Why Canada’s food inflation may get worse before it gets better

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When it comes to food prices, Canadians can be in for an expensive winter.

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Canada’s inflation rate hit 4.7 percent in October, the fastest rate increase in nearly 19 years. Food inflation for the month was 3.8 percent, but as the growing season ends for many types of fresh produce in Canada and the US, more stickers at the Canadian grocery store could be in for shock.

Food inflation is notoriously volatile. For example, prices can swing up or down significantly depending on the season.

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And it’s not unusual to see prices of produce rise 10 percent or more in the winter as they are being imported further afield, says Michael von Masso, a food economist at the University of Guelph.

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But supply chains affecting Granthshala trade are complicating the task of supplying off-season fruits and vegetables to Canada.

Take blueberries. A shipment of those arriving from Peru usually takes 10 to 12 days to reach Toronto, says Larry Davidson, CEO of North American Product Buyers, an Ontario-based buyer and wholesaler of international produce.

These days, however, it easily takes 20 to 25 days for a container of berries to reach the destination, Davidson says.

“For us, as a receiver, we would get a product that would be distressed,” he says.

According to Davidson, delays could be anything from a lack of containers to back-up ports, a lack of workers to load and offload ships, and longer-than-normal wait times for trucks.

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There’s a workaround blowing up in fresh, perishable produce, says von Masso, but it comes at a price premium.

He says higher energy prices are also putting upward pressure on food prices. This is especially true for products imported from the US and other parts of the world, which have to travel long distances, he noted.

Then there is climate change.

“Climate change is a supply chain issue. Production interruptions can have long-term effects on both supply and the price of products,” says von Masso.

Severe droughts in western Canada and the western US have reduced crop yields in those regions. According to von Masso, this, in turn, has forced many ranchers to liquidate their herds, which would reduce the supply of animals to market in future months.

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Beef prices in October were already 14 percent higher than a year ago, but von Masso thinks that increase could rise to 20 percent or 25 percent, depending on how dry the drought is. is permanent.

Flooding in BC is also having a significant impact on Canada’s food supply chain.

Disruptions to major transportation routes mean farmers in BC’s Fraser Valley currently have to dump perishable products like milk and eggs, says Sylvain Charlebois, director of the Agri-Food Analytics Lab at Dalhousie University.

“There’s a lot of garbage going on there, unfortunately,” he says.

Precious food will take the biggest bite out of low-income Canadian budgets, says Pedro Antunes, chief economist at the Conference Board of Canada.

“When we look at domestic balance sheets right now, they’re in pretty good shape compared to 2019,” he says.

The same is true for many low-income families, thanks to the COVID-19 income support programs launched by the federal government.

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But with those programs now finished, “inflation is destroying that savings and that extra income we find very quickly,” he says.

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