University of Guelph Study finds high produce prices affect consumer habits

supermarket vegetables

(Photo: Ryan J.Lane via Huffington Post)

A recent study from the University of Guelph has revealed that the continual rise of produce prices are driving consumers to make changes in their diets. The study was conducted by  Sylvain Charlebois, who was a UofG professor of marketing and consumer studies at the time of the study, along with marketing and consumer studies professor Lianne Foti and U of G’s food institute, Maggie McCormick.

In the past year, produce prices have risen substantially with an average increase of 14%, while fruit has risen 11%. This has driven consumers to alter their buying habits and even cut back on the amount of fresh fruits and vegetables they buy.

“In some locations, Canadian consumers have seen prices jump by more than 25 per cent,” Charlebois told University of Guelph News.

The trio of researchers ran a survey-based study last May of 1000 people across Canada. Factors such as socioeconomic status, gender, age and education were considered in addition to behavioural aspects.

Over 26% of participants reported reducing their intake of fruits and vegetables while 66% said that cost prevented them from buying one specific fruit or vegetable. Around 45% stated they had replaced fresh fruits or vegetables with juice, frozen fruits or vegetables.

“This study demonstrates some level of vulnerability by consumers when looking at vegetable and fruit affordability,” Foti explained. “It’s reflective of how vulnerable the Canadian economy is to macroeconomic conditions affecting the price of imported food products.”

The research was presented on June 6th, at the annual Food and Agriculture Business Seminar.

Read more about the study here.

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The Beauty of Ugly Fruit

There has been considerable attention given to Loblaws’ recent announcement of their “Naturally Imperfect “product line.  Naturally imperfect will introduce smaller or slightly misshapen food into grocery stores at a discount.  The idea is to reduce the amount of waste upstream in the value chain and to improve access to these products at lower prices.  Seems like a win win!   I’ve had the chance to speak about it several times and, as always, things become clearer after you’ve spoken so a blog post seemed like a great idea.

A Great Idea

Reducing food waste is a great idea.  Its not clear how much of some of this product is getting thrown out versus diverted into processing.  That’s why we need more research on food waste at all stages of the value chain (a shameless plug for our ongoing project).  What is clear is that some small produce is difficult to put through processing and is thrown out.

Improving access to affordable fruits and vegetables is a great idea.  The price for perfection is higher.  While we spend a lower proportion of our income on food than almost anywhere else in the world, we do have food insecure people and others who perhaps eat less fresh healthy produce than they might if it was more affordable.  Why should we hold everyone’s diet hostage to a misguided standard of beauty.  The nutrition is identical.

Raising awareness of food waste is a great idea.  Our research suggests that the more people think about food and waste, the less food they waste.  Just talking about the issue like this has the real potential to reduce household food waste – which we’ve measured at 4.5 kg per household per week.

Is there a downside?

There are folks at some farm organizations saying that this initiative has the potential to erode the prices they receive for their premium produce.  That might be true but its not clear that it will happen.

1 – The economics of this aren’t as clear as the critics might suggest.

  • if consumers don’t buy it, it won’t matter.  I hardly expect that everyone will buy naturally imperfect so premium products will still exist.  If lot’s of them buy it demand will drive the price up.
  • When prices are lower, total demand increases.  The increase in total demand may increase revenues rather than decrease them.  Its not clear what will happen but this is as plausible as decreased revenues.
  • Even if prices come down, the cost of production includes the produce that is thrown away.  Including that in the total sales means revenue should increase.
  • If the price for imperfect food that is not wasted is too low, the product will get diverted to processing markets rather than retail.  The market will figure it out.

2 – This is not the first time I’ve had someone say we should continue to waste food to support farm returns.  I had someone stand up once at a presentation and say we shouldn’t encourage household food waste reduction because it would lower demand and cost jobs and revenue in the production and processing sector.  Its heartbreaking to consider that we would produce food to throw out just to keep people employed.  Even if prices come down (which I argue above is not a sure thing), do we really want to use resources to produce product just to throw it away?  Consumers can and will make the choice.  Change happens.  This position is indefensible and unsustainable.  I can’t imagine making the argument in any other sector.  We should scrap cars off the assembly line just to keep people in Windsor and Oshawa employed?

We should celebrate this initiative.  We should buy these products.  We should expand it to other product.  We should expand it to other stores.  Everyone, including producers, processors and retailers will be better off in the long run.