Tuesday, June 10, 2014

George Morris Centre: Facts or Rhetoric

George Morris Centre says that it is "Canada’s leading economic agri-food research centre."  Is George Morris Centre the leader in agri-food research, or the propaganda centre for Big Food or Supply Management ("SM") rhetoric?

Rhetoric is defined as:
"language that is intended to influence people and that may not be honest or reasonable."
George Morris Centre ("GMC") used to be part of the University of Guelph.  Today, it is registered as a non-profit charitable organization.  According to its 2013 financial report, it is operating at a $475,000 deficit on a $1.8 Million annual budget; a 26.4% deficit.

GMC writes research reports, puts on seminars, and provides speakers.  They have a significant number of talented people who don't work for peanuts.  Finding the revenue each month to keep GMC going is likely not an easy task.

To help fund GMC, they sell memberships (Individual $250/yr, Association $1,000/yr, and Corporate $2,500/yr).  Are the opinions, needs, and desires of these GMC members influencing, controlling, or tainting the research and opinions of GMC?

Is GMC an independent, unbiased, and authoritative source than can be relied upon, or a shill and propaganda mouthpiece for Big Food and Canada's Supply Management sector?

GMC recently released a new research report, titled Is Food Really More Expensive in Canada Than the US?  This report was written by GMC Staff Members Al Mussell (Senior Research Associate), and
Kevin Grier (Senior Market Analyst).  Al has a background in US dairy, while Kevin is more into meat and retail grocery.

It takes brave individuals to write about something that just about everybody "knows" to be obvious, ubiquitous, and long ago assumed to be consistently true.  What could you possibly say other than re-hash the same facts over again?

However, these two GMC researchers dove into the deep end, and produced this report.  It seems that this GMC paper was prompted by the May, 2014 Commentary by the CD Howe Institute "Sticker Shock: The Causes of the Canada-US Price Differential" by Nicholas Li.  The CD Howe report found that consumer prices are broadly higher in Canada, and Canadian food prices purchased for consumption in the home was about 57% more expensive in Canada than in the US in 2011.

GMC's comments on the CD Howe report were:
"Meats and the milk, cheese, and eggs group were observed to have the largest cost differential, at 76-77% more expensive than in the US.  [Nicholas] Li comes to a familiar conclusion- blame supply management."
GMC appears to be great friends with Canada's Supply Management system.  Perhaps GMC has a majority of its members in the SM system.  When CD Howe complains about SM in Canada, what should GMC do to help its members who use SM proceeds to buy GMC memberships?

I wonder how much in charitable donations does GMC receive each year from the Supply Management sector?  Since all of those $ eventually come from Canadian consumers of SM products, it is easy to be generous with other people's money, so I bet SM is very generous to GMC.  If I am wrong, let GMC and SM disclose the truth so that we all know.

Exactly how many consumers, poverty activists, small flockers, affordable food supporters, and local food groups buy GMC memberships?  I doubt it's a large crowd.  My guess is that GMC has significantly less than one person in this large group who buys a GMC membership.  Also, I doubt any of these people attend GMC seminars.  If I am wrong in my assumptions, let GMC disclose the GMC membership data so we all know for sure.

So GMC has an easy choice:   support GMC members, and find some way to lessen the blow from the CD Howe report.  If you can't fight it with facts, perhaps GMC can muddy the waters so that there is confusion where clarity previously existed on the US-Canada food price differential.

CD Howe used OECD data to prove its case (data that originated from each government, likely Statistics Canada in our case).

GMC used data from US Department of Agriculture- Economic Research Service and an unspecified Canadian source (I assume USDA Table 97_2012, but that hole in GMC's paper is worrisome).  GMC determines that in 2012:
"in the US, food and non-alcoholic beverage purchases consumed at home were 6.6% of consumer expenditures. Canada came in with expenditures of 9.6%. This appears close to the 57% spread from the OECD data quoted by Li."
Let's see, 6.6/9.6= 68.75% and 9.6/6.6= 145% and (9.6-6.6)/6.6= 45.45% and (9.6-6.6)/9.6= 31.25% so we have something between 69% and 31% difference, depending on how you calculate it.  Oh oh.  GMC seems to support CD Howe and their conclusion that Supply Management likely results in higher food prices.  GMC goes on to explain it away:
"According to the USDA, US household consumer expenditures were $US 34,541; For Canada it was $US 27,761. This gives total expenditures on food for a US household of $US 2,273 and a Canadian household of $US 2,679. The implication is that, over the course of a year, Canadians spent about $US 406 more on groceries than Americans did. This is just under $US 8/week, or about 18%.  The implication is that when we factor in observed differences in consumer spending for all goods, apparently the difference in food expenditures is not quite so egregious."
GMC says Canadians pay 18% more, but doesn't say 18% of what.  It is incorrect to use percentages unless you clearly state what the percentage refers to.  GMC muddies the waters, again.  Taking a guess, I find that the US$2,679/yr that Canadians pay for groceries is 17.8419% more than the US$ 2,273/yr that a US family spends on groceries; close to the 18% figure stated by GMC.

