Ontario egg farmers are lowering prices, but you won’t pay much less at the supermarket — here’s why
Canadians growing increasingly alarmed by the soaring cost of food will be relieved to hear the price of one critical food staple - eggs - should be heading down. But consumers may not see much difference at the supermarket checkout counter - and the reason why is a window into why inflation is so difficult to tame.
The good news is Egg Farmers of Ontario, the marketing board that sets the prices for eggs in the province at the producer level, recently decreed that prices are coming down after huge hikes over the past year. Late in December, the board sent out a price determination order stating that standard prices at the egg-farmer level will decrease by 14 cents per dozen effective Jan. 29.
The bad news is that just two weeks after the order came out, Canada's largest egg producer and supplier, Burnbrae Farms, announced that it will be raising the prices it charges supermarkets and other retailers for eggs by 10 cents a dozen as of March 19, effectively passing along just four cents of the decrease to consumers. (Burnbrae will lower prices by 14 cents at the end of January to reflect the Egg Farmers of Ontario market price, before raising them again mid-March.)
The reason? Burnbrae says that its costs as a processor and distributor are going up.
This price (increase) covers costs to our business including supply chain costs, labour, packaging, fuel, heat and power, repairs and maintenance, administrative costs, etc. all of which have increased dramatically in the last couple of years," said Margaret Hudson, president and CEO of Burnbrae Farms, in an email.
Some retailers, who have long borne the burnt of consumer ire over rising food costs, say they are angry and confused.
There's a contradiction between what the marketing boards are saying and what the processors are saying. Egg farmers, through their marketing board, are seeing their costs are going down," said Gary Sands, senior vice-president of the Canadian Federation of Independent Grocers.
But despite that, egg processors are notifying grocers on the retail level that they're increasing prices ... Our independent grocers see the price determination and they're scratching their head and wondering what's going on, why are prices going up?"
Sylvain Charlebois, head of the AgriFood Analytics Lab at Dalhousie University, agrees with Sands, adding the problem is there's no regulating body for eggs once they leave the farm.
When farm-gate prices drop and retail prices increase you have to wonder what's going on there," Charlebois said.
Canada's supermarket chains, including Loblaws, Sobeys and Metro, are facing mounting scrutiny with critics saying companies are hiking prices faster than necessary and profiting from the worst food inflation consumers have seen in decades.
The divergent price messages from the EFO and Burnbrae Farms indicate a need for more transparency in Canada's supply-management system, Charlebois said. That system, which has strict production quotas, has most recently come under fire for artificially boosting Canadian milk prices.
The Canadian Dairy Commission - a federal Crown corporation that sets the price for dairy basics - said in November that the wholesale price of milk will increase by 8.4 per cent next month, while butter will increase by 12.4 per cent in February. How the CDC calculates these rates has been criticized for being opaque.
It's easy to blame grocers for price increases, but there's lots going on up the food chain that we need to look into," Charlebois said.
Supply management is supposed to bring stability and fair pricing for consumers but there seems to be a tug of war going on within the supply chain, and consumers are the ones who will fall victim."
Ghada Alsharif is a Toronto-based business reporter for the Star. Reach Ghada via email: galsharif@torstar.ca