Canadians trust farmers despite high food costs — for now

Rising food prices have been drawing the ire of the Canadian public, but the bulk of that frustration and anger is not directed at farmers. Not yet, at least.

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Food retailers are viewed unfavourably, but farmers remain one of the most trusted demographics in the food system. That trust is at risk.

Why it matters: Lack of understanding about food production and the workings of food supply systems poses risks to the high levels of public trust in Canadian farmers.

Canadians are increasingly concerned about lack of transparency at all levels. Combined with an increasingly volatile world, the perception of opaque food systems could eventually have negative repercussions for farmers.

The latest Canadian Centre for Food Integrity consumer trust survey indicates farmers are the most trusted food system stakeholder in Canada’s food system. Ashley Bruner, the centre’s interim chief executive officer and research manager, says the assessment is consistent with year-over-year results, despite a clear rise in concern over food costs.

Out of more than 20 “life issues” provided, study data indicate the cost of food has reached an all-time high. This is up significantly compared to 2022, with the issue becoming more acute as Canadians are increasingly strained in other areas such as housing, interest rates and general inflation costs.

However, when respondents were asked why they thought the cost of food has increased, farmers were not mentioned.

Supply chain issues remain the top mention, although it is being increasingly displaced as concerns grow over food company profiteering.

“The good news is people most commonly understand it’s not one person or group to blame for the cost of food, but this is down significantly since last year. Less people think it’s a system wide issue. What we’re seeing is an increase in pinpointing profit-driven actions,” says Bruner.

“As of this summer we saw trust is steady for farmers. But that affordability piece is really a risk. People don’t seem to understand the impact of severe weather events, labour issues, global conflict. There are some pieces where we’re not communicating or getting the story out well. Farmers would be a really good mouthpiece.”

Bruner also says perceptions of transparency have dropped notably across the board, calling the trend a “canary in the coal mine” for any trusted food system stakeholder.

“One surprising thing we’ve seen the last couple years is the environment piece is off people’s radar as cost of food goes up. There’s a general feeling there is no public incentive or will to tackle climate change. That’s one big back burner issue,” says Bruner.

“We know farmers are on the forefront of that issue, and there’s also a very low willingness to pay for sustainability. It’s very much on our shoulders … We need to keep trying to bring food prices down by being more efficient and sustainable.”

The reality of retail

Some primary producers have taken action, notably a delayed 1.77 cent per litre farmgate milk price increase from the Canadian Dairy Commission. This increase will occur in May 2024 rather than February as originally announced, in response to a Dairy Farmers of Canada recommendation to account for food price inflation.

Retailers have also been under significant pressure to reduce prices. Instances of profiteering, such as bread price fixing, have generated significant anger among Canadians.

Although such examples generate a lot of headlines, John F. T. Scott, a veteran economist specializing in the food distribution and retail sector and former head of Canada’s largest retail grocery association, says the “number of scoundrels” who try to take advantage of Canadian consumers is pretty small.

The reality, says Scott, is Canadian grocers face fierce competition with one another to offer the best quality and safest food, for the lowest price, to Canadian consumers. Each company is competing to acquire product for less cost. From labour issues to fuel costs, a plethora of other factors have contributed to higher prices, which are passed onto the consumer.

Looking ahead, this trend will be hard to buck beyond a handful of seasonal items. He reiterates some retailers are “going hard on value discount,” which indicates the industry knows things are hard and long-term management strategies are needed.

“These things are very complex. Rebuilding trust, the simple answer is for retailers to provide consistency and value. If you’re consistent in values, you’re ultimately known and trusted for that,” says Scott, adding some of the fallout between grocery retailers and the wider Canadian public is also a result of “political opportunism.”

He believes federal government demands that retailers stand before a committee and reveal their merchandising plans is a ludicrous and unnecessary action based partly on lack of understanding about the industry.

Others in the agriculture sector are more critical.

Stewart Wells, Saskatchewan farmer and vice-president of operations for the National Farmers Union, says his organization has long been highlighting the need for greater transparency in where food dollars go, as well as a long-term trends in farm gate returns.

