Pessimism throws a wet blanket on what should be food heroes

Producers and the public don’t always agree. But lately, they’re united in their struggle beneath the weight of a heavy, wet blanket of pessimism, leaving them uninspired and lacking hope as the New Year unfolds.

Consider how things have changed since a promising spring and summer. Back then, supply chains were starting to recover, trade and travel had resumed and optimism was in the air. On the farm, record yields were forecast for some commodities. Equipment sales were strong. Farm visits returned and farmers’ markets thrived. 

Producers had come out of the pandemic as heroes, feeding the world with grace and cool heads.

But it’s a different story today. Adverse weather, labour shortages, inflation and of course the Omicron variant have taken a toll on confidence and optimism, on and off the farm. 

For example, in December, a Gallup poll showed that although financial markets were holding steady, Americans feared a stormy horizon. The Gallup Investor Optimism Index, which checked in +39 in the summer, fell to +10 as the year end loomed.

Nearly half of Americans said that price increases were causing their family some degree of financial hardship. One in 10 adults described inflation as causing "severe" hardship that was affecting their current standard of living.

The same went for producers. The DTN/The Progressive Farmer Agriculture Confidence Index survey, released the same day as the Gallup poll, showed U.S. farmers were uneasy about the uncertainty of the wider economy. 

As a result, the confidence index fell 18 points from pre-harvest levels, and nearly 50 points from the optimism that was emerging a year ago.

That survey said farmers specifically voiced concerns about input costs and inflation, huge issues on both sides of the border.

It’s easy to understand why consumers are on edge. In December 2021, Statistics Canada announced that the Farm Product Price Index had increased nearly 25 per cent from September 2020-21, mostly because of higher prices for both crops and livestock and animal products.

Fruit prices were up too -- nearly 10 per cent – which would normally make economists and food price forecasters wring their hands. 

But in December, when the annual Canada Food Price report predicted consumers would pay $966 more for groceries in 2022, headlines shifted from specific commodities to a look at the overall picture – which in the face of inflation was grim and confusing, as consumers wondered where in the supply chain their money was headed.

In the U.S., producers are taking measures to make sure consumers understand the big picture. In November, the National Farmers Union stepped up a campaign called Fairness For Farmers. It’s designed to raise awareness of how consolidation is affecting producers, by driving up the price they pay for inputs.

They point out how major commodity suppliers’ ownership -- along with competition -- has shrunk drastically. For example, they say, a scant four companies now control 85 per cent of beef packing, 85 per cent of seed corn production and 84 per cent of the pesticide market. 

And since the 1970s, 40 per cent of flour mills and nearly 90 per cent of meat processing facilities have closed their doors, unable to compete with the giants.

It’s a real issue on farms. The DTN/Progressive Farmer confidence survey showed 82 per cent of producers were either concerned or very concerned that rising input costs would eat into profits in 2022. 

The survey also showed that farmers who were asked how they’d likely be faring a year from now gave answers that produced a record-low score. So just imagine how all this is affecting farmers’ mental health, which we know is a growing concern everywhere. 

U.S. President Joe Biden gets it. In December, he convened a meeting of decision makers from major retailers, consumer products firms and grocers, to see what’s up. The emphasis was on understanding how everyone could work together to keep store shelves stocked for Christmas.

But farmers weren’t going to let the opportunity pass to remind him how competition was hurting everyone. Through the Fairness For Farmers campaign, they urged the President and other lawmakers to improve price discovery and ensure fair and accurate market information. Facilitate competition and more diverse market opportunities, they added, and reinvigorate antitrust enforcement. 

Canada needs to pay attention to what’s going on. When the Farm Product Food Index was released in December, the federal, provincial and territorial agriculture and food ministers were still exhaling from the landmark Guelph Statement they’d created the previous month, a document outlining their joint priorities for the next several years.

Indeed, that initiative was a big accomplishment, one for which they should be lauded for their vision and cooperation.

Now, though, they need to take a deep breath and go back to the drawing board.

The ministers must figure out how they’ll lead the country through this new reality: escalating food costs, consumer fear and dramatically rising input prices for producers. 

This situation won’t simply work itself out, and it’s throwing a damper on the whole food system, at a time when we should be celebrating its resiliency and success. 

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Publish date: 
Wednesday, December 29, 2021

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