Globe reporter Heather Scoffield was on-line today to discuss her article last week
The rising price of a cheaper grocery bill
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Ms. Scoffield writes in her article: "The portion of disposable income that Canadians spend on food has slowly eroded over the past decade. In 1997, Canadians put 12.5 per cent of their spending money towards food. Today, it's about 9.25 per cent . . . But a smaller and smaller portion of that is going to farmers. They are reporting the worst three years in recent history in terms of farm income."
Ms. Scoffield covered fiscal and monetary policy for the Globe and Mail's Ottawa Bureau before becoming the newspaper's economics reporter in Toronto last year.
She has written extensively about how public policy affects business and the economy.
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Michael Snider, globeandmail.com: Hello everyone, and hi Heather, thanks very much for joining us today. Last week you wrote about Food Freedom Day, the day when the average Canadian has made enough money to cover the cost of food and non-alcoholic drinks for an entire year. While that sounds great for consumers, I gather the occasion holds less allure to farmers and retailers. I'm wondering if there's a breaking point somewhere down the road, when cheap food actually prices farmers out of the market.
Heather Scoffield: That's already happening. Stories about farmers abandoning their businesses, or having no one to pass them on to after they die, abound. Farm output has been growing in Canada, but the number of farms have been dwindling. It's all about economies of scale now. More and more, it seems the only farms that can stay afloat are the really large enterprises -- unless, of course, a small farmer finds some type of niche or value-added product that can keep him or her in business. Farmers say they've just experienced the worst three years in recent history, and next year isn't looking much better. It's not all because of cheap groceries, however. It also has to do with rising costs of energy.
Patrick Cummins from St. Stephen Canada writes: Why not remove all subsidies, dismantle all supply management monopolies, tax subsidized imports (at say 3x subsidy) and let the market take care of itself.
Heather Scoffield:Taxing subsidized imports is not really letting the market take care of itself. It's putting up a protectionist barrier that the trade lawyers and the World Trade Organization would have a heyday with. Plus, there are so many subsidies embedded in the global food trade that it would be next to impossible to nail down how much of the sticker price is a subsidy. And there's the broader problem of global prices that Canadian exporters have to face. Those global prices are lower than they normally would be without the massive agricultural subsidies offered mainly in Europe and the United States. An unsubsidized Canadian farmer would likely find it difficult to compete.
That being said, there are some countries -- notably New Zealand -- that have abandoned subsidies and left the farmers to figure it out on their own. In Canada, I doubt such an idea would fly. While the new Tory government does want to make the Canadian Wheat Board a voluntary endeavour (it's mandatory for now), it has made it clear than any major reduction in farm subsidies is not on the agenda for now.
Colin Ellard from LaHave Canada writes: A box of cornflakes = $3.50. 11 cents to the farmer. 3.5 cents to the grocery store. Can you outline for us where the rest of the money goes? It seems that somebody's doing well. Also, can you comment on the impact of organics on the food business? It seems to be an area of strong growth in Canada (judging by changes in grocery store offerings in the last few years).
