Although, Latest data from Statistics Canada Although food prices in Canada remain high, it indicates that monthly food price increases may be slowing. From vegetables to fresh and frozen beef, many people are feeling the financial burden of food inflation.
To cope with high prices, many people have started relying on budgeting and coupon apps. A recent study by Dalhousie University’s Agri-Food Analysis Laboratory in Halifax found that: 15.5 percent Some respondents started growing their own food last year.
Of the nearly 5,000 Canadians surveyed, 45.5 per cent said they prioritize cost over nutrition when shopping for groceries.
This could be detrimental in the long run if the price of healthy food continues to rise. But who is to blame for soaring food prices? Unfortunately, there is no single person or thing that is responsible for soaring food costs in Canada. Below we outline some of the main factors that have contributed to the rise in food prices in recent months.
1. Climate change and extreme weather
Catastrophic wildfires continue to rage across Canada, destroying forests and farmland and leaving burn scars visible from space. These wildfires not only disrupt agricultural cycles, but also create logistical challenges for food transportation, with vehicles having to reroute trucks or put deliveries on hold until safe roads clear. There is.
The severe drought of 2021 also significantly reduced production of domestic wheat, canola, and barley on the Prairies. All of these are important ingredients in many everyday foods.
Beyond these extreme weather events, the overall effects of climate change are expected to continue to impact Canadian farms and agricultural production.
The country’s agricultural regions are expected to experience drier summers and wetter winters and springs in the coming years. canadian agriculture.
This can result in farms receiving too much water during the planting season and too little water during the growing season, leading to reduced crop production.
2. Global supply chain disruption
The COVID-19 pandemic has caused supply chain disruptions around the world, many of which have affected Canada’s ability to quickly and reliably import food from other countries.
This has increased costs for farmers, food production facilities, transportation companies, and grocery stores, which may have contributed to higher food costs for consumers in recent years.
3. Ukraine War
Ukraine is often considered “.”granaryBecause Europe is one of the continent’s largest producers of grain and corn.nevertheless Canada produces a large amount of its own grain.recent droughts and wildfires have reduced domestic production and increased reliance on overseas agriculture.
The ongoing war in Ukraine has limited the country’s ability to safely farm, produce, and export agricultural products. As of May, 90% of agricultural operations in Ukraine had lost income and 12% of land was reported to be contaminated with landmines, according to the Food and Agriculture Organization of the United Nations. In 2022, grain acreage decreased from 16 million hectares (approximately 40 million acres) in 2021 to 11.6 million hectares (28.6 million acres).
4. High gas and electricity bills
Energy costs continue to rise across Canada, and in Alberta 122% increase Comparison of electricity rates in August with the same period last year. In addition, gas and diesel fuel prices remain high across Canada.
In an interview with CTVNews.ca in August, Michael Manjulis, professor and director of global management studies at Toronto Metropolitan University, blamed bad weather and oil supply shortages for the rise in gas prices.
Farms, food manufacturers, grocery stores, and transportation companies all rely on fuel and electricity to keep their operations running. Just as warehouses and grocery stores need power to safely store food and power climate-controlled units, farmers and transportation companies need to fuel their equipment and trucks.
To maintain production, businesses have to pay higher energy costs, resulting in higher overall prices.
5. Decline in the value of the Canadian dollar versus the US dollar
Canada imports every yearbillions of dollars Food equivalent from the U.S., according to Trading Economics data. Unfortunately, the value of the Canadian dollar relative to the US dollar remains weak, with one dollar currently worth only 73 cents in the United States as of this writing. This is a 12% decrease from the exchange rate of 83 US cents recorded in 2006.June 2021.
This means that the Canadian dollar has less purchasing power for U.S. imports, making it more expensive for Canadian companies to import food from U.S. suppliers. Unfortunately, these costs are often passed on to the consumer.
6. Grocery store pricing
Earlier this year, presidents and CEOs of major grocery chains came under fire from members of Congress over soaring food prices. Top executives from Loblaw Companies, Metro and Empire Company Limited appeared before a Congressional committee in March amid calls from federal politicians for more transparency into the factors behind record profits. did.
At the time, food industry leaders argued that food inflation was not caused by price gouging. Additionally, experts such as Michelle Waslishen of the Retail Council of Canada say that food prices are “highly dependent on how much suppliers are willing to pay for their products.”
However, a significant number of Canadians say they believe grocery stores are to blame for rising food costs. This is according to the study referenced above from Dalhousie University’s Institute for Agricultural and Food Analysis.
The survey found that 30 to 33 per cent of respondents in provinces such as British Columbia, Alberta, Ontario, New Brunswick and Manitoba said price gouging was the main problem behind soaring food prices. Ta.
Ultimately, there appears to be insufficient evidence to conclude that grocery stores are directly involved in price-fixing practices. Nevertheless, major grocers continue to work with the federal government to tackle food inflation. The CEOs of Canada’s five largest grocery chains recently agreed to work with the government to stabilize prices, Industry Minister François-Philippe Champagne said, but the process could take several months. There is a possibility that this may occur.
Where do Canadians go from here?
From extreme weather events to labor shortages, global conflict and inflation, Canada’s food industry continues to be under pressure. Additionally, the 2023 Canadian Food Prices Report, produced by four Canadian universities, predicts food prices will rise by 5 to 7 per cent this year compared to last year.
Although inflation is falling, the cost of food remains high. Read on to find out some reasons why.
Christopher Liew is a CFA certified and former financial advisor. He writes his personal money tips for thousands of daily Canadian readers on his blog. Wealth Awesome website.
