Fact Sheet — The Canadian Federation of Agriculture’s Calculations
Food Freedom Day – Income and Expenditure Calculations
Food Freedom Day is the calendar day representing when the average Canadian has earned enough income to pay his or her grocery bill for the entire year. As with any number, there are a variety of sources that could be used to calculate it. The CFA uses national income figures from Statistics Canada. The latest information on total national income is divided by the latest population figures to arrive at an average income per person. For 2002 it was $28,558. Then, total expenditures on food, both in stores and in restaurants, are divided by the population to get an average food expenditure per Canadian in a year. For 2002, it worked out to $2,001. The two numbers together tell us that as a national average, Canadians spent 10.51 per cent of their total income on food in 2002. On February 7, 10.5 per cent of the year has gone by and Canadians have earned enough to pay for the entire year’s food bill.
The OECD Numbers
While 10.5 per cent is a small share of income, we wanted to look at how Canada compared to other countries. In order to do this, we used figures from the Organization for Economic Cooperation and Development. The OECD figures are for food expenditures are a proportion of total household consumption expenditures. That is, it shows food as a percentage of total consumer spending. The Food Freedom Day calculations look at food as a percentage of total income. As well, the OECD numbers only include food expenditures in stores, leaving out meals bought in restaurants.
Farm-Gate Prices vs. Retail Prices
Farmers and consumers are at opposite ends of the food chain. Farmers get paid one price for their commodities, while consumers pay a very different price for the end products they buy in the supermarket or restaurant. Of course, the difference in price is related to the value added from processors, wholesalers and retailers. Statistics Canada tracks the rate of change for both farm products (the Farm Product Price Index) and different categories of consumer goods (the Consumer Price Index). It is also related to the relationship between buyers and sellers at every step of the way.
By looking at the rates of change of the FPPI and the food component of the CPI, it can be seen that farm-gate prices and consumer prices have been following different paths: Over the last five years, consumer prices have increased almost five times more than have farm-gate prices.