Sun. May 26th, 2024

Cost of Living4:57Star-spangled bargains: Why Americans have it so good

With the average grocery bill rising despite slowing inflation, Canadian shoppers are doing whatever it takes to lower food costs, including, in the case of one B.C. mom, making a run for the U.S. border.

Brandi Dustin lives in Roosville, B.C., which is located just a 15-minute drive to a supermarket in Eureka, Mont. 

Even with the weak Canadian dollar and the gas she spends crossing the border twice a week, Dustin says she saves about $300 a month buying all her food in the United States.

“The dollar is awful. But … I am still saving. I check and see what the sales are in Canada and every time I look I’m like, ‘Oh, I know I can save more in the U.S.'”

Dustin says bread, fruit and vegetables are about the same price as in Canada, but milk, cheese, butter and meat are much cheaper.

“We had tons of smoked ribs this summer, which I hadn’t had in ages,” she said. “Yesterday, I picked up a 3.77 lb pork roast for $3.73 American.” That’s about $5.12 Cdn. At the nearest grocery store in Canada, pork roasts of equivalent size would cost about $13 Cdn. 

And yes, she can bring a pork roast back across the border, according to the Canadian Food Inspection Agency.

In fact, if she really wanted to, Dustin could drive home with 20 kg of chicken wings, 20 kg of apples and 20 kg of cheddar cheese — so long as everything is for personal consumption and is declared at the border. However, Dustin said she’s never been asked to pay duty on food.

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Lower wages can mean lower prices

According to Canadian food economist Mike von Massow there’s no “single silver bullet reason” groceries are cheaper in the U.S.

The University of Guelph professor of food, agriculture and resource economics says there are many factors contributing to lower food prices in the U.S., but in his opinion “the big one” is the difference in wages.

“Labour costs are higher here,” von Massow said. “People in grocery stores in Canada get paid more than most people in grocery stores in the U.S.”

Michael von Massow is an associate professor in food, agricultural and resource economics at the University of Guelph.
Michael von Massow is an associate professor in food, agricultural and resource economics at the University of Guelph. (University of Guelph)

The hourly minimum wage in Canada ranges from $13 to $16.77, whereas in the U.S., the federal minimum wage is $7.25 US per hour and hasn’t been raised since 2009. However, 30 states and 48 localities have mandated a higher minimum wage than the federal rate.

Even so, von Massow said overall lower wages in the U.S. bring costs down for supermarkets and many other levers of the food supply chain, such as farming, processing, manufacturing and transportation.

Market size matters

Another reason some food items are cheaper in the U.S. is because the American grocery store industry serves a population nine times bigger than Canada’s.

“Market size is massive,” said Ambarish Chandra, an associate professor of economics at the University of Toronto.

“The U.S. just operates at a much bigger scale. And so grocers can provide their range of goods at much lower prices in the U.S. market than they can in Canada.”

Ambarish Chandra, an associate professor of economics at the University of Toronto.
Ambarish Chandra is a business professor at the University of Toronto who researches cross-border travel and trade. (Rotman School of Management)

According to market research company IBISworld, there are currently 55,000 more grocery stores operating in the U.S. than in Canada — and Chandra says more supermarkets lead to more competition.

Canada has generally not done a good job, at all, of stimulating competition … and so we’re sort of paying the price on that score as well.

When speaking with CBC’s Cost of Living, both Chandra and von Massow pointed to the influence that Walmart has had on food prices in America. The discount chain represents a quarter of the U.S. grocery market share.

“Because Walmart is so dominant in the U.S., they can drive prices down. That, of course, forces all of their competitors to try to match them,” Chandra said. “Even if they don’t match them precisely, they come close.”

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Supply management

Then there’s the supply management system, which limits Canada’s supply of dairy, poultry and eggs to what is expected to be consumed, through production quotas and high foreign import tariffs.

The idea behind the system is that it will lead to predictable and stable prices and ensure farmers get a fair price for their products.

While Canadians support the dairy and poultry industry directly through higher prices for supply-managed products, Americans pay indirectly through their taxes, which go to pay subsidies. Between 2017 and 2021, their federal government spent an average of $24-billion US annually on agricultural subsidies

Von Massow says those supports are another reason why Canadians sometimes see lower prices on milk and cheese at American supermarkets. 

“The price differences aren’t only on supply managed products. And in fact, there are some supply managed products that are cheaper in Canada,” said von Massow.

A lineup of vehicles at a border crossing.
Drivers wait at U.S. Customs and Border Protection inspection booths at the Peace Arch border crossing across the Canada-U.S. border from Surrey, B.C. (Darryl Dyck/The Canadian Press)

Will shoppers go the distance?

Canada Border Services Agency does not track the reasons Canadians travel to the U.S., so it’s hard to know how many people are making the trip to buy groceries.

However, Statistics Canada does monitor same-day border crossings by car and motorcycle, and there has been an increase every month since March. In July, more than 1.6 million Canadians took a day trip to the U.S., up nearly 21 per cent from June.

Using driving distances on GoogleMaps, Chandra — who researches cross-border travel and trade — said in 2021, only about a third of Canada’s population lived within 100 kilometres of the U.S. border.

So for most Canadians, it’s probably not worth the time or cost of gas to go grocery shopping in America. But it is for Brandi Dustin. 

The U.S. supermarket that she shops at is actually closer to her home than any Canadian grocery store.

“In the future I am hoping that our prices can come down a bit and I can support our Canadian economy a bit more. It’s just made it a little hard to do. So I’m doing what I have to do to support my family.”


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