Who Pays if Food Prices Fall

While accusations of price gouging and calls for price caps on the cost of food are generally ridiculed here in Canada, both ideas received a boost following Kamala Harris’s recent convention speech to U.S. Democrats. “To combat high grocery costs, VP Harris to call for first-ever federal ban on corporate price-gouging” said the Democrat’s news release. Republicans of course call the plan “communist”. Former President Trump ridiculed the plan as “SOVIET Style Price Controls.” In Canada Kevin Hopkins of R-Street calls controls “a grand illusion” and points to what happened in Venezuela where he claims price controls lead to wide-spread food shortages. The fallback for “serious” economists and commentators in both countries is that the grocery business operates with such small margins (1 to 2% compared to 7 or 8% in other industries) that surely there can't be any price gouging. Even so the stock market (where profits not margins matter) love the food retailers. The hard truth is that during the supply-chain crises in 2021 and 2022 retail prices rose faster than wholesale costs and the supermarket chains have been banking record profits. All the while food insecurity amongst Canadians, and food bank use, are also at record levels. Politicians in both the United States and Canada know it’s a defining issue that touches every voter. It’s very hard to know in the last few months of a consequential and very close election campaign in the U.S. whether Harris’s promise to ban corporate price gouging will lead to anything. What we do know is that the current Biden government has been much more serious about challenging the market power of large corporations than Canada’s Liberals. The U.S. Justice Department antitrust case brought against Google is one example. And what’s called the Federal Trade Commission led by the very capable Lina Khan is investigating the market power of Apple and Amazon. Here’s Khan’s take on corporate behaviour that demands investigation: “We focus on how companies are behaving. Are they behaving in ways that suggest they can harm their customers, harm their suppliers, harm their workers and get away with it. And that’s how the “too big to care” approach is really what ends up signalling that it has monopoly power.” That just sounded so much like what we’ve been witnessing from Loblaws over the last few years. Unlike Sobeys Loblaws stopped paying the pandemic bonus to its workers as soon as it could. It resisted joining the effort to develop a “grocery code of conduct” until it had no choice. Loblaws is responding to its critics. The Federal government has been trying to attract international discount grocers here to offer some competition but they’ve refused saying they can’t see any way to fight the market power of the established big 5 retailers. Loblaws has taken up this challenge just announcing plans to build 3 ultra-discount grocery stores in Ontario. The No Name stores will help consumers pay less by limiting the number of products being sold, featuring mostly house brands, in a bare bones store layout. That’s a plus for consumers, but at what cost to suppliers like farmers. Vass Bednar is the author of a forthcoming book called The Big Fix: How Companies Capture Markets and Harm Canadians. She’s written in the Globe and Mail that private label products like No Name, President’s Choice, Kirkland Signature at Costco, Compliments at Sobeys and so on have huge advantages. They’re developed from all of the customer data that’s collected. They aren’t weighed down by the extra “slotting fees and additional costs” other suppliers have to pay. She writes: “… companies don’t work as hard to steal market share from each other. Instead, they have started to steal market share from independent suppliers through the creep of private-label brands.” The best example I heard of the risk to suppliers came from a CBC report by the excellent journalist Angela MacIvor. Her story was on Loblaw’s Atlantic Superstores combining with Superstores in other provinces as a rebranding exercise. She was persistent in asking how this would lead to cheaper prices for consumers. The answer from senior Vice President Jonathan Carroll says it makes negotiating with suppliers easier.  “Our retail family got a little bit bigger. And it's exciting to see that, you know, if we're buying a palette deal, we can get a better price on that palette deal and give that price back to our consumers.” So cheaper products will not come from cutting into Loblaws’ record profits but demanding cheaper prices from suppliers. And who along that supply chain will take the hit? Who knows. Nice work if you can get it.

Farmers Caught in Crossfire of Climate Change Politics

 I often wonder if axe didn’t rhyme with tax, or a Conservative politician had initially proposed a carbon tax, would we be having a more sensible discussion about climate policies.  Justin Trudeau’s Liberals are definitely on the ropes, swinging wildly hoping to land a punch. Pierre Poilievre has done a superb job capturing the anxiety of Canadians worried about paying their bills.  Recently it’s been Canadian farmers caught in the cross-fire. The Liberals are accused of ignoring the financial pain caused by the carbon tax on farmers, and at the same time charged by environmentalists with abandoning the centre piece of its climate change policies.  Neither of these things are true.  

The latest skirmish is over Bill C-234. It began in February of 2022 as a private members bill proposed by Ontario Conservative MP Ben Lobb.  While 97% of the fuels used by farmers (for tractors, trucks, combines, etc)  are already exempt from the carbon tax, this bill would also exclude the tax on propane and natural gas used for drying grain and heating buildings.  It was supported by all Conservative MPs and also NDP, Green, Bloc, and interestingly  3 Liberal members-  2 from PEI -  Heath MacDonald and Robert Morrissey, and Kody Blois from Nova Scotia.  The 3 Liberals all come from rural ridings. Widespread support like this for an energy policy is unheard of.

