest consideration when it comes to our grocery shelves.

Cheap is getting a bit of a new meaning on our grocery shelves in 2017.  We all learned recently that Amazon was taking over Whole Foods.  Amazon of course sells almost anything and its move into the grocery market surely sent shivers through some grocery aisles.  It is certainly streamlining the food buying process for those so inclined.

In Canada, Amazon has 13 locations mostly in the Toronto and Vancouver area.  Amazon founder Jeff Bezos recently stated that Amazon was determined to make “healthy and organic food affordable for everyone”.  In fact, on Monday the $14 billion takeover of Whole Foods becomes official and Amazon is reducing prices on a selection of items.  It just so happens that some of those items include organic rotisserie chicken, organic bananas, organic avocados and organic baby killing baby lettuce.  Of course, there are a whole host of other items.  Cheap organic natural foods were never a staple of the old Whole Foods store.   It seems like Amazon is changing the culture.

Of course, the Amazon, Whole foods marriage is a long way away from the farm.  However, this is 2017 and as time goes on and the digital revolution becomes even more focused, we can expect even more innovation in the way our food gets on those grocery shelves.  If you have ever visited a Whole Foods store, like I have in Detroit Michigan, it is quite the adventure.  I spend most of my time reading labels, not because I wanted to know what was in these products, I had just never seen them before.  The Amazon, Whole Foods take over means it all should become more ubiquitous and cheaper.  In many ways it’s hard to believe.

Of course, it’s harder for me to believe because I am from a rural area, were choices are limited.  For instance our local grocery store here in Dresden Ontario is a good one, but it is also the only one.  I much prefer to shop there because I know the people and a want to keep my business local, real local.  It is much the same in places like rural Saskatchewan.  However, in Canada’s urban centers food comes in all kinds of shapes and sizes, prices and modes even delivered by online companies liked Uber Eats.  So the Amazon marriage with Whole Foods will be big competition in urban areas.

The question is how do farmers capitalize on these new ways to deliver food to the masses?  At this point of course I don’t know.  I have always said the food has to be cheap in order for consumers to buy it and that still holds for a large segment of our consuming public.  However, there is so much room for price segmentation in the urban grocery market.  Amazon can see that, hence they are taking such advantage.  I hope farmers find a way to tap into that too.

Of course, all of this has an increasing effect on food demand. That is good for many of us within commodity production.  We continue to be burdened with surpluses, but thankfully the demand remains on steroids.  Needless to say, the profits taking from all this food is widening too.  With the increased segmentation of the grocery market and with the presence of both Amazon and Google who announced a partnership with Walmart last week, it’s a bonanza in grocery competition.  The bricks and mortar grocery stores are going to have to really redefine themselves.

That is surely happening now in the United States and may be on the increase in Canada.  I haven’t even mentioned some of the grocery store trends that I see when I have visited Asia and other parts of the world.  In some of those countries food isn’t so ubiquitous, it is much more basic.  However, in Canada and United States, food is a celebration, even though it remains ubiquitous and cheap.  The vehicles might be changing but that doesn’t change the fact that it will always be challenging to profit from that food at the farm level.  However, that’s a 1000 years old. We’re doing groceries different now; hopefully we can find better ways to transfer some of those profits toward the farm gate.