Grocers’ group warns of rising food costs to come

EASTERN ONTARIO — In a letter to Ontario Premier Doug Ford today, Senior Vice President of Canadian Federation of Independent Grocers (CFIG), Gary Sands, extended his concerns about an inevitable spike in grocery prices across the country. This prediction of course stems from the ongoing COVID-19 pandemic. 

Local independent grocery store operator Gordon Dean of Mike Deans forwarded Sands’ letter to Nation Valley News in hopes of spreading the news and making the public aware of the fast-approaching rise in costs. 

“I work with CFIG on a daily basis, what is being said here is correct from my view point and 25 years of doing this gig. The cost of food is going to increase very significantly to our docks in the coming weeks and months,” voiced Dean.

Sands cites a new market update jointly released by Dalhousie and Guelph Universities that foresees a sharp rise in food costs. 

See Sands’ letter below:

Dear Mr. Premier, 

With the current coronavirus pandemic presenting challenges to the public, our health care system, governments and certainly the Canadian food industry, I wanted to take this opportunity to reach out to you on behalf of the Canadian Federation of Independent Grocers (CFIG). 

Within the context of COVID-19, of particular importance is that governments understand the challenges the pandemic is presenting for the entire food supply chain, in particular for independent grocers — and what that can mean for consumers and the cost of many products in the months ahead. Canada has a closely integrated and interdependent food supply chain. Independent grocers also compete on a landscape that in this country is overly consolidated, both at the supply and retail levels. Our members also operate on overall margins of an average 1.5 percent. To stay on that uneven playing field, independent grocers in Ontario must differentiate themselves from their chain competitors. They buy local, hire local and support local initiatives and live in the communities that they serve. Independent grocers also serve a myriad of more rural communities in which no retail chain would have any interest of operating in. 

Yet they are not immune to factors that can and in the case of the coronavirus pandemic, will influence the price of many staples and products. Already the current deep depreciation in the Canadian dollar is having an impact on buying power. While gas prices have dropped, several jurisdictions from which Canadian retailers import fruits and vegetables, such as Florida and California, have declared states of emergency and are experiencing widespread and significant labour shortages. This will naturally impact costs on the supply chain. As well, we expect that there could be an increase in freight costs and we are receiving more reports of truckers refusing in the current situation, to drive and cross inter-state and international borders. This too, will impact costs on the entire supply chain. Compounding that situation, panic buying on the part of consumers, has in many cases wiped clean grocery store shelves for a number of products. The resulting increased demand by retailers, taxes the ability of the current supply chain and distribution system to catch up, which in turn, further increases costs throughout the supply chain. 

I have taken the liberty of attaching the link to an article carried in the media yesterday, which outlines a forecast of what we can expect with respect to food prices in the months ahead. It is worth noting that this forecast is usually released by the highly respected Sylvain Charlebois of Dalhousie University annually in December. However, because of the devastating impact on the food industry of the coronavirus, Dalhousie and Guelph University released an updated forecast today. They predict overall price increases, but also identify other areas where prices will rise higher than the overall target. 

As well, an ongoing concern in the context of the coronavirus pandemic that CFIG has been raising over the last couple of weeks with the Federal government and other provinces, is our concern that close attention must be paid to supply — and that price increases in the supply chain are being borne equally. Independent grocers, and by extension the customers they serve in the communities of Ontario, must have fair and equal access to supply — and this is a responsibility of both industry and governments. This is an issue that last week, Canada’s Minister of Agriculture and Food raised directly with suppliers. Without those safeguards, then independent grocers and the citizens of Ontario will be faced with disproportionately higher prices. 

I would also be remiss if I did not point out other cost impacts now being felt at the retail level as a result of coronavirus. Retailers have been incurring additional and significant costs to enhance safety and hygiene measures — installing plexiglass barriers, rigorous and stringent in-store cleaning, enhanced safety protocols, increased wages for employees, purchasing additional supplies of hand sanitizers and other protective equipment … These are just some of the new realities of retail grocery. But again, operating in a sector with margins much lower than other sectors- and so dependent on cost issues that impact other parts of the supply chain, there is no way any front line grocer can avoid passing on increases in costs. We look forward to working with your government and other governments across Canada, as we collectively meet and overcome the challenges presented not just to the country’s food industry, but to all of us as Canadians. 

These are to be sure, unchartered waters that we find ourselves, but we will get through this, together. Thank you Premier, for your ongoing support of our province’s independent grocers and the communities in Ontario that they are proud to serve. 

Sincerely, 

Gary Sands

CFIG Senior Vice President

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