The Bill went on to the Senate for final approval and that’s where more political drama played out.  A Quebec based Senator Pierre Dalphond proposed an amendment that would keep the exemption on grain and crop drying, but maintain the carbon tax on heating buildings.  For farm groups this was nothing but obstruction.  Dave Carey the co-chair of the Agriculture Carbon Alliance told the Senate agriculture committee the tax is a “significant financial burden on producers… that there are no viable alternatives” for heating and cooling livestock barns and greenhouses, or for grain drying.

The Senate came close to passing the Bill without any amendments but each time there were procedural delays. The Liberal government says their senators are independent but there’s little doubt they are doing what they can to prevent this Bill as it was originally written from becoming law.  Their argument is that new tax credits have taken the sting out of any carbon tax paid by most farms. But there’s something else at play here: the overheated response to the government’s plan for a 3 year suspension of the carbon tax for homeowners using heating oil.

I’ve written elsewhere that this suspension coupled with financial help to add heat pumps to homes burning furnace oil is sound policy to fight climate change, and the cost of living crisis faced by so many rural Canadians especially in Atlantic Canada.  The Conservatives of course smell blood.  It’s political mantra “Axe the Tax” had claimed its first trophy.  It’s evidence they say that an unpopular government is retreating on its signature climate policy just to bolster its popularity in this region.  The media piled on calling it a carve out, and have now made the Senate vote on farm energy use the test of the government’s resolve, and whether Environment Minister Steven Guilbeault can even continue in his job.

This is all politics writ large and the media is just as much to blame.  The silliest thing I saw was a survey asking Canadians if they think the carbon tax should come off what they’re using to heat their homes as well. You don’t need Captain Obvious to tell you the answer to that. People are struggling. Anything that can cut the cost of living would be welcome. What makes the furnace oil/heat pump policy different is that you’re replacing by far the dirtiest and costliest heating fuel with new technology. It’s a much more proven method of lowering greenhouse gas production than carbon capture which the federal government is also heavily invested in. No one is condemning the Liberals for that.

And there are other warning signs that language and politics are endangering efforts to fight climate change.  There are reports from Germany that in some circles heat pumps are becoming what masks were through the Covid pandemic: a sign of government over-reach challenging individual freedom. Reporting for Politico just before German elections in October Karl Mathiesen wrote  “The heat pump, a banal piece of green home technology, was at the centre of Germany’s major political controversy of the summer — one that has helped propel the far-right Alternative for Germany (AfD) to the brink of a series of electoral breakthroughs…. When they write the book on the downfall of liberal democracy, will it begin with the heat pump?”  Yikes.

Make Bill C-234 law without amendments because farmers have no ability pass on additional costs and Canada needs to promote the food security that greenhouse production can provide.  It’s not another “carve out”. It’s the will of Parliament. It’s the right thing to do.

Politically Crass and Opportunistic, But Still the Right Decision 

I often wonder if Stephen Harper had proposed a “carbon tax” would we be having a less cynical discussion right now. The tax is dead centre in the heart of true Conservative orthodoxy, that market based decisions by individuals rather than government regulations are the best way to change behaviour and efficiently manage an economy. But no. Conservatives everywhere smell blood and will instead promise to “Axe the tax.” Replaced with what? Who knows. 

Yes the Liberals desperately need a win in Atlantic Canada to just possibly prevent an electoral slaughter in the next election. Beyond politics however there’s been a lot missing in the recent discussion. 

Steep inflation, a cost of living crisis, were never considered when the carbon tax was introduced. The market mechanism works when people with disposable incomes are encouraged to make better choices to meet important climate goals. In a reasonably humane country the carbon tax should not overtly punish or harm low income rural Canadians dependent on furnace oil, but that’s what it was doing. 

Despite the fact that the carbon tax suspension applies to all Canadians using furnace oil, there is a disproportionately large number of people in that situation in Atlantic Canada. 

There’s more. Furnace oil is the dirtiest of all fuels used for heating. And some important research by CBC Charlottetown reporter Kerry Campbell has revealed that it’s also the most expensive. Campbell discovered that to produce a unit of heat (a gigajoule) on PEI costs just over $47. The same heat unit in Saskatchewan using natural gas is just over $12. Yes Saskatchewan winters are colder but the carbon tax on this cleaner fuel is also less. 

The other part of the recent announcement (and what makes it more than just a crass political play) is a plan to help middle and low income Canadians using furnace oil to include heat pumps to warm their homes. To me this is what makes it more than just a give away to potential Liberal voters, or an inexcusable break with a plan to fight climate change. You’re replacing the dirtiest and most expensive fuel with a better technology. Period. And despite what’s been argued on some of the smartest political shows like Curse of Politics, and The Line, heat pumps are much more robust than they were just a few years ago, and capable of heating at very low temperatures. Do they completely replace an oil furnace everywhere? Of course not, but the amount of dirty furnace oil that gets burnt will plummet. And that matters. 

