(Montreal) Soaring grocery basket prices, record traffic at food banks, explosion in costs for farmers and processors, difficult weather conditions for harvests, filling household plates will have been a particularly arduous mission in 2023.
In the fields of Quebec, farmers are not overflowing with enthusiasm at the idea of leaving this difficult year behind them, because the next year brings just as many clouds on the horizon, believes the president of the Union of Agricultural Producers (UPA), Martin Caron.
Already, the exceptional rains of December are raising concerns for the next harvests. “It doesn’t help us to see the snow disappear and there is water on the surface. There is a risk of freezing to the ground with ice. That’s really not good for our cultures. »
Farmers have been hit hard by inflation, whether in fertilizer, equipment or worker wages. Farmers’ inputs increased by nearly 21.2% on average in 2023, reports Mr. Caron. “You have to go back to 1974 to see a figure this high. »
Like households worried as the renewal of their mortgage term approaches, farmers risk seeing their financial situation deteriorate due to rising interest rates.
He points out that the debt of farmers in Quebec has almost doubled in ten years to reach nearly 29.4 billion. This weight comes at a time when the sector’s margins are under pressure, underlines the president of the UPA.
With higher debt service, he fears farmers will be forced to liquidate assets or simply go out of business. “We are currently seeing companies that are no longer repaying the capital on their loans, they are just paying the interest because they do not have the means to repay the capital. But you can’t do that in the long term. »
The year 2023 was just as difficult for food processors, responds Dimitri Fraeys, vice-president responsible for innovation and economic affairs at the Conseil de la transformation agricole du Québec (CTAQ).
He cites as examples the scarcity of labor, the drought in Europe which increased the price of oils or the strike at the port of Vancouver which disrupted the supply chain. “The supply chain is getting better, but it is still fragile. »
Mr. Fraeys, however, hopes for an “improvement” for the second half of the year due to the expected drop in interest rates. “It helps enormously to accelerate investments. If we want to improve productivity, we must invest in robotization and mechanization. So, I think there are plenty of projects that are on the table and waiting to have the necessary financing to be able to start. »
A moderation of inflation
For consumers, experts anticipate a moderation in inflation. The chief economist of Desjardins Group, Jimmy Jean, believes that inflation will moderate to an annual rate of 2% by the end of 2024.
In Canada, food inflation fell from 8.3% in June to 5% in November, according to Statistics Canada data.
The economist bases his hypothesis on indicators such as farm prices, the price of natural gas, import prices and the price of international foodstuffs. “What this tells us is that food inflation is expected to continue to decelerate. »
A group of experts, which includes researchers from Dalhousie University, the University of British Columbia, the University of Guelph and the University of Saskatchewan, also anticipates a moderation in inflation. He predicts food prices will rise between 2.5% and 4.5% next year.
Personally, Professor Sylvain Charlebois, director of the agri-food analysis laboratory at Dalhousie University and leader of the project, believes that the final result will be close to the bottom of the range, perhaps even lower.
Even though food is an essential need, consumers have resisted by purchasing different foods and reducing food waste. Result: total household spending actually decreased, even if prices increased in 2023, again according to the report by academic experts.
“I expect price wars in 2024,” predicts Mr. Charlebois. Loyalty to brands has really taken off in 2023. People are shopping anywhere to save money. To redevelop a certain loyalty among customers, brands will offer very aggressive discounts. »
The big boss of Dollarama has also noted that grocers have increased the intensity of their competition at a time when the Montreal retailer’s non-perishable foods are becoming popular among consumers, who are even talking about them on social media.
There is a limit to what the industry can do to ease the burden on consumers, Dollarama President and CEO Neil Ross warned during a conference call with financial analysts earlier in December. “It’s really a difficult situation. Manufacturers continue to push prices upwards. Retailers are doing their best not to pass the bill on to consumers, but there is a limit to what they can absorb. »
A slower rise in prices risks being little consolation for the less well off who are already struggling to feed themselves.
Around one in ten people visited the food bank network in Quebec in March 2023, according to data from the Food Banks of Quebec (BAQ), an increase of 73% compared to 2019, before the pandemic. “If inflation has decreased a little, it is because prices are increasing the same,” worried the general director of the Food Banks of Quebec (BAQ), Martin Munger, during an interview in October. The situation is getting worse. »