COMMENTS IN RESPONSE TO FOOD CHAIN RETAIL PRICE MONITORING SURVEY IN CANADA

Transcription

1 COMMENTS IN RESPONSE TO FOOD CHAIN RETAIL PRICE MONITORING SURVEY IN CANADA Provided by M. Zafiriou Strategic Policy Branch Agriculture and Agri-food Canada Tel : In consultation with : Linda Robbins MISB/AAFC Robert Koroluk, RAD/SPB AAFC Mitch Wensley, RAD/SPB AAFC 1. Are price formation, transmission and transparency issues along the food chain important and if so for which stakeholders and why? Yes these issues are important. As government, we have a responsibility in understanding developments arising from changing structure, consolidation, new players, mergers, acquisitions, and foreign investment affecting the agriculture, agrifood and agri-based products sectors so we can understand how these changes are impacting the structure and performance of the sector and the various stakeholders that make up the sector (ie farmers, farm input suppliers, food processors, retailers, food service, consumers, etc). Ultimately these may affect the cost, effectiveness and outcomes of our policies and programs which may require revisions to respond. We have strong Competition Policy and oversight in Canada to ensure that price fixing, non-competitive behaviour, and injury from non competitive behaviour are kept to a minimum. II. What are the three most important issues with respect to food prices that have raised concern over the recent period? 1. rising commodity prices/price volatility and their transmission through to consumers,(and affecting all players in the chain) including whether subsequent price reductions are passed through to consumers(or whether there is price asymmetry) 2. food security issues/ (affordability and poverty) in Canada as well as around the world 3. Inflation, given recent stimulus by most governments and the impact this is having on world prices including through exchange rate depreciation, especially of U.S. dollar

2 III. Have you undertaken any institutional initiatives in recent years to improve your understanding of impacts of price formation, transmission and transparency on stakeholders in the food chain? Competition Bureau is always monitoring and investigating these issues. Aboriginal Affairs Canada is looking at contracting research to gain a better understanding of the structure of, and competition in, the food distribution and retail sectors in Northern Canada (north of 60). Otherwise there have been no new initiatives launched to address price issues 1. Do these involve more than one ministry or units in a ministry and if so which? (including working groups, new statistical units and special government offices and how they are administratively set up and operate. Aboriginal Affairs Canada (the former Indian and Northern Affairs(INAC)) had established a working group in 2008 to study food price availability and food security issues in the North of Canada. The group included members from Statistics Canada, INAC, Agriculture and Agrifood Canada (AAFC) and Health Canada In 2008 when primary commodity prices spiked, there was a working group established out of the Department of Foreign Affairs with members from Natural Resources Canada, AAFC and Environment Canada studying and monitoring the impact key supply and demand factors on world agricultural commodity prices. Any cross department activities in this area that would be of particular interest. The Competition Bureau, which implements Competition Policy in Canada, a Parliamentary House Committee on Agriculture and Agrifood and the provincial Ministry of Agriculture and Rural Affairs in Alberta investigated price transmission and profits in meat slaughtering around the time of the BSE crisis in Canada in The Parliamentary Senate Committee on Agriculture and Agrifood (SCAAF) looked at Competition in the Sector in 2009 including some investigation into concentration in the food chain and price determination. IV Are there non governmental institutions which are involved in the same activities (ie trade unions, cooperatives, consumer groups or business associations)? The National Farmers Union (NFU) in Canada has undertaken studies of price margins in agriculture and food in Canada (see Martz 2004)

3 V. Please describe briefly statistical and analytical activities undertaken on a regular or ad hoc basis. Please include special studies and research projects, database development, statistical analyses and other relevant activities. Agriculture and Agrifood Canada, Markets and Industry Services Branch have commodity experts who monitor and collect prices of various commodities. Much of this information is available at: Ridgetown College in Ontario collects cost of production and prices information for most commodities including the Canadian Egg Marketing Agency that are used in the determination of regulations related to the production and marketing of eggs Dairy Farmers of Canada collect cost of production and prices information for milk and dairy products to determine policies/regulations around production and marketing. Most provincial ministries collect cost of production data for benchmarking farms (ie Alberta, Quebec etc) Statistics Canada collects farm level, industry level and retail level prices for developing price indexes for raw materials, farm level, the food processing level and retail level. Canadian Agrifood Policy Institute (CAPI) has commissioned studies on price transmission: (Larue and Gervais, 2005). AAFC has commissioned research on price transmission (Bishnu Saha, 2007; Gervais, 2008) or provided input and worked with the OECD on its investigation into price transmission and market power issues in the red meat sector (OECD, Supermarkets and the Retail Meat Supply Chain, 2009) The Ministry of Agriculture, Food and Fisheries (MAPAQ) commissioned Larue et al to look into the hog processing industry in Quebec, including extent of concentration and price determination. AAFC has just launched a research project to develop a Food Marketing Cost Index, similar to the new Food Marketing Cost Index developed by the Economic Research Service of the United States Department of Agriculture. References Report of the Standing Committee on Agriculture and Agri-food, Competitiveness of Canadian Agriculture, May Saha, Bishnu and V. Mitura, Price Transmission Along the Canadian Beef Supply Chain and the Impact of BSE, Statistics Canada Research Paper. Catalogue N M- No.

4 91. Accessed at: http: eng.htm Fulton, M. Farmers as Price Takers: How Farm Returns are Established, Commissioned Paper for Canadian Agri-food Policy Institute, May Accessed at: http: Gervais, J.P, Report on Changes in Retail Buying Behaviour and the Impact on Structure and Returns in Agriculture, Prepared for Agriculture and Agrifood Canada, May 30, Gordon, D. and T. Hazeldine, Modeling Farm-retail Price Linkage for Eight Agricultural Commodities, Agriculture and Agri-food Canada, Technical Report #1/96, Available at: Larue, B and J.P Gervais, Establishment of Farm Prices and Degree of Linkage with Consumer Prices, Commissioned Paper for the Canadian Agri-food Policy Institute, May Accessed at: Martz, D. The Farmers Share. Compare the Share 2004, Center for Rural Studies and Enrichment, St. Peter s College, Accessed at: OECD. 2006, Supermarkets and the Meat Supply Chain: The Economic Impact on Food Retail on Farmers, Processors and Consumers.

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