A research brief published by the NFU earlier this year argues data on farm gate returns and retailer profits supports three main points:

1. The gap between these two prices — farmgate and retail — has steadily widened over recent decades. While the current period of food price inflation is particularly stark, the underlying problem is a chronic trend that started long before the COVID pandemic, the war in Ukraine, and other recent supply chain disruptions.
2. Supply management is not the cause of food price inflation. Price increases are occurring in both Canada and the United States for both supply-managed and non-supply-managed goods. In fact, supply management is functioning as designed to avoid drastic changes in food prices.
3. The real causes of food price increases are retailers and processors taking ever-larger portions of Canadians’ food dollars. These trends are made worse by increasing corporate concentration, where a handful of large companies exert their power over markets.

“Proportionally over time the price to consumer is continually going up and the share of the food dollar going back to farmers has been continually going down. It’s a long-term trend,” says Wells.

Regarding public perceptions of farmers specifically, he doesn’t believe there has been a palpable change or increase in frustration or mistrust.

“But there certainly is a lot more interest in where the food dollar is going. How is it shared throughout the system? We are completely in favour of that. We are in favour of transparency. I’m not sure the average consumer would know the NFU has been advocating for this transparency for decades.”

What does “trust” really mean?

From a more macro level, Scott says food inflation sits well below the general rate of inflation, although this fact can get lost in the political uproar. This perspective is shared by Mike von Massow, associate professor in the Food, Agricultural and Resource Economics department at the University of Guelph. He says some food prices have even dropped, although a wider cost of living crisis is hard to ignore.

“Even if we get inflation down to zero, which we are unlikely to do, everything is much more expensive than it used to be. That struggle many people are having will continue. It just won’t necessarily continue to get worse. I think that’s an important distinction,” says von Massow.

“The likelihood is in the long term, I think we are going to see much more up and down in food prices, and inflation generally, then we’ve ever seen before … Whether it’s a war in Ukraine or a lettuce virus in California, it’s disruption,” he says.

“We don’t have a diversified supply chain. That affects resilience. For example, if 90 per cent of lettuce in October and November comes from California and the West Coast, if there’s a virus outbreak — which we are anticipating this year — prices will go through the roof as people compete for what’s left and don’t have another supply.”

A significantly more volatile supply environment could have significant impacts on primary producers when combined with a general lack of understanding of how food is produced, and how it reaches store shelves.

Where knowledge is lacking, Canadians will fill the gaps with what they do know – that land values are very high, for example, and that farmers who complain about low commodity prices are simultaneously sitting on a lot of potential cash.

Pleading poverty when food prices are already high or not being upfront about practices that some might find hard to stomach, could induce a sense of betrayal, says von Massow.

Should this happen, the lofty position farmers currently occupy in the minds of Canadians will quickly crumble.

“Where we have risk is consumers feel pretty good about what farmers doing, but have no real idea what you’re doing. To me, we need to get into a conversation with consumers to say ‘here’s what we’re doing and why,’ and be willing to change it if they’re uncomfortable with that,” he says.

Previous changes to animal housing requirements are examples in which the agriculture industry listened to what people wanted, rather than pursuing social licence via telling the public concurrent practices were perfectly fine. This process can and must happen again, lest Canadian farmers lose their domestic customers.

Citing a particularly effective and humane industry-standard method of euthanizing piglets, Massow says anyone getting on stage in downtown Toronto to communicate it’s the best method for the task would be confronted with a very tough audience. Thinking everyone in such an environment would be OK with such practices, even if they are humane and effective, is “dreaming in technicolour.”

Inflation or no inflation, high public trust in primary producers is never guaranteed.

Wells also thinks some industry status quos could eventually come back to bite primary producers if left unaddressed.

“My experience in farm country, in small communities, is there is growing angst about the number of large operations … Where is this money coming from? This money is not coming from the productive value of the land,” says Wells.

He blames lenders and successive governments for maintaining insurance and other farm sector policies which, from his perspective, disproportionally benefit large landholding businesses.

“I am very unhappy about taxpayer dollars going to programs which increase consolidation and hollow out the small communities.”