What about the cost of these heat pumps? Well the federal government is putting money into other technologies with similar aims to reduce carbon that have nothing to do with Atlantic Canada. Carbon capture is the most obvious. Is that a play to win seats in Alberta? (won’t work I know, and there is that certain pipeline nearing completion.) 

I think the most discouraging thing I’ve read or heard on this was from New Brunswick premier Blaine Higgs. He represents tens of thousands of rural New Brunswickers who will benefit from this, but his response was just the new Conservative mantra “Axe the tax” for everyone. Why? He told Catherine Cullen of CBC’s the House that Canada produces less than 2% of the world’s greenhouse gas production so what’s the point. It simply won’t change anything. If that’s the climate change strategy that Pierre Poilievre brings to the next election, and Canadians buy it, then Higgs is right. What’s the point.

Two Dozen Oddly Shaped Potatoes Should Not Cripple PEI's Potato Industry

 I've written several pieces on the potato wart situation on PEI. I'll include 2 that try to give a good sense of what's going on. 

 

 

In i-politics Nov. 30, 2021

PEI Potato Industry Another Victim of  “America First”


Potato wart, a fungus that poses no risk to humans but makes potatoes unmarketable, was found in 2 fields on PEI in early October.  It’s a serious pest Canadian plant health officials have successfully managed for more than 2 decades.  However on November 21st Canada’s agriculture minister issued an order preventing shipments of all PEI potatoes to the United States, and seed potato shipments to other parts of Canada.  The economic toll has been well documented and is staggering, at least $120 Million in lost sales. The emotional toll on an industry that’s struggled through 3 years of drought and difficult harvests will be enormous too.  The weather issues can be seen as acts of God, but there are human hands all over this latest catastrophe.

Potato wart is a quarantinable pest and potato industries everywhere have every reason to keep it from becoming established. There were harsh but understandable steps taken when it was first discovered 21 years ago on PEI in a field in New Annan belonging to Cavendish Farms the big french fry maker.  PEI could not ship potatoes anywhere. CFIA inspectors quickly took 300,000 soil tests throughout the province and couldn’t find it anywhere else.  It still took almost 2 months before fresh potatoes could be shipped again to the U.S., and 9 months before trade in seed potatoes restarted.  Millions of pounds of surplus potatoes were destroyed.

These pest issues get resolved when plant health officials gain confidence that their counterparts in the other country have a credible plan to prevent any spread. That’s what the Potato Wart Domestic Long Term Management Plan was designed to do.  And it’s been working. Over the last 2 decades 33 fields were identified with the wart and the potatoes quarantined. In fact there has not been one case of potatoes with wart being shipped anywhere. Never a border closure or restrictions on the movement of fresh potatoes.  Until now.

The U.S. National Potato Council isn’t shy about it’s role lobbying to promote the interests of American potato growers. “Standing Up For Potatoes on Capital Hill” is the first thing you see on its website.  In a news release it boasts that it asked USDA Secretary Tom Vilsack to suspend importation of PEI potatoes to prevent “the dire threat to the U.S. and Canadian potato industries should potato wart be spread beyond PEI.” This quote comes from new NPC president and Maine potato grower Dominic LaJoie.

It’s not surprising that Lajoie and the NPC would ask for this ban. Lajoie knows better than most that PEI and Maine are long time competitors chasing the same markets in the U.S. North East. Anything that can slow down PEI imports is a direct benefit to Maine growers.  

What’s disappointing is that Secretary Vilsack and U.S. plant health officials would agree to threaten a U.S.D.A. order to shut the border unless Canada acted first. Agriculture Minister Marie-Claude Bibeau really had no choice but to comply. A U.S.D.A. order would be much more difficult to manage.

The real fallout for Canada is that CFIA Acting Chief David Bailey had to justify Bibeau’s move by questioning the ability of the wart management  plan and his CFIA colleagues to regulate potato wart here. That’s a major setback.


The only “new” information this year was that the 2 discoveries showed higher levels of potato wart. But so what? Whether there was one or a dozen potatoes it’s the fields that are regulated. The 2 farms were already under surveillance from previous cases and the potatoes were destined for the french fry plant. Bottom line: the plan continues to work. It protects potato growers inside and outside of PEI from potato wart.

What’s harder to know are the backroom dealings that convinced Secretary Vilsack to ignore this. Was it to keep Maine Senator Susan Collins happy? She’s a veteran of potato disputes with PEI and a moderate Republican Joe Biden might need in a deadlocked Senate.  Collins will be pleased that the closure will enrich Maine potato growers given that drought in major potato growing areas in the Central and Northwest states has led to a shortage in the U.S. Of course the exact opposite will happen in Canada now with surplus potatoes driving down prices. Not a bad 2 weeks work for the National Potato Council.

