'Its going to be nuts': Food producers in York Region grapple with skyrocketing costs

Feed, fertilizer, gas and packaging price increases have hit local producers such as Smalley's Produce and King Cole Ducks in recent months

yorkregion.com
Simon Martin
March 21, 2022

Sticker shock is what a lot of people are experiencing at the grocery store at the moment, but it’s also what farmer Michael Smalley sees operating his Smalley Produce business specializing in potatoes on Herald Road in Mount Albert. The cost of food isn’t going down any time soon either, he said.

“Its going to be nuts,” he said. “Fertilizer is going up 30 per cent, fuel is probably up 40 per cent.”

In Smalley’s world, the cost of everything needed to operate his business has increased in the last year. Rent on land, packaging is up 30 per cent; it’s hard to know where it stops, he said. “It’s a snowball right now. I have no idea what’s going to happen, the cost of production is escalating so fast.”

While the market for some products was already inflated due to COVID-19-related shortages, Smalley said the Russian invasion of Ukraine has had a tremendous impact on fuel and fertilizer prices.

It's much the same story for sisters Patricia Thompson and Debbi Conzelmann at King Cole Ducks in Stouffville.

“The last couple of months, the increases have been coming fast and furious,” Thompson, King Cole Ducks vice-president of sales said. Conzelmann, who is the CEO, said the biggest impact is feed cost, which has gone up 35 per cent from last year. Energy expenses including gas have increased 48 per cent over the last year for King Cole.

The cost of boxes have increased substantially. King Cole ships duck feathers overseas, and the cost of a shipping container has quadrupled.

Due to the fact that King Cole is a vertically integrated business, they are able to control a few more things in process and have been holding off on price increases at this point, but if the cost of goods continue to increase as it has been, Thompson said producers will have little choice but to increase priced.   “It’s particularly tough because the last couple years have been difficult with COVID,” Thompson said.

There are a number of pressures that can affect food prices: labour shortages, minimum wage increases, energy shortages and inflation are just some. Usually one or two of these factors can pinch food retailers; right now, they’re all occurring at once.

“Every single type of issue that could have an impact is all happening at once, simultaneously,” said Giancarlo Trimarchi, president of Vince’s Market, which has three locations in York Region as well as one in Simcoe and Uxbridge. On Feb. 1, Trimarchi was shocked to find that dairy was up eight per cent and butter a whopping 12 per cent.

“There’s been a ripple effect through the entire economy; yogurt could go up 10 to 12 per cent,” he explained.

What happens next is a difficult balance for grocery stores. Vince’s, for example, has not changed its milk prices, so the store is losing money with each bag or carton that leaves the store.

From a food insecurity standpoint, more processed foods, usually far less healthy, become cheaper for the consumer -- meaning 100 per cent yogurt prices rise, while the yogurt with extra ingredients such as chocolate chips and granola remain more stable.

“People will move into processed food because prices are proportionately cheaper. Then you want to ask, ‘What are we promoting? What are people putting in their bodies?” he questions. “That puts pressure on health; it’s a slippery slope.”

“We are waiting to see what happens,” he said. Brenda Spotton Visano, a York University professor specializing in economics and public policy who lives in Vaughan, said low-income families will be forced into unpalatable decisions.

“It doesn’t affect those with a cushion ...but people on a tight income will have to start thinking about what to spend their last few pennies on,” she said.

Spotton Visano said according to Stats Canada; inflation is up five per cent, public transit is up 11 per cent; fuel, oil and diesel are up 50 per cent.