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Agriculture

$1.75B in mystery money could let Ottawa to start compensating farmers soon

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  • OTTAWA — The federal government says it plans to spend $1.75 billion by March without having said what the money is for, though at least some of the cash is likely to go to farmers hurt by new trade deals.

    The government remains tight-lipped about how it will use the rest of the “non-announced” spending it allowed for in last week’s fall economic statement.

    In all, the government has made room for $9.5 billion worth of still-to-be-unveiled commitments over the next six years.

    A government source says some of that will go to dairy, egg and poultry producers, whose protected domestic markets were opened up to more foreign competition under new North American and Pacific Rim trade deals. The source, who was not authorized to discuss the matter publicly, spoke on condition of anonymity.

    The fall statement said the government is still talking with farmers and processors about compensation for the new United States-Mexico-Canada Agreement (USMCA) and the recently ratified Asia-Pacific trade pact known as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

    The negotiations will determine the size of the final package and how the money will be rolled out over the coming years.

    In 2016, the Liberal government dedicated $350 million to help dairy producers deal with the impacts of Canada’s trade agreement with the European Union. The amount included a five-year, $250-million fund for milk producers and a second program worth $100 million for cheese-makers.

    Looking ahead, Ottawa is also facing litigation related to Indigenous issues, including land claims, that could draw on some of the money.

    Most of the yet-to-be announced funding has been dedicated to the later years of the projection, with $2.1 billion set aside for 2021-22, $1.85 billion for 2022-23 and nearly $2.8 billion for 2023-24.

    One possible use for the cash: national pharmacare.

    The governing Liberals have put together a group of advisers to consult Canadians and to explore options for a national program. The council is due to report in 2019, when the topic of pharmacare is likely to become an issue during the federal election campaign.

    A spokesman for Finance Minister Bill Morneau argued the list of the government’s funding commitments in the fall update is comprehensive.

    But Pierre-Olivier Herbert noted some measures cannot be disclosed yet due to cabinet confidentiality or because ministers have yet to make a decision. Issues of national security, commercial sensitivity, or litigation or certain matters related to trade agreements must also be kept under wraps, he said.

    “The net fiscal impact of these confidential or sensitive measures is rolled up and presented at an aggregate level and will be detailed in due time,” Herbert wrote in an email.

    Thanks to the stronger economy, Morneau had more than $20 billion in extra fiscal room over the coming years to work with, compared to the forecasts in last February’s budget. But he chose to announce new initiatives — including billions of dollars worth of tax incentives for corporate Canada — that will use up all that space and then some, contributing to slightly larger annual deficits beginning next year.

    The document contained Ottawa’s long-awaited plan to help the country compete with the U.S. for investment dollars. It came in response to major American tax and regulatory reforms that many in the business community warn have eliminated Canada’s edge as an investment destination.

    The package includes new write-offs that are expected to lower federal revenues by about $14 billion over the next half-decade all by themselves.

    The fall update also contains no timeline to eliminate the Liberals’ shortfalls, which are now projected to be higher than $18 billion in each of the next couple of years.

    The opposition Conservatives and some economists have criticized the Liberals for not providing a date to balance the budget. There are warnings the government could face big fiscal challenges when the next economic downturn arrives.

    After the 2015 election, the Trudeau government abandoned vows to run yearly shortfalls of no more than $10 billion and to balance the books by 2019. Instead, it has focused on reducing the net debt-to-GDP ratio — a measure of how burdensome the debt is — each year.

    Andy Blatchford, The Canadian Press



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    Agriculture

    Average family to pay $400 more for groceries next year, report estimates

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  • The average Canadian family will pay about $400 more for groceries and roughly $150 more for dining out next year, an annual food price report predicts.

    Food prices will rise between 1.5 to 3.5 per cent in 2019, according to the report from researchers at the University of Guelph and Dalhousie University. That means the average family of four will spend $12,157 next year — up $411 from 2018.

    Vegetables will see the biggest price jumps — between four and six per cent for the category, according to the report.

    Meanwhile, meat and seafood prices are expected to fall, with the meat category to decline by one to three per cent and seafood costs to remain the same or fall up to two per cent.

    Since 2015, the team has predicted prices in those two categories would rise as high as six per cent each year.

    “This is a bit of a risk for us… We’ve never done that,” said Sylvain Charlebois, one of the lead researchers and a professor at Dalhousie University, referring to anticipating a decline.

    But the team is confident in its prediction.

    They believe there’s an oversupply of meat, he said, and Canadians are eating less animal protein. Instead, they’re showing more interest in alternative proteins, like quinoa and lentils.

    The plant-based protein trend is evident in recent manufacturer and restaurant moves as well.

    Meat processors Maple Leaf Foods Inc., for example, acquired two companies in this niche in recent years, Lightlife Foods and Field Roast GrainMeat Co.

    At the same time, fast food chains have started adding vegan and vegetarian options to their menus. A&W Food Services of Canada Inc. even temporarily sold out of its Beyond Meat patties shortly after adding them to its menu.

    Industry watchers have attributed the demand for plant-based protein to millennials, health-conscious baby boomers and concerns around antibiotic use in agriculture.

    A turning point for animal protein, though, was 2014 when beef prices started to rise dramatically, said Charlebois.