Once again CFIA is doing large scale soil sampling around the province looking for wart, but torrential rain is making that difficult. Without a quick resolution (highly unlikely) millions of pounds of perfectly good potatoes will eventually have to be destroyed just as food prices are spiking everywhere. The lowly potato is easily forgotten in most Canadian kitchens but it’s the lifeblood of the PEI economy.  Trade protectionism and politics are making a very rare and well managed plant health risk an economic disaster for Canada’s smallest province.

In the Island Farmer Jan. 13, 2022

A Tough Start to the New Year for PEI’s Potato Industry

The British have a phrase that captures Canada’s position trying to fight an unnecessary, unfair and devastating export ban of PEI fresh potatoes into the U.S.: “on the back foot”.  The definition: in a position of disadvantage, retreat, or defeat.

It’s been disheartening listening to Canadian Food Inspection Agency (CFIA) officials in legislative committee hearings in Charlottetown and Ottawa say over and over that it will be the Americans who will decide when there’s been enough evidence that wart is no threat to the U.S. potato industry. CFIA’s David Bailey said "It's very difficult to give a specific sort of critical path of timelines. We do not control their [U.S.] decision-making and we do not control when they have comfort, from a risk tolerance perspective.”

And for those who say that it’s Canada’s Agriculture Minister Marie-Claude Bibeau who can end the border closure consider this. The day after she announced PEI could no longer export to the U.S.,  American  plant health officials (APHIS) ordered the U.S. Department of Homeland Security’s Customs and Border Protection to refuse entry to all potatoes from PEI.  I want to see PEI’s 4 MP’s and Minister Bibeau under the whip too but this export ban won’t end until Washington officials say so.

I know many in the U.S. industry read Canadian reporting on this issue and have taken offence to what I and others have written,  that this isn’t a plant health issue but a protectionist trade war.  Of course potato industries everywhere have good reason to keep potato wart from being established, and that’s what the wart management plan has done successfully for 2 decades.  There’s simply no evidence that it hasn’t been effective.

I think U.S. officials have shown bad faith for 2 reasons:

1. In 2020 wart was found unexpectedly in 2 seed potato lots during a routine certification process. Seed potatoes are the biggest risk to move potato wart to some other jurisdiction. In 2020 the Americans allowed CFIA to follow the protocols in the management plan and there was no restriction on fresh potato movement.

In 2021 wart was found in 2 fields on 2 farms. Both farms had had potato wart before. Both farms were being tightly supervised by CFIA, and the potatoes destined for the french fry plant.  The discovery itself was not wholly unexpected and posed absolutely no risk to potato growers inside or outside PEI. And we know what happened.

The biggest difference I see is that the drought in 2020 had cut into PEI’s production and quality.  This year perfect weather led to the best harvest in history. Currency exchange rates do give PEI a competitive advantage in the U.S. market and with this wart discovery Maine and other U.S. growers saw a chance to keep PEI out. A responsive U.S. Department of Agriculture got the job done.


2. The other sign of bad faith is preventing PEI fresh potatoes from being shipped to Puerto Rico, a U.S. protectorate with no commercial potato production. We have to remember that Idaho has a quarantinable pest called potato cyst nematode.  It ships fresh potatoes  to Japan where PCN is prohibited following the exact same protocols used by PEI. Not good enough say the Americans. Not this year anyway.

Canada learned through the Trump years that playing nice when dealing with arbitrary trade restrictions just doesn’t cut it. I hope potatoes get as much attention as electric cars as Canada makes plans to fight U.S. protectionism with all the political and legal tools at its disposal. Waiting for the results of tens of thousands of soil tests going into 2023 would be throwing PEI to the wolves.

And there’s work to be done on PEI as well. The two fields with wart this year belong to Irving owned companies including Cavendish Farms. The company insists it’s following all of the CFIA rules and protocols and there’s nothing to indicate that’s not true. However I believe Cavendish officials must at least acknowledge some of the choices made over the last 20 years and work with the industry now to reduce the risk of wart being discovered again:

1. In 2000 the initial field with wart belonged to Cavendish Farms. The agriculture minister of the day Mitch Murphy insisted that the field would be planted in trees. That never happened.  Instead, and with the understanding of others in the potato industry and the CFIA, Cavendish negotiated a protocol that would allow possible replanting with potatoes after 5 years. That will change. The 33 fields found with wart over the last 21 years, including those owned by other growers, are almost certain to be planted in trees in the months ahead.

2. Cavendish Farms chose to plant riskier contact fields with Russet Burbank, the best fry potato but very susceptible to potato wart, even though the CFIA continues to suggest that resistant varieties (Goldrush, Prospect) can severely limit,  and after several decades, eventually eradicate wart.

And finally the scale of the Irving’s farming operations matters here. CFIA insists there are no new testing requirements from the U.S. now. That means it’s the multiple large farms that share equipment the Irvings own and operate that’s led to extensive levels of tracing and soil testing that the CFIA says could go on until 2023.

Let the CFIA do what it does best on the technical and scientific issues but back it up with some trade and negotiating hardball. Take ads out to inform U.S. consumers that they’re paying too much for potatoes and why. Test U.S. new potatoes in the months ahead for banned pests and diseases. Find some leverage that can threaten American producers too. It’s not nice, but unnecessary protectionist trade wars never are.

