Learning from the past
Back in 2015, the annual Food Report by the University of Guelph showed sharp rise in the costs of fruits and nuts and vegetables. However, prices exceeded expectations. The report forecast a rise in fruit and nut prices between 3 to 5 per cent. In reality, prices actually shot up by 9.1 per cent.
It was a similar story with vegetables in 2015 as well. Forecasts placed the rise in costs between 5.5 per cent and 7.5 percent. However, the actual rise in cost was 10.1 per cent, according to the report.
Many of the reasons for the rise come from a poor Canadian dollar exchange rate. According to the Guelph report the Canadian dollar took a dive in 2015 and did so sharply before any importers could hedge against our currency.
The report also cites another problem with fruits and vegetables. A key issue is that produce doesn’t really have any substitutes if you aren’t eating meat. So, many consumers will continue to eat the vegetables and the costs as well.
The graph below based on the annual Guelph Food Report and illustrates how prices aren’t rooted in certainty and can be quite volatile from one year to the next.