Peanut butter to jump by a third in January

Devin Bird grabs a jar of peanut butter while shopping at the Food Basics discount grocery store on Pape Ave.

“It's a good amount of what I need,” says Bird, an out-of-work vegan. “It's got protein. But most of all, it's cheap.”

But it won't be as affordable next year. Like many common foods, peanut butter is on the rise due to rising fuel costs and changes in weather.

With a colder, more humid climate, Canada imports 80 per cent of its peanuts from the U.S. Recent droughts in the country's south have raised peanut prices dramatically. Last month, Canadian peanut butter producers warned customers to expect a 35-40 per cent price jump around January.

It's these kind of price fluctuations that make the job of Toronto's largest food bank even harder.

“It’s a pretty challenging situation,” says executive director Gail Nyberg, of Daily Bread Food Bank.

As cost-effective protein with a long shelf life, peanut butter is listed among the group’s 10 most-needed items.

A jump in its price is a triple threat for her organization. The food bank predicts higher demand from customers and fewer donations from the public, but also less value when its uses from its funds.

When Daily Bread doesn't get enough donations, it purchases food to-the-need at wholesale prices.

Peanut butter cost $14.50 a case last October. The group's current rate is $16.95 and they've been told to expect $19 early next year.

Nyberg says price jumps have become part of running a food bank. Tuna and rice, also among Daily Bread's most-needed foods, have fluctuated drastically in the past two years.

“We’re entering our holiday drive with some pretty lofty goals,” Nyberg says. “We didn’t reach them at Thanksgiving. But we'll try our best.”

The work year's almost over for Joy Carter, spokesperson for the Georgia Peanut Commission.

It's a month after the state's peanut season and Smucker's has just announced its commodity costs have peaked. After raising the price of Jif peanut butter by a third earlier this month, the company predicts no more price hikes.

“This drought started back in the spring and really hurt production,” Carter says. “But this is the reality of farming. You adjust when you see something coming.”

Farmers contract their land around February and often rotate peanut crops with corn and cotton. Like any small business owners, they are granted loans at rates determined by how stable banks deem their investments.

“This year, the corn and cotton crops were given a much higher per-acre loan,” says Leslie Wagner, executive director of Southern Peanut Growers. “This encouraged farmers to have fewer peanut crops”

Higher interest rates, coupled with a drought and rising fuel costs, meant a 13-per-cent drop in peanut production and a boom in sale prices. In the past three decades, the price of peanuts has only reached this year's rate twice.

Though farmers are protected by charging more for cost-intensive crops, such price jumps are a risk for Georgia's $2-billion industry. Universities in the largest peanut-producing state are researching drought-resistant seeds and cost-reduction methods like better irrigation.

Climatologists have linked this summer's drought to the annual La Niña pattern, which has been exacerbated in recent years by exceptionally hot temperatures.

The U.S. drought is part of a series of weather events affecting global food prices, though a comparatively trivial one. Last summer, Russian faced its hottest summer on record. Forests fires engulfed one-third of its grain crop, leading to an 11-month grain export suspension that drove up food prices in countries like Indonesia, where 45 per cent of household income goes to food.

In Canada, consumers only spend about 12 per cent of their income on food. Though the rise in price for peanut butter and other foods will hit those with limited income, Canadians have a variety of sources of protein.And, at least in East York, consumers seem up for the challenge.

“What can you do? Peanut butter's like everything; the cost goes up and up,” says Sonia Alce, eyeing a peanut butter sale poster. “If you love it, you're going to have to stock up.”

“Oil's gone up; everything's gone up,” says Janet Coker, a grandmother on a fixed income. “But you make do. Wages rise too, but not as quickly. You just have to budget and be smart about it.”

Before leaving Food Basics, Bird grabs another jar of peanut butter, on sale at a 75-cent discount.

“I'd normally wait for half-price, but this could be it,” he says. “It's time to stock up.”