In the mid-year update to its Food Price Report, Dalhousie University stated that meat prices would increase by an additional three percentage points, from December 2016 prediction of a 4-6% increase to 7-9%.
Sylvain Charlebois, lead author of the report and member of the Faculty of Management/Agriculture at Dalhousie University, said: “Farmgate prices for cattle have gone up on average by 15% but have not affected beef retail prices, at least not yet. However, we have noticed that some cuts have increased prices by as much as 20% since January. We do not expect beef prices to be affected until early 2018. It is slightly the same story for hog futures, but so far pork prices have not been affected.
Steady chicken
“Unlike beef, we could see pork prices at retail rebound much sooner. Perhaps as soon as early fall. Chicken is expected to remain steady for the remainder of the year.”
The report criticised the discrepancy between Canada’s Consumer Price Index (CPI) for April 2017, published by Statistics Canada, and its own research. The CPI reported a 0.75% reduction in meat prices compared to the same month the previous year. Dalhousie University recorded an 11% rise in meat prices between January 2017 and May 2017.
“Most would accept that the CPI is not entirely accurate. Actually, given the complexity of assessing inflation, the CPI was never meant to be perfect. However, this year, with food inflation, the CPI seems inaccurate.
“According to recent reports, since [overall] January food inflation has run anywhere between 0.1% to 0.3% per month. But with several price spot-checks around the country, food inflation in Canada could in fact be much higher than what is being reported by Statistics Canada.”
Food inflation
If the CPI had misinterpreted food inflation so far this year, pinpointing the cause was imperative, said Charlebois. “… Statistics Canada states that it reviews its methodology every now and then and does change its basket of food items every single year. Perhaps what is happening indicates that their methodology needs work.
“This also speaks to how poorly we understand and appreciate the value of data and how it can influence policy. If our food inflation rate does not accurately reflect what is happening in the marketplace, with an acceptable margin of error, it just does not serve our population well. In many parts of the country, food security is a challenge that can be handled.”
The report also downplayed the impact of Donald Trump threatening to leave the North American Free Trade Agreement (NAFTA). “The Trump administration has now completed almost five months, and little has changed,” said Charlebois. “An executive order on immigration policies failed to garner enough political support. This would mean we don’t expect to see the agrifood sector being affected.
“The American administration opted to leave the Trans-Pacific Partnerships and has threatened to leave the North American Free Trade Agreement. Washington has given both of its trading partners, Mexico and Canada, 90 days to prepare for negotiations. This is affecting the Canadian Dollar, mostly, but not trades.”