According to a report published this week Canadians can expect to pay a considerable amount more for food in 2022 while dealing with potential empty shelves and a scarcity of food items. The annual report titled, “Canada’s Food Price Report 12th Edition 2022” is a collaboration between four leading Canadian universities including the University of Dalhousie, the University of Guelph, the University of Saskatchewan and the University of British Columbia.
The report concludes that the projected increase in food prices for 2022 for Canadians could increase by an average of a whopping seven percent.
It’s expected that bakery items will increase five to seven percent, dairy products upwards of eight percent, fruits by five percent and meat products by two percent.
Vegetables are expected to increase in price by upwards of seven percent.
On a provincial basis, of Canada’s 10 provinces half of them are expected to shoulder above-average food price increases in 2022.
The report indicates that this year Canadians have already endured a 4.2 percent average increase at the grocery store with only vegetables coming in below last year’s figures, decreasing by 2.1 percent. Meat products, in 2021, hit Canadians pocket books the most, increasing in price by 9.5 percent.
Canada once ranked 18th in the world when it comes to food security however slipped several spots in the rankings to 24th in 2021.
According to the report high inflation is the primary driver of food price increases.
“Inflation in 2021 increased to 4.4%, reaching an 18-year high. This substantial increase was driven by high oil costs, high housing costs and rising food prices,” the report reads.
It concludes that COVID-19-related supply chain disruptions and labor market challenges are likely driving inflationary increases as well while noting that “wages and salaries for most have not kept pace with the increase in prices.”
The report highlights that labor market challenges remain a persistent challenge contributing to rising prices.
According to Statistics Canada data, as of September 2021, employment in Canada has returned to pre-pandemic levels however there are still approximately 180,000 positions in accommodation and food services that still need to be filled.
COVID-19 restrictions, implemented by federal and provincial governments, are partially blamed for the lack of candidates to fill these roles. “As Canadian provinces moved in and out of lockdowns and restaurants closed or operated with reduced staff, the insecurity of work in the industry became apparent. Many workers have used the pandemic as an opportunity for a career change and found jobs in other sectors with more stability,” the report states.
The fragility of global supply lines was flagged as a contributing factor increasing food prices in 2021, a problem that is expected to persist into 2022. The report states that, “There were major disruptions, delays and reduced capacity, especially in maritime transport as congestion of cargo ships was apparent at both Canadian and U.S. ports.”
The resurgence of COVID-19 in various countries, booming pent-up consumer demand, U.S.-China trade relations, equipment shortages and extreme weather were also cited as contributing factors impacting supply chains.
Adverse weather effects, such as severe wildfires in British Columbia and drought conditions in the Canadian Prairies were identified as the primary factors driving up costs on meat and bakery products.
“Wildfires, record-breaking heat and drought, floods and cold fronts are becoming increasingly commonplace and affecting food prices year after year,” the report states.
The Trudeau government’s carbon tax, which is expected to increase to $170 per tonne by 2030 from $40 in 2021 was hinted at as being a contributing factor to increasing food prices but the report stops short of drawing any conclusions and instead states, “It remains unclear what the effect of the carbon tax on food prices will be and more data are needed.”
Canada’s food prices in 2022 and beyond
Going forward the report identifies several risks at the macro-level that the report’s authors believe will continue to contribute to rising food prices well into the future.
The report cites climate change, geopolitical risks, input costs and energy costs as “very significant” factors impacting food prices. Each of these factors were considered either “very likely” or “likely” to occur and persist.
For a family of four the predicted food expenditure for the year 2022 is calculated to be CND$14,767.36 (US$11,623.09) while a couple can expect to pay CND$7,690.65 (US$6,053.16) per year.
The figures assume a very conservative five percent food waste however the report notes that the percentage of food that ends up in a landfill is likely much higher. The figures also assume that Canadians are exclusively cooking and eating at home and does not include food service costs nor do they account for specialized diets or fees associated with online food retail.
Food insecurity and empty shelves
In Canada, food insecurity is expected to grow in 2022 putting additional pressure on food programs and food banks “if incomes do not rise to meet food expenditures and other basic needs.”
“At the same time, organizations that provide aid to the food-insecure may have difficulty meeting increased demand and rising food expenditures while operating with stagnant funding and budgets.”
Grocery retail theft is expected to “intensify.” Items flagged as having a high potential to be stolen include items such as meat, cheese, over-the-counter medication and energy drinks. “Unreported loss to theft could be as high as $3000 to $4000 each week in some Canadian grocery stores,” the report concludes.
Canadians can not only expect to pay more at the grocery store but the selection of items available for purchase will diminish.
The report concludes that “We will continue to feel the effects of ongoing supply chain disruptions due to COVID-19, labor market challenges and high inflation in 2022. Companies may experience high international shipping costs and empty shelves as a result.”