    Between December 2013 and December 2014 the monthly average retail price for one kilogram of ground beef rose more than 26 per cent, according to Statistics Canada data. For comparison, the price advanced about 3.5 per cent from December 2012-13. It reached a record high of $13.23 in October 2015.

    “It really spooked consumers,” said Charlebois, adding they started substituting plant-based protein into their diet.

    Butchers and grocers will likely take it easy on beef prices next year in an effort to bring people back to the red meat, he said.

    Consumers’ embrace of plant proteins will help push vegetable prices higher next year, as will the weather, according to the report.

    “Fruit and vegetables are some of the most perishable, fragile food products that are on the grocery shelf,” said Simon Somogyi, a lead researcher on the report and a University of Guelph professor.

    They’re particularly influenced by climactic events, like the El Nino expected to occur this winter, he said, which can result in warmer and drier conditions, and create shortages in the supply chain.

    As far as which vegetables may see the biggest increases, it’s difficult to know what produce item will become the next cauliflower, Charlebois said. The cruciferous vegetable saw soaring prices per head in 2016.

    Charlebois points to lettuce and tomatoes as possible candidates for big price fluctuations. Meanwhile, Somogyi said produce imported into Canada is more susceptible to weather events and the corresponding price changes.

    The report predicts more modest increases for bakery (one to three per cent), dairy (zero to two per cent), fruit (one to three per cent) and other food items, such as non-perishables, not covered by the other categories (zero to two per cent).

    Restaurant prices will rise between two and four per cent, according to the report, mainly because operators’ labour costs increased as several provinces and territories boosted their mandated minimum hourly wage recently.

    The researchers’ predictions for 2018 were fairly accurate. Fruit prices, which they estimated would rise between one to three per cent, stayed stagnant — the only category where they missed the mark.

    Follow @AleksSagan on Twitter.

     

    Companies in this story: (TSX:MFI)

     

    Aleksandra Sagan, The Canadian Press


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    Agriculture

    Survey suggests shoppers approve of self-checkout lanes at the grocery store

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  • TORONTO — A new survey suggests most grocery shoppers spend 32 minutes per visit and approve of those automated self-checkout lanes.

    The study out of Halifax’s Dalhousie University underscores that the “worst part” of shopping for many consumers is waiting for a cashier, says lead investigator and professor Sylvain Charlebois, who predicted even more grocery technology is on the horizon.

    The management professor says he was surprised shoppers spent such little time per visit and shopped only 1.29 times a week, noting that’s less time and less frequent than similar studies on U.S. shoppers.

    At the same time, it seems self-checkouts are becoming increasingly popular, with 25.1 per cent of shoppers “strongly agreeing” and 29.6 per cent “somewhat agreeing” that they are a good idea. Another 20.3 per cent were indifferent.

    The Grocery Experience National Survey Report took place over three days in October 2018, and surveyed a controlled sample of 1,053 people online in both English and French. The margin of error is 3.1 per cent, 19 times out of 20.

    Charlebois said the study encompassed stores that dedicate the majority of their footprint to food, including chain supermarkets, small independents, butchers and bakeries. The findings were set to be released Tuesday.

    He said shoppers seem to like variety, with the average Canadian noting they regularly visit at least two different stores.

    “It’s certainly good news for competition, for independents (and) small stores. I suspect that Canadians are curious, they want to go to a place where they can find lots of different products,” he said, adding that the survey did not ask about the types of store most frequented.

    Consumers also said they want more human interaction, which seemed to run counter to an apparent affinity for self-checkout. But it could just come down to the type of staff interaction they want, said Charlebois.

    “The end of their experience, which is probably the worst part of grocery shopping — paying for your food, waiting in line, reading the first page of the National Enquirer — those are things people just don’t want to do,” said Charlebois, whose study found 11.1 per cent of respondents always use self-checkout, and 54.9 per cent occasionally use self-checkout.

    “But when there is a situation where there’s some confusion, or consumers are a little bit lost, they want that human interaction. That’s why that assistance factor seems to be quite high.”

    Still, he notes increasing automation runs the risk of pushing consumers out of the store in favour of online shopping.

    “There’s a bit of a balance there. As a grocer you want to humanize the experience because that’s something you can’t replicate online,” he said. “And the other thing you cannot replicate online, which is actually making grocers lose sleep at night, is impulse buying.”

    About half of the respondents, 49.4 per cent, said they had never bought groceries online and were not planning to, while another 34.3 per cent said they were considering it.

    Canada’s first self-checkout lane appeared in 2000, when the technology was somewhat cumbersome, said Charlebois.

    “It’s not as bad as it used to be but there’s more work that needs to be done. I do see the day where people will be able to walk out of the grocery store without seeing someone, (without) paying anyone, basically. It would actually be withdrawn from their bank account automatically, like Amazon Go.”

    The study also suggests some urban/rural divides.

    City dwellers appear more likely to choose a store based on its ownership, while rural dwellers seem to prioritize price.

    And while just five per cent of the total sample said they currently subscribe to a meal kit service or are considering a subscription, that number rose to 60 per cent among urbanites.

    Cassandra Szklarski, The Canadian Press


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    december, 2018

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