The surging dollar seen earlier this year has had little effect on Canadian food manufacturing profits, which are expected to increase steadily over the next four years.
Michael Burt, an associate director with the Conference Board of Canada, said the industry is not as affected by the fluctuating dollar as other sectors because it services mainly domestic markets.
“We are a fairly stable industry; people need to eat,” he said.
Rising grain prices and higher input costs for farmers and processors have been largely passed along to the consumer in higher food prices.
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While that has allowed the industry to expect annual profit increases of four to five percent in the coming years, there is much pressure to keep food price increases to a minimum.
Burt said the higher costs of grain and animal feed have been countered by lower costs in meat processing.
Producers hit by feed costs and depressed prices for their cattle and hogs are compensating by culling their herds.
“Going forward, if the inventory goes down, it becomes a negative,” he said.
Other factors affecting the marketplace include a slowdown in the economy that could see consumers buying cheaper products in the short term.
More significant for the long term is the Wal-Mart discount chain’s expanding role into food sales.
Burt said the price conscious retailer will exert pressure on its suppliers to keep prices from rising.
Health conscious consumers have also improved the bottom line of some sections of the food marketplace.
Burt said an aging population with more disposable income is seeking better products and is willing to pay more for them.
He said current food trends include flat sales for meat and declining per capita consumption of dairy products, with the exception of newer yogurt products.
In past years, the Atkins high-protein diet contributed to a surge in meat sales, he added.
Today, the trends have moved toward eating more fruit, vegetables and fish and replacing meat with lentils and beans.
The conference board is a non-profit, independent applied research organization in Canada that publishes research and helps create networks and develop leadership skills.
