PE Ledger

Why food inflation in Canada may worse before it improves

Canadians may be in for an expensive winter in terms of food prices.

In October, Canada’s inflation rate jumped to 4.7 per cent, the highest level in over 19 years. Food inflation for the month was 3.8 per cent, but as the growing season for many types of fresh fruit in Canada and the United States comes to a close, Canadians may be in for even more sticker shock at the grocery store.

Inflation in the food industry is typically volatile. Prices, for example, can fluctuate greatly depending on the weather.

And, according to Michael von Massow, a food economist at the University of Guelph, it’s not uncommon for vegetable costs to rise by 10% or more in the winter merely because it’s being imported from further afield.

However, the global trade supply chain snarls are making it more difficult to keep Canada supplied with out-of-season fruits and vegetables.

Consider blueberries. According to Larry Davidson, CEO of North American Produce Buyers, an Ontario-based buyer and wholesaler of international produce, a shipment of them from Peru normally takes 10 to 12 days to arrive in Toronto.

However, according to Davidson, a container of berries can take anywhere from 20 to 25 days to get at its destination.

“As a receiver, we will receive a product that is in poor condition,” he explains.

According to Davidson, delays can be caused by a lack of containers, backed-up ports, a lack of staff to load and unload ships, and longer-than-usual wait times for trucks to pick up the fruit.

Flying in fresh, perishable vegetables is one solution, but it comes at a cost, according to von Massow.

According to him, high energy prices are placing upward pressure on food prices. He points out that this is true for products imported from the United States and other regions of the world, which must travel considerable distances.

Then there’s the issue of climate change.

“Climate change is a supply chain concern,” says the report. “A stoppage in production can have long-term implications for both product availability and price,” adds von Massow.

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