 Someone sent me a link to a very useful blog with important and helpful information on food budgeting. Thankyou Debbie Gant:

https://www.deliveryrank.com/blog/how-to-eat-healthy-on-a-budget

Water is More than a Liquid on PEI

 I didn't make a lot of friends with this one:

The Water Wheel Keeps Spinning

It was hard to think that the moratorium on high-capacity wells for farmers could get any more confusing (there are other words), but it has. In the interest of fairness a legislative committee has recommended that no rural business be allowed a new well until research has been completed to better understand the groundwater resource and how to manage it properly.  Other than pushing new businesses to towns and cities with central water systems (from high-capacity wells) this is exactly where we were two years ago when a research project was first proposed.

Politicians have so much trouble with this because the moratorium has become a litmus test for the environmental credibility of political parties. Get it wrong and the stigma of caring more about Americans eating french fries than protecting precious water resources will stick for several elections.  But now there’s a new challenge: get it wrong and risk the viability of farms throughout the province because of continuous summer droughts from climate change.

The urgency for farmers is pretty obvious, but we have to understand that for many others the moratorium is a bargaining chip, the one bit of control for those opposed to potato production. People concerned with the heavy use of pesticides, nitrate risk to streams and groundwater, soil erosion, fish kills and so on. They worry that take the moratorium off the table, and the industry will be free to do whatever it wants, including putting the province’s water resources at risk. It represents a total breakdown of trust.

There were times during the wild-west growth in potato production during the 1990’s that I shared these concerns, but several things have happened since that give me confidence that potato production is more responsible and sustainable now, and getting more so each year.

The pesticides being used are safer (not safe) and have evolved from the legacy WW2 nerve agents popular back then. The specialized sprayers many farmers use now are much more precise, and research at UPEI and elsewhere on “precision agriculture” will do even more to make sure the minimum amount of pesticide and fertilizer is used and only go where it’s needed.

There’s an even bigger hammer wielded on potato growers producing for the french fry markets.  Fast food giants like McDonalds are starting to demand proof that farming practices are minimizing harm to the environment, and there’s no question that Cavendish Farms insists that its growers must not be the cause of fish kills. It just does not want the bad publicity.

Then there’s the growing relationship between farmers and local watershed groups, the living lab research projects on commercial farms looking at new rotation mixes and use of cover crops in the fall. All are designed to lessen the risk of damaging the natural resources we all depend on.

It’s still “show me” time for so many people, but driving good and bad farmers out of business IF water could be used safely and responsibly is simply unreasonable.

Here’s the thing. The research is needed even if the moratorium never ends. There are 308 high-capacity wells already in use in the province, 36 on farms established before the moratorium, and hundreds more used by cities, towns, food processors, golf courses and so on.  We need ways to confidently judge when all these current users are taking too much water and have to stop.  This research will help us get that.

There are 2 things that matter in all of this for me. We can’t let irrigation water and fertilizer push production on deteriorating soils.  I think establishing a minimum soil organic matter level for a permit is one way to avoid this, but this has to be implemented fairly. Many will want a fixed number (3% and higher say) but what about farmers who have genuinely started the long road back to improving soils, but haven’t hit that number yet? Improved productivity would help to financially support the soil building we want to encourage.  Can we get legal commitments on proper crop rotations as part of the irrigation permitting? Hey, maybe just enforce the 3 year rotation regulations, and soil organic matter testing and benchmarks the Roundtable proposed 25 years ago.

The other issue is preventing saltwater intrusion into aquifers. This will require intelligent placing of wells away from the coast.

The controversy over increased irrigation is dragging along a lot of baggage, and we have to be willing to let some it go. Yes it began 19 years ago with Robert Irving wanting to ensure the supply of potatoes to compete in a ruthless commodity french fry market that pits PEI against farmers and processors in western North  America with virtually no environmental regulations, land ownership restrictions, and a long history of irrigation use .  But now many other farmers, including certified organic producers, are saying irrigation is necessary to maintain food production. Islanders need to know if it can be done sustainably and regulated properly.  Research will tell us that. Let’s use some common sense, please.

The Covid Pandemic.. What's it Doing to the Food Chain?

 The Covid pandemic, which this November has turned into a nightmare in so many places, continues to have profound effects on farmers and consumers. I've been doing some writing on this and wanted to add these to the blog.

Bullies in the Food System


Of course it’s the big food retailer from the Maritimes that gets it right. We may be Canada’s poor cousins but we know when we’re being pushed around.  Nova Scotia based Sobeys is the sole supermarket chain to say no to unilaterally hiking fees to suppliers. As has been widely reported Sobey’s boss Michael Medline called this move by Loblaws, Walmart, and the wholesalers for Metro “hard to believe and repugnant.”

