Innovation needs fair prices to thrive

The definition of a fair price for food –and who determines that price — is elusive. There's fair to consumers, fair to processors and retailers, and fair to farmers. When one pushes back, the other one feels it.

Take consumers, for example. When they push back against prices, retailers squeeze processors.

In turn, processors squeeze farmers.

Being at the end of this scenario, and having nowhere else to turn, farmers then squeeze governments. They respond with support and bailouts.

And who do governments squeeze?

Well, they squeeze taxpayers, also known as consumers, who started the ball rolling in the first place. It's a vicious, endless circle that society tolerates because it thinks farmers can somehow produce food for next to nothing.

But some optimists believe consumers might pay extra for food with additional benefits. Indeed, that's what farmers have been hoping, as researchers keep finding new magic in conventional foods, such as whole grains, fruits, vegetables and fish. Some of the compounds in these foods and others are linked to disease prevention, even without further processing or any other enhancements whatsoever.

So, if these foods are being marketed as "health" foods, and fetch a premium for innovative processors and retailers, isn't it fair that farmers also get a bigger share for being innovative?

It's a question panellists from urban and rural Ontario struggled with at this year's Agri-Food Innovation Forum, held in Toronto last week. This year's theme was Food: A Healthy Proposition –The Appetite Continues.

Asparagus grower Brenda Lammens, chair of the Guelph-based Ontario Fruit and Vegetable Growers Association, warned if farmers are pushed to the wall on price, innovation is a non-starter.

As a profession, farmers believe in research. But if they're squeezed too much, they won't have enough money to invest in the kind of new technologies that can make their farms viable and as efficient as possible, and help them keep their prices as low as consumers, retailers and processors demand.

Ontarians were showing more support for farmers, and interest in the origins of their food, just as the recession dug in. Provincially sponsored studies showed almost everyone knew the Foodland Ontario identifier, and the local food movement was catching fire.

From a retail perspective, though, price still reigned supreme.

That may explain why Ontario produce was not and is not sold at a premium in grocery stores, despite its attributes and consumer interest. Innovation panel participant Kim McKinnon, vice chair for Ontario of the Canadian Council of Grocery Distributors, says the onus is on the agri-food industry to make a case for higher prices.

"You tell us why your products are better than (imports)," she said.

That can certainly be done. For one, local food is usually fresher. You can monitor growing practices here. Farmers in Ontario pay a fair price for labour. Supporting local farmers is like supporting local soccer teams — they're part of the community. They give back. They even shop at your store. And in farmers' case, they also stock your store shelves with products when given a chance.

McKinnon says the door is still open. She says retailers will support Canadian-grown products "unless the price is so uncompetitive it's ridiculous."

Hmm. The price of bottled water versus tap water is ridiculously uncompetitive too, and yet stores stock it and people buy it, thinking there may be some health benefit.

Overall, though, I don't think most Ontario food marketers believe they can or should compete by being a cheap alternative.

By innovating, you add value. Probably the best modern examples are omega-3 eggs and DHA milk, produced by University of Guelph researchers, sponsored mainly by the Ontario Ministry of Agriculture, Food and Rural Affairs. These products are made in Ontario, they offer nutritional benefits, they sell for a premium and they've captured appreciable market share.

At the ground level, these new ideas have one thing in common: Ontario farmers.

You can't have a food chain, let alone a value chain, without farmers' participation, determination and inventiveness.

For their efforts, they deserve, and need, a fair share of the food dollar.

About The Author

Urban Cowboy

Raising awareness and promoting dialogue about current food and agriculture issues.


Headshot of Owen Roberts

Owen Roberts is a faculty member in the Agricultural Leadership, Education and Communications program at the University of Illinois. As an agricultural journalist, he is the past president of the International Federation of Agricultural Journalists and a lifetime achievement award recipient from the Canadian Farm Writers' Federation. His programs and research papers have been recognized nationally and internationally through awards from the Journal of Applied Communications, the National Agri-Marketing Association, the Association for Communications Excellence, and others.