How food delivery boxes are keeping produce prices low

By Special to MoneySense on February 23, 2016
Estimated reading time: 4 minutes

Companies are opting for local fruits and veggies over imported goods

TORONTO – Fresh fruit and vegetable prices may be climbing at a rapid rate, but the costs of food delivery box subscriptions are holding steady as economic and weather forces align to make local food a better deal. “You haven’t seen the increased prices on local foods, locally produced foods in the way you have for imports,” said Ran Goel, who founded the Greater Toronto Area’s Fresh City Farms in 2011. Fresh City Farms is one of many food box subscription companies to offer regular deliveries of pre-selected or customized produce. In January, food costs for Canadian households were four per cent higher than they were at the same time a year earlier, according to Statistics Canada’s latest consumer price index. Fruits and vegetables fuelled the hike, rising by 12.9 and 18.2 per cent respectively. This year, overall food costs will outpace general inflation again, according to the Food Institute of the University of Guelph. Fruit and nut prices will jump between 2.5 and 4.5 per cent, according to the institute’s annual food price report projections, while consumers will pay roughly two to four per cent more for vegetables. Is a meal kit delivery service right for you? » The low Canadian dollar and a drought in California and Mexico — where much of the produce Canadians enjoy over the winter is grown — are largely to blame for the situation, including the near-double-digit price tag for a head of cauliflower earlier this year. Locally grown produce, therefore, acts like a “buffer” from the steep price increases on imported foods, said Goel. Many food box providers pride themselves on including mostly local offerings that include root vegetables and apples. So their subscribers may feel the pinch less than those shopping for imported produce at grocery stores. Fresh City Farms packs its produce bags with an average 70 per cent locally grown food throughout the year. For example, the company’s boxes include potatoes — Ontario’s largest fresh vegetable crop, according to the Ontario Potato Board. The humble spud actually cost 5.4 per cent less last month than in January 2015, according to Statistics Canada. During the winter, when the growing season in southern Ontario grinds to a halt, Fresh City Farms’ produce bags have about half local, half imported goods. Then, Goel said, he attempts to select American produce sold at a good value. That means there was no cauliflower during the so-called cauliflower crisis. Goel has consequently been able to keep his food basket prices steady. The only extra cost passed on to consumers, he said, is that sometimes they receive slightly less produce than usual in their baskets — a tactic also used by other companies. A recipe for the lagging loonie? » In its food boxes, B.C.- and Alberta-based SPUD mostly removed imported fruits like mangoes, bananas and oranges, said Corbin Bourree, SPUD Edmonton’s managing director. “That’s where we’re seeing the biggest price jumps,” he said. Instead, the company has substituted those tropical fruits with more local offerings, including Canadian cucumbers and apples, so that prices don’t spike. Such defensive purchasing strategies also helped the Food Share’s food box prices remain the same, said Alvin Rebick, a manager at the non-profit organization who’s also a loyal customer. He signed up for the service to lower his grocery bills. Rebick estimates he saves about $15-20 a week on produce to feed his family. Other consumers are apparently beginning to see food boxes as a financially savvy option amid rising food costs. Fresh City Farms doubled the number of customers it serves over the past year, said Goel, which is atypical growth for the company that has been steadily increasing its subscriber base by roughly 40 to 50 per cent a year since 2012. SPUD Edmonton, meanwhile, reports a 50 per cent increase, said Bourree, in a province grappling with a significant economic downturn. But the doom-and-gloom rhetoric of rising food prices may also be spurring some customers to suspend or cancel their delivery services, said Rebick. “When people are hearing that the food prices are too high and walking into the grocery store and seeing those prices,” Rebick said, “I think they sort of shy off, and say … ‘It’s not going to be good enough or it’s going to be too expensive.’”