What I found even more reprehensible was the justification by Loblaws for doing this, to help consumers during the Covid-19 crisis. “As we face pressures, one option is higher prices for customers, but we don’t want to take that approach as Canadians are facing enough financial pressures,”  Loblaw Companies spokesperson Catherine Thomas told the Toronto Star. “Instead, we’re asking primarily our biggest suppliers to help us keep prices low.” Thanks for thinking about your customers (and your shareholders), but what about all the others along the food chain who aren’t big enough to pass their costs onto someone else, especially the group at the bottom: farmers.

My blood pressure always goes up when I read stories like this, but I’m also glad that the daily, grinding imbalance in economic power that permeates so much of our economy gets fully exposed.  Walmart initiated this in July. Now the other big chains other than Sobeys are joining in arguing they need to invest a lot of money in “e-commerce, in-store and digital operations” and they clearly believe someone else should pay for the investment. Why didn’t farmers who need new equipment, or moving companies that need new trucks, think of this before? They didn’t, and they don’t because no one would pay, they’d simply look elsewhere.
I’ve argued many times before that governments in Canada and the U.S. have abandoned previous notions of maintaining fairness in the economy using anti-trust laws to scale back companies that get too big. Many argue it’s because consumers (the vast majority of voters now) have benefitted as large retailers like Walmart and the like offer extraordinary value to their customers and find their profits by squeezing suppliers instead.  This is exactly what Loblaws, Walmart, and Metro are planning to do now, and they control enough “shelf space” to pull it off.

It’s the response to the Covid-19 pandemic that’s driving this. Thankfully not so much here on PEI,  but shoppers in big cities where Covid infection rates are high like the idea of shopping for food on-line, having it delivered, or ready to pick up. Big retailers are responding and this is behind the substantial investment they say they need to make.  

Then there are the food delivery services (Doordash, Uber Eats, Skip the Dishes, etc) which allow families to order from local restaurants, again from the comfort and safety of home. And don’t forget the boxed uncooked meals that get brought to the door (like HelloFresh) and include all the ingredients and recipes for a family gathering.

Obviously all of these new services have costs, companies that expect to make money. I’m still trying to understand their impact on farmers, but with more hands out along the food chain, and companies trying to find a price point that will grow their businesses, I imagine like most costs, a lot will have to be absorbed at the farm gate.  I’m going to write more about this when I’ve done more research.

There’s much more Covid-19 fallout. Dalhousie University’s Agri-food Analytics Department (run by the very smart Sylvain Charlebois) has done important research on Canadians’ appetite  for supporting local food production. Consumers certainly realize that the pandemic has disrupted supply chains, and they like the idea of increased food security that comes from local production, but the results also point to what’s called the ‘local food paradox’.  In a country wide survey 79.5% of consumers say they’ll pay a premium for locally grown produce, but then only 25% say they actively seek out local products and consider where food is produced being important.  In other words price continues to be the main driver for most food shoppers. This is completely understandable as individuals and families struggle after Covid-19 ravaged the economy, but it sends very mixed signals to farmers.

Charlebois warns food production and distribution is a high-volume, low-margin business and doesn’t easily attract the kind of capital needed to adapt to Covid-19 disruptions. This is why most of the big supermarket chains are trying to get the needed investment from their suppliers. Sobeys has issued the challenge to governments to bring in a code of conduct to prevent this kind of predatory behaviour. Will there be others who will stand up for smaller players against bullies in the food chain, like farmers? After all that’s what we do in the Maritimes. 

Who Will Pay?

I believe we’re facing 2 disasters in this annus horribilis 2020: the worldwide pandemic, and the predicted impact of climate change. Both have human hands all over them. Both are affecting all of us, but especially the people growing our food.

The impact of this summer’s drought will be easier to grasp. It’s certainly not uniform across the province and some crops have come through OK but with smaller yields, especially ones that like heat: corn, grapes, soybean, grain crops that got an early start like barley.  PEI’s important potato crop is taking a beating, losses estimated right now at more than $50 Million and climbing. Livestock farmers will be short of feed this winter as pastures burn up, and the usually reliable second cut of hay or silage won’t happen. Crop insurance will help cover some costs.

I should add that a CTV news story on PEI’s potato biz that got a lot of play in other publications, including potato trade newsletters, had a serious mistake. It said : “Agricultural irrigation was outlawed on Prince Edward Island in 2002. It’s the only province in the country where farmers aren’t allowed to water their crops.”  Instead it was a moratorium preventing drilling for new irrigation wells that was introduced in 2002 and continues to this day. There are 35 irrigation wells already in use and 29 irrigation ponds have been constructed in the last 20 years.

The moratorium is a frustration for those farmers who have become convinced (for good reason) that all the predictions for climate change of extreme and prolonged weather patterns have come true, with weeks of drought during the growing season now the new normal.

It will require credible research (and some trust that it is credible, the hard part) to show whether there’s sufficient water for the moratorium to be lifted. It’s far past time to start.


