Buy Canadian economics carry a steep cost

While Canadians may embrace buying Canadian food products in retaliation for the trade dispute with the U.S., it won't come cheap

Sylvain CharleboisCanadians are encouraging one another to go “Trump-free” – that is, to shop for groceries without buying a single American product. Even restaurants are jumping on the bandwagon by serving “Trump-free” dishes.

These are interesting reactions in the face of Washington’s somewhat contradictory foreign trade policies.

In a nutshell, here’s what happened following the G7 summit: Prime Minister Justin Trudeau plays nice with U.S. President Donald Trump, Trump tears Trudeau apart on social media, Trudeau plays nice again.

While Trudeau showed very Canadian diplomacy, poise and resilience, the Canadian public seems to be taking another approach.

The Buy Canadian campaign targeting food products is nothing new. We’ve shown our solidarity in the grocery store before. Canadians tend to rally and support specific sectors when these sectors are faced with adversity.

In 2003, during the mad cow crisis in which the cattle industry took a $7-billioin hit, Canadians showed their love for Canadian beef, so much so that Canada became the first country in the world to see its domestic demand for beef go up after its first native mad cow case. But this support was short-lived compared to the crisis itself, which lasted more than two years.

Retail sales for beef in Canada remained high for about the first nine months and then decreased steadily. Consumers have busy lives, fixed habits and, most important, specific budgets. Once the media had moved on to the next crisis, most people had already forgotten there had ever been a mad cow crisis.

Many Canadian farmers ended up losing their farms because of the mad cow mess. But the public tends to react to things that are front of mind and that affect them directly.

Trade disputes are notorious for their capacity to damage economies, affecting everyone involved.

We trade for a reason. Some nations can produce certain goods at a lower price than others. A nation’s competitive advantage can both develop its own economy and serve other economies in need of innovative products they can’t produce themselves.

With food, however, innovation is not nearly as big an issue as food security. Food systems operate with the premise of serving a budget-stretched consumer. Studies show that we’re bargain hunters, whether we realize it or not.

Food is temporary and, as such, can’t help consumers integrate into a certain social class, perceptually speaking. Unlike durable products, consumers can’t show off their new jam, strawberries or freshly-purchased chicken. This is the nature of ‘cupboard economics.’ People can visit a beautiful home but never see what’s kept inside the cupboards.

At the restaurant, though, it’s different. Here, the Buy Canadian campaign is more fitting.

Patriotism ranks second to price. But this is the ideal time of year to use patriotism to justify some of our retail purchases. As Canada Day approaches, more consumers will feel the urge to buy Canadian and why not? But here again, consumers are fickle and will opt for the product that offers the best quality for the lowest price. In other words, they’ll most often choose the lowest-priced item, regardless of country of origin.

But here’s another reality for consumers to consider while on their quest to find Canadian products: The highly integrated nature of both economies plays out on our grocery store shelves. Many American food products have at least one Canadian ingredient and vice versa.

Defining what’s a Canadian product can be tricky. In the produce section, for example, it’s easy to choose Canadian items over American ones, since fruits and vegetables are clearly labelled as to country of origin. It’s much less obvious with processed goods.

And finding a maple leaf on the package is only half the battle. Many ingredients in packaged foods come from elsewhere, since regulations only require Canadian manufactured food products to undergo the last stage of processing in Canada.

If we want to be assured of buying Canadian, we should go out to eat Canadian more often or buy fresh products in the grocery store. Kudos to those Canadians willing to do so.

However, if our trade war with the U.S. escalates, not only will we not have a choice in buying Canadian, it will also cost us a lot more to feed ourselves.

Sylvain Charlebois is dean of the Faculty of Management and a professor in the Faculty of Agriculture at Dalhousie University, senior fellow with the Atlantic Institute for Market Studies, and author of Food Safety, Risk Intelligence and Benchmarking, published by Wiley-Blackwell (2017).


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