The Extraordinary Factors Affecting the Canadian Produce Market

It’s the end of another long work day and you go to order produce for next-day delivery to your restaurant. You know this process can be tedious, and are just hoping everything goes smoothly this time for that big upcoming catering. You contact your supplier and are almost done relaying your order, only for them to tell you the price of bananas has risen by a whopping 35%!

What's going on here?!

“Restaurant owners are finding it increasingly difficult to balance weekly spend and return on investment.”

With extenuating factors such as rent, tax, & wage increases looming, owners are finding there’s not much left over once all is said and done.

A small 5% increase in produce prices can result in an absence of product, missed sales, and spell financial turmoil for a restaurant.

One way owners are fighting back is by gaining an understanding of the Canadian Market Economy and ordering ahead using the ChefHero (now notch) app.

What is a market economy?

A ‘Market Economy’ is a system by which supply & demand directly informs the production of goods and services. This is opposed to a ‘Command’ or ‘Traditional’ Economy, which are typically used in socialist, communist, or developing nations.

In Canada, suppliers sell their goods at the highest price consumers will pay, while buyers search for the lowest price possible for their requested goods or services. When this system is in balance, prices remain relatively consistent as produce is sold at the same rate it is grown.

When there is an excess of product, or excess of buyers looking for a specific product, this throws the system out of order. At this point, the market becomes known as a ‘Soft’ or ‘Hard’ market.

“A ‘Soft Market’ can cause rapid drops in pricing as suppliers compete to sell the excess product.”

Soft Market vs. Hard Market

A ‘Soft Market’ means there is currently more product available on the market than there are buyers wanting to purchase that product.

A ‘Soft Market’ can cause rapid drops in pricing as suppliers compete to sell the excess product. The price will continue to fall as the excess of supply increases over the demand. Think of summer when the price of strawberries is suddenly greatly discounted. Although this product is available year-round, during peak season suppliers have an excess of product they need to sell which floods the market causing it to be ‘Soft’.

A ‘Soft Market’ is often also known as a ‘Buyer’s Market’ as the buyers hold the majority of the power in this relationship.

A ‘Hard Market’ is the complete opposite and is also referred to as a ‘Seller’s Market’. The market becomes ‘Hard’ when buyers want to purchase more of a product than there is currently available on the market. Because so many buyers are competing for the same product, suppliers are able to charge for items at a premium cost. Ever try to buy those same strawberries in the dead of winter?

"Supply and demand within the market is only one factor affecting the rise and fall of produce pricing."

Additional Factors

So that all makes sense, prices rise when product is low, and prices fall when there’s an excess, but still, a 35% increase?!

Supply and demand within the market is only one factor affecting the rise and fall of produce pricing. There are a number of legislative and non-legislative factors laid down by the Canadian government which could affect prices as well:

1. International trade tariffs and taxes brought down from NAFTA, the North American Free Trade Agreement which dictates the trade regulations in North America.
2. Fees or tax increases from other governmental agencies responsible for coordinating federal and provincial market policies.
3. Increases to the cost of fuel, minimum wage and rent.
4. Fluctuating national dollar value
5. Weather, global warming or natural disasters can completely wipe out a crop, delaying production by several weeks, creating a ‘Hard Market’.
6. Seasonality and peak growing seasons can also create a hard market when an item in high-demand goes out of season.

So, should I close my restaurant?

The good news is ChefHero (now named notch) is here to help! With an understanding of market conditions, in addition to Weekly Specials and Market Updates from ChefHero, restaurant owners are able to order well in advance, remaining unaffected by the changing market. ChefHero’s prices are updated weekly, and our Market Update lets customers know when the market is becoming ‘hard’ or ‘soft’, so you’re always one step ahead of the game! In addition, our marketplace system allows buyers to choose which supplier they would like to order from, instead of being locked into only one. So even if prices are too high from your regular supplier, our ChefHeroes are always on standby to help direct you to an alternative option!

“Restaurants, bars, cafes, and food halls are the lifeblood of Toronto.”

We’re blessed with an eclectic variety of foods to choose from, with this variety being an integral part of Canada’s culture. ChefHero is on a mission to deliver the world’s most trusted wholesale food network. That means you’re able to pick and choose items to order, view invoices, and pay all from a mobile or desktop application! If you’re interested in viewing a demo please don’t hesitate to email [support@chefhero.com].  

What’s the most YOU have ever paid for a case of strawberries?