Erna van Duren discusses her research on the Ontario food processing industry and value chains. Her research program director role is part of the OMAFRA - U of G Partnership.
CBE faculty contribute research, expertise to 2018 Food Price Report
Faculty from the College of Business and Economics contributed key research and expertise to the 2018 Canada’s Food Price Report. The 8th annual Report was released today by the University of Guelph’s Arrell Food Institute and Dalhousie University.
The report concludes that Canadians will spend more money than ever before in restaurants and on convenience foods in 2018, and pay higher prices for vegetables and fruits in grocery stores. Overall food price increases are expected to be moderate next year – between one and three per cent, in line with inflation.
The following College of Business and Economics faculty contributed to the report:
- Professor Erna van Duren, School of Hospitality, Food and Tourism Management.
- Professor Francis Tapon, Department of Economics and Finance.
- Former economics PhD student Mustafa Koroglu.
In 2018, a family of four is expected to spend nearly $12,000 on food on average – about a $350 increase from 2017. The impact of that increase will vary, depending on factors such as socioeconomic status and demographics, said study co-author Erna van Duren. “For example, in families where the income earning potential is not keeping up with the pace of inflation, it will be more concerning,” she said.
Most of the projected increase will come from dining out and buying convenience foods, the report said. Food prices in restaurants will increase at double the rate of food purchased in grocery stores. Canadian families are expected to spend eight per cent more to eat out in the coming year.
The food industry will continue to see the effects of major structural changes that began in 2016. “Food prices are being kept artificially low due to the aggressive discounting practices of the major Canadian food retailers,” said Paul Uys, Director at the U of G’s Arrell Food Institute, citing increased competition from large distributors including Walmart and Amazon, which purchased Whole Foods.
“But the aggressive discounting strategies being employed by major supermarket retailers cannot continue indefinitely.”
Increased competition from pop-up farmers markets and ready-to-eat food alternatives are also affecting the industry, “Convenience is now trumping price as a key decision factor,” van Duren said. “People are spreading their food budget around more.”
In the United States, consumers now spend equally at restaurants and at retail, and Canada is expected to reach that 50-50 mark by 2035, the report said. “This represents a seismic shift,” said van Duren. She said retailers will need to remain competitive through such strategies as aggressive pricing and more ready-to-eat options.
As well, consumers will need to make smart choices, such as shopping strategically and cooking more at home to save money, van Duren said.
The project lead was Sylvain Charlebois, Dalhousie’s dean of the Faculty of Management and former associate dean of U of G’s College of Business and Economics.