The Covid 19 impact is harder to calculate. There are lost markets as restaurants either haven’t reopened, or have cutback on purchases because of Covid regulations and the diminished  tourism season.  The pandemic has also exposed the reliance on temporary foreign workers from Mexico and the Caribbean. It’s forced the rest of us to recognize the thousands of food service workers in processing plants, supermarkets, food distribution centres, truckers and so on. We call these people heroes, and essential, but now understand many are receiving bare minimum pay.

People working at the large supermarket chains did receive a $2.00 an hour increase in March, but once profit margins were hit,  and the supermarkets couldn’t pass on these costs to anyone else, this increase was rolled back in June.

We need to pay attention to this. Evan Fraser is the head of the University of Guelph’s Arrell Food Institute in Ontario.  He understands that to keep essential workers like the immigrant farm labourers coming to Canada, treat those working throughout the supply chain fairly, pay and benefits will have to increase, but as the Canada Research Chair in global food security he wonders who will pay these additional costs.  “I actually stay up at night worrying about this one. I don’t have an answer to it”, he told the Kingston Whig Standard.  Fraser knows low income families are already struggling and can’t afford to pay more.  “And we already have a food insecurity problem in this country that has been massively exacerbated by COVID.”

Fraser and many others are genuinely concerned about food insecurity for so many families. It’s also an argument many business writers and economists use to attack supply management. I think these are income security issues that quite rightly have also received a lot of attention during the pandemic. A guaranteed annual income or something similar is what’s needed.  Evans again, “ What we’re seeing is symptomatic of a situation that squeezes the margins at all levels and then leaves vulnerable people and vulnerable aspects (in the system) open for exploitation”.

What the roughly 60,000 temporary foreign workers now know is that their labour is critical and won’t be done by Canadians.  That leverage and efforts by unions and labour activists will lead to better working conditions and pay, both direct expenses for farmers.  Can these additional costs be recovered?
This really comes down to raw economic power, and farmers have learned over the last 20 years that with all the consolidation at the processing, wholesale, and retail levels that power is well beyond the farm gate.   

Retailers in particular (the holders of valuable “shelf space”, that crucial last link to consumers)  have been very skillful at distributing some of their costs back down the food chain.  Walmart Canada recently announced it would charge suppliers extra fees to cover $3.5 Billion it will spend on new infrastructure.  PEI’s Mary Robinson the president of the Canadian Federation of Agriculture knows what comes next “Those suppliers, who are the ones who buy raw product from farmers, they’re getting squeezed, so you can be guaranteed that that squeeze is going to be felt down the line.”

Is This a Way Forward?

It’s not likely that the founders of McCain Foods, Wallace and Harrison, would have ever heard the words “regenerative agriculture”, or even “sustainable” farming, but the company they managed for decades says it’s committed to both.  The current president Max Koeune certainly showed he understands what’s happening on farms right now “Farmers are being challenged with producing more with less while facing increasingly challenging weather patterns due to climate change and growing food in soil that is deteriorating.’’

McCain Foods will build 3 Farms of the Future, one right away in New Brunswick, and 2 more in other countries by 2025.  The announcement came in the company’s first sustainability report called “Be Good. Do Good”.   According to McCain the farms will “showcase how regenerative farming practices and the latest agricultural technology and innovations, can be implemented at scale….. (they) will also test the latest precision agriculture technologies, new equipment and the use of renewable energy.”

Regenerative agriculture has been the domain of the progressive/organic farming crowd for several years now. At its heart is the repudiation of many of the industrial farming practices now in use. It calls for biodiversity, long rotations, soil continually covered in plant material to capture and store carbon, prevent erosion and rebuild soil organic levels, protecting watersheds,  and more, so this is a substantial shift for McCain.  Some will smell more public relations than corporate epiphany, but I think the straight forward statement  by the current president, especially as it relates to deteriorating soils, shows a level of sincerity in all of this.  The company had already been promoting the use of diverse rotation mixes and encouraging “nutrient restoring” cover crops.  

Not to be outdone, Bayer announced late last month that it wants to slow down climate change by offering farmers in Brazil and the United States carbon credits for using practices that capture carbon, again using cover crops and no-till practices.  

Here’s my only complaint with all of this: a refusal to acknowledge that the deteriorating economics of growing crops for processing, potatoes for french fries, or soybeans for livestock feed, have led to the very soil destroying practices these companies now want to fix.  It’s all well and good for fast food companies like McDonalds to promote itself as demanding “sustainable” farming practices from its suppliers to make its customers feel good, but then it turns around and refuses to offer any more money for french fries siting competitive pressures.  This is really just corporate hypocrisy, demanding others in the supply chain do the heavy lifting with no acknowledgement of the increased costs involved.  A more honest effort would see customers pay a little more for fries with the assurance that the extra would get back to farmers to allow them to improve their practices. I might even buy some french fries if that ever happens.  

To its credit McCain is investing in farms to do research and demonstrate soil building practices, not just making demands of farmers from the boardroom. I hope the research also keeps track, and is honest about, the cost of regenerative practices.  That will help farmers set some benchmarks about what they need to be paid if McCain and other processors are  serious about farm practices improving.  