Now that we know where GMC gets its numbers from, we can look at GMC's magical thinking more carefully.

The average US household earns 24.4% more than the average Canadian household.  In spite of the average US household earning more, it spends less on food, whether in absolute US$ (15.2% less) or as a % of household income (31.25% less).  Either way, Canadians earn 24.4% less and pay 31% more for food than our American neighbours.  The combined whammy of these two factors produces a 63.3% greater impact of food purchases on Canadian family budgets (ie. 1.244 * 1.3125= 1.633).

Whenever a propaganda pusher wants to create rhetoric (ie. propaganda), changing the basis of comparison, or taking percentages is a favorite ploy.  CD Howe says Canadians pay 57% more for food that US households.  To disguise this sad fact, GMC changes the basis of comparison and takes percentages.

GMC goes on, in its Table 1, to look at 2009 expenditures for food cooked and eaten at home vs. food eaten outside the home.  Here, Canadians eat out less than our US neighbours (6% for US, 3.7% for Canadians, for a 61.7% difference) .  Everybody knows it is more expensive to eat out.  Most restaurants charge a 200% to 300% markup (eg. if the food ingredients cost the restaurant $10.00 then that meal will sell for $30.00 in a restaurant if a 300% markup is used).  If Canadians can't afford the food they need, they certainly won't be maximizing their dining out experiences.  For this 2009 data, in-home and out-of-home food is 14.6% for the US, and 15.3% for Canadians, so Canucks pay a grand total of  4.79% more that our US neighbours.

GMC then concludes,
"In other words, it suggests that what Canadians and Americans spend on food in total as a share of consumer spending is about the same."
There is still a 4.79% difference in this 2009 data, which is dismissed by GMC as a triviality, so close to equal that GMC dismisses it as zero.

A 4.79% price difference to frugal Canadians is far from zero.  Have you seen how far Canadians will drive to buy gasoline at just 0.1 cents per litre cheaper (ie. 0.1 cents is a 0.069% price savings at 140.0 cents per litre)?

Of course, the data in GMC's Table 1 is 2009 data, 5 years old.  Does the CD Howe data of 2011-2012 suggest that things have gotten a lot worse for Canadians in those 3 intervening years?

Graph from Page 4 of GMC's Report, showing price trends in US and
Canada for food and all items purchased by households
Above is a graph taken from GMC's report.  We can see that all prices were indexed as of 2002 (ie. set equal on the index as of 2002).  From that starting point, US food prices increased the most, followed by Canadian food prices.

When you start with a small number (ie. US food prices), the same increase creates a huge percentage increase, as we see here for the US food price index.  For example, changing from 1 to 2 is a 100% increase, but to change from 100 to 101 is just a 1% increase.  This is just another propaganda trick.  I'm not fooled by GMC's slight of hand.  Were you?

Let's look at something that GMC exposed by their graph, but didn't discuss.  Since 2002, Canada's all item prices increased by about 22.5%, but Canadian food prices went up by about 32.5%.

I assume that "all items" includes food, so if we were to compare "All items except food" with "Food", we would get even a bigger price differential.  We will ignore this effect for now, but realize that the magnitude of the screwing revealed below is even worse than we state here because of this issue.

When we look at the relative price changes, the 2013 Canadian indexes 32.5% (Food) vs. 22.5% (All) is a 8.16% difference for Food Vs. All.  For the US in 2013, the price indexes are 34.8% (Food) vs. 29% (All), which is a 4.5% difference Food Vs. All.

In summary, everything was set equal in 2002, then US food went up 4.5% more than all other US consumer prices.  For the same period, Canadian food went up 8.16% more than all other Canadian consumer prices.  Therefore Canada has had double the price inflation rate differential (ie. Food Vs. All) of what the Americans experienced.  I would suggest this is an apples to apples comparison that clearly shows Canadians are being screwed for food prices.

Just as CD Howe reported, I agree with CD Howe that chicken, eggs, dairy, and turkey represent the leaders in the screwing of Canadians for food prices.  That means Supply Management causes or significantly contributes to the screwing of Canadians for food prices.

How can the same data be used to draw totally different conclusions?  I would suggest it is because a twisted tale is being created by a propaganda shill mouthpiece in one case.

Is this example enough to clearly show GMC's bias?  Are we done here?

Perhaps GMC is in a funding crisis because they are on the wrong side of the issues.

Perhaps if GMC was seen as a protector and defender of all Canadians, then all the governments, citizens, and the entire agri-food industry would support them and take them seriously.

GMC has done great works for Canada and Canadians in the past.  Perhaps the Board of Directors of GMC should re-read the bio of their namesake, George Fletcher Morris (1910-1999)  and determine if he would approve of this GMC report and its obvious bias against the 38 million Canadian consumers, and in favor of GMC's friends, the Supply Management millionaires.

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