The recipe for high-priced cauliflower starts with the currency, says UBC expert
If you have gone grocery shopping recently, you may have noticed that the costs of everyday foods have dramatically increased - particularly cauliflower.
We spoke with UBC Okanagan Associate Professor of Economics John Janmaat to get some insight into the rising food prices in Canada. Janmaat teaches in the Irving K. Barber School of Arts and Sciences and researches environmental and resource economics; factors that determine water use; and policy options to encourage ways of using water. Janmaat also holds a research chair in water resources and ecosystem sustainability, jointly funded by the provincial government, the Okanagan Basin Water Board and the BC Real Estate Foundation, under the Leading Edge Endowment Fund program.
Q: Why are food prices rising? Have the prices of all foods gone up?
JJ: The market for food products is global. That means we are affected by things that affect the amount of food that is produced and the amount that other people are buying everywhere in the world. Right now, the biggest impact is from the drop in our dollar relative to the U.S. dollar. Since we import a lot of our produce from the U.S., the fact that our dollar is now worth 70 per cent of what it was three years ago means that even if nothing else has changed, produce imported from the USA will be more than 40 per cent more expensive when priced in Canadian dollars. Anything we import that is priced in U.S. dollars will have been affected in the same way, if nothing else has changed.
Not all food prices are changing by the same amount. There are other things affecting the price too. Beef prices recently rose a lot, but right now they are not going up that fast. They were rising because demand was growing faster than the size of the beef herd could be increased. It takes almost two years to turn a newborn calf into a steak, and typically more than four years if you first have to raise that calf's mother. After beef prices are high for a while, farmers will have increased the size of the herd, and then prices stabilize or fall as more cattle are brought to market.
Weather can also be a factor, such as the drought in California that meant some produce and things like almonds that came from California became quite expensive. Government policy can also have an effect. Our supply management system means that in Canada, prices for dairy and poultry products won't change quickly. Not so long ago governments began paying subsidies to farmers to grow corn for ethanol production. This drove up the price of corn and grain. So, different food products have different price changes, and these are driven by weather, changes in consumer demand, exchange rates, changes in government policy, and a host of other things.
Q: What is the real reason behind the #cauliflowercrisis?
JJ: Cauliflower is hard to grow well. I've tried it in my own garden. It has always been a somewhat expensive vegetable. Since we import most of it from the U.S., the drop in the Canadian dollar is a big explanation in the price jump. There have also been some recent health claims about cauliflower being a particularly healthful vegetable. So, demand from consumers has been increasing at the same time that our dollar has dropped. Put those together, and it isn't surprising that the price has spiked.
Q: Should we get used to $8 cauliflower?
JJ: I don't think so. So long as our dollar remains low, imported cauliflower will be expensive. However, that high price, particularly the part of the price resulting from the increased demand - those claimed health benefits - will lead more farmers to grow cauliflower. When the supply goes up, the price will go down. We can grow it here in Canada too, particularly in the summer, so when it is in season, the price will probably come down quite a bit.
Q: How does this affect local wholesalers, grocery stores, and restaurants?
JJ: It probably isn't going to affect local wholesalers and grocery stores all that much. These costs just get passed along to the consumers. They may work a little harder to find cheaper sources, if they feel doing so will increase their sales. However, it won't affect their bottom line too much. Restaurants likely won't be affected that much either, although the process is a bit different. If the menu just says 'vegetables', then they may substitute cheaper vegetables for those that have seen the largest price increase, like cauliflower. If cauliflower is on the menu, then it may be a little harder, as restaurants typically don't reprint their menu every day. However, a restaurant is selling you an experience, and the cost of the food they buy that goes into that experience is typically not all that large. Paying the chef, the servers, the rent, the cleaning staff, taxes, etc. is a big share of the cost, so again the overall impact won't be that large. If produce prices do stay high, then the next time the restaurant prints its menus, the prices will go up.
Q: Is it becoming harder to eat healthier?
JJ: I guess that depends on how true the health claims are. Kale was the super food a little while ago. Now cauliflower is big news. If eating healthy means eating that food with the latest health claims attached to it, then eating healthy has probably always been expensive. Currently the prices of fresh produce have gone up, so that part of a healthy diet is presently more expensive. However, not all produce has gone up by the same amount, so if you are wiling to change what you are eating, you can probably still eat healthy without having to buy cauliflower. Frozen vegetables, locally grown seasonal vegetables (root vegetables, squash, etc. at this time of year), can all be part of a healthy diet, and have not seen the same price increase that cauliflower has. Of course, you had better talk to a nutritionist rather than an economist to get these things right!