The costs linked to better rotations and practices are also an important part of the Living Lab research program here on PEI. Agriculture Canada and university researchers are working on active farms, interacting with the “real world” challenges farmers face. It will be interesting to see how this relationship works and what kind of constructive information can be discovered.

Farmers have to be open to new ideas too. They have to make so many decisions every day they need a strong belief they know what they’re doing. Corporate executives,  researchers and editorial writers will get paid no matter what happens so there’s always going to be suspicion they’re being pushed around by people with little skin in the game.  I do see in social media many farmers bragging about cover crops they’re experimenting with, how well their cover crops are doing. This isn’t something you would have seen 4 or 5 years ago, so I know things are getting better.

McCain president Max Koeune said one more important thing that effects us all,  “…. the food challenges we've experienced during COVID-19 could only get worse if we don't start taking action.''

I’m still waiting for someone to acknowledge that farmers, and the soils they work, bear the hidden costs of cheap fast food, so I’m going to hold back on full throated cheering for the moment, but this is a good start.  

What’s for Supper?- Pandemic Edition


“Eating is an agricultural act”. This is a statement from exceptional farmer/philosopher Wendell Berry, and has been quoted often over the last few months as farmers and journalists try to make sense of agricultural markets during and after the pandemic. What Berry is saying is that consumer decisions are at the heart of the success and decision making of and by farmers. It was felt early on here for example as people couldn’t buy french fries at shuttered fast food joints, and started loading up on bags of fresh potatoes to survive the lockdown, and PEI farmers had to adjust. Some benefited, many didn’t.  These same farmers had to wrestle with this uncertainty as costly decisions were made about planting last month. The question for so many is what happens when things get back to normal, whenever that might be.  

There have been encouraging signs through the pandemic that more consumers are starting to appreciate local food production because of genuine and ongoing worries that food supply chains are breaking down. On-line purchasing and convenient delivery or pick-up has helped expand this important market. It’s still a small percentage of consumer food purchases, and only taps into a tiny portion of PEI farm production, still very dependent on national and international markets. But it’s a start.

The time of year colours this discussion too. Spring, then summer is when fresh fruit and produce is available in abundance, and Islanders would be hard pressed not to be aware of, if not purchase, new potatoes, strawberries, sweet corn and the dozens of other crops that will soon be available.  On top of this the pandemic has forced families to shelter inside with plenty of  time to do some home cooking. Baking bread became the first pandemic food obsession, with flour mills around North America scrambling to keep up with demand. Social media has been full of people bragging about complicated meals made. or culinary disasters.  

It will be the Fall before we know if the changes we’re seeing now, more interest in local production, cooking meals from scratch, will continue when people’s lives start inching back to normal.  

Let’s face it, food processors and the big retailers do an extraordinary job providing a wide variety of food products that are as easy or as challenging as anyone wants to get supper on the table.  Will people who go back to work feel they now don’t have the time to peel carrots, bake bread, or make yogurt? Will family finances be so stretched by the end of this that cost will be all that matters? Will those who continue to work at home see an opportunity to keep cooking meals from scratch? Will the draw of a McDonald’s french fry and Big Mac be just too hard to resist?  I suspect all of these things will happen, and every decision will have an impact on farmers. Remember “Eating is an agricultural act.”  

There was some insight into this in an excellent publication on the food industry called The Counter. Reporter Karen Stabiner recently wrote about a conversation she had with Dan Barber. He owns a well-known restaurant northeast of New York City and “walks the walk” of a business person who desperately wants small and medium sized farmers to succeed.  He says things have never been better for “local” production, but he thinks this boom is just an illusion, that a bust will quickly follow. “We are looking at a precarious time for the farmers we desperately need for our health, our happiness, the health of the environment. Small farmers are the ones you want to keep around” he told Stabiner.  

Barber says small farm operations simply don’t have the labour necessary to both maintain increased field production and service the bigger demand for direct sales (farmer’s markets, CSAs, etc.) especially if new customers expect the convenience of delivered veggie boxes and the like.  “Labor costs will be very high, a lot more work for a lot less revenue. If that weren’t true, farmers would’ve figured it out a long time ago.”  

Barber says many more small scale processors and value-added businesses are needed on a regional basis to slaughter livestock, process and preserve vegetables and grains.  “This is a moment for standing up and digging in for what we want, and not allowing big food to take the market back.”

I agree that weary and broke families will be looking for some comfort and convenience when this ends, and no doubt large food processors and retailers will cater to that, it’s what they do best. I also think that as stories on the pandemic pulled back the curtain on what’s behind a 99 cent hamburger (essentially huge slaughter plants in Alberta and Ontario manned by poorly managed and paid immigrant labour) that we can look around the Maritimes and appreciate what we have here.  Yes we might pay a little more, have to extend food shopping beyond the big supermarkets, but as we do that our food dollars go first to people as committed to this region as we are. Remember “Eating is an agricultural act.”