Get ready for a price war at the grocery store
Analyst to speak on food fight at Farmtech
Wednesday, Jan 23, 2013 06:00 am
Farmers should expect for a food fight at the supermarket now that Target’s coming to town, says an upcoming speaker at a major ag-tech.
About 1,700 people are headed to the Edmonton Expo Centre next week for the FarmTech 2013 conference. Billed as the premiere agricultural conference in Canada, it features about 50 industry experts and plenty of exhibitors who will hold forth on the latest environmental, economic and technological trends in farming.
This year’s show sold out in record time, said show co-ordinator Rick Taillieu, and should have record attendance. “It’s a one-stop shop to get a pile of high quality information on technology, the environment, agronomy and management,” he said, explaining its appeal, as well as a chance to network.
This year’s highlights include talks by ATB Financial economist Todd Hirsch, Hockey Night in Canada’s Ron MacLean and David Chilton, author of The Wealthy Barber, Taillieu said. There will also be many sessions on marketing, crop diseases and succession.
“Last year was a very, very unusual year for growing conditions,” he noted, with parts of Alberta parched and others soaking wet, so many farmers will want to hear about upcoming diseases and bugs this year.
We’ve also had a seismic shift in cereals with the end of the Canadian Wheat Board’s single-desk market, he continued. “Two years ago canola and pulses were your only cash crop. Now, wheat is (one).” That has likely caused many farmers to shift their rotations.
Dennis McKnight, food and agriculture analyst and president of The Innovators marketing company, will be speaking on how farmers can keep out of the coming food fight between Target and Walmart. The new Target outlet in St. Albert is expected to open this summer.
“Alberta is a very, very lucrative food market,” McKnight said, having led the nation in the growth of food and drink sales for the last five years and accounted for about an eighth of all food sales in Canada ($11.2 billion out of about $80 billion).
With Target moving into Canada, McKnight predicted a price war as it and Walmart try to undercut each other. Since most food sellers run on three-to-four per cent margins, that’s going to put a tight squeeze on stores like Safeway and the farmers that supply them.
“We’re going back to the days of the general merchant,” he said, referring to the success of big-box, sell-everything stores like Walmart. Loblaws was getting into clothing sales, for example, and drugstores like Shoppers Drug Mart are getting into food. “When you look at the future, will you see a Safeway or a food store anchoring a major shopping centre? I doubt it.”
If you’re a commodity farmer trying to make cheap beef or pork, he continued, this means even less profit for you as prices plunge and the dollar rises. “Our whole way of competing has to change.”
Instead of competing against cheap producers like Brazil, McKnight argued, Alberta farmers should go upscale.
“Not everyone buys on price,” he said, and there’s a big demand for locally grown food. People want to know where their food comes from, and will pay big money when they can find out – farmers’ markets made about $1 billion last year in Canada.
Some producers are catching on. Spring Creek Ranch in Vegreville is doing well by selling high quality, hormone-free beef, for example. Maple Leaf’s Lethbridge plant now specializes in barley-fed pork for Japan, which fetches a premium price.
“Farmers are sexy again,” McKnight concluded, and farmers who can market their local roots and unique traits will succeed.
FarmTech runs from Jan. 29 to 31. Visit farmtechconference.com for details.