Food prices have been increasing steadily over the past two decades, and consumers will soon notice a more pronounced increase.
Why is this happening? Experts are calling attention to the elevated costs of labour and commodities, as well as climate change. As a result, the average Canadian family can expect to pay $695 more annually for their groceries in 2021. Below are three factors that are affecting your grocery bill:
Labour shortages on Canadian farms became more apparent at the beginning of the COVID-19 pandemic. There have always been issues with recruiting Canadians for farm work since it is seasonal, and the physical requirements can be challenging. COVID-19 added additional pressures of self-isolation, childcare, quarantining after travel and the risk of contracting the virus.
Applicants that did apply for farm jobs were younger, less experienced and lacked the required skills, which meant lower productivity and higher turnover. Additionally, the Canadian Emergency Response Benefit (CERB) also caused labour issues. Some employees were only willing to work part-time hours or the minimum hours to qualify for CERB.
When farm owners cannot find Canadians for open positions, they use temporary foreign workers (TFWs) to fill openings. TFWs are vital to Canada’s agriculture sector, as they make up 20 percent of its labour force. During the pandemic, there were ongoing issues with securing enough TFWs to meet the needs of Canada’s farms with border restrictions, quarantines, testing and other COVID-19 measures creating roadblocks. Another problem for farm owners and TFWs was securing proper housing and meeting strict safety regulations for physical distancing and two-week quarantines, mainly because farms are in rural areas where housing is already scarce.
The additional costs of PPE, housing, training new workers, overtime pay and overall lower productivity took a toll on Canadian farms. Research sponsored by the Canadian Agriculture Human Resources Council (CAHRC) revealed that Canadian farmers lost $2.9 billion in 2020 in potential earnings due to COVID-19 related labour shortages. These additional costs eventually caught up to consumers.
Soaring Commodity Prices
Commodity prices have been soaring since mid-2020 with talks of a possible commodity supercycle. A commodity supercycle is when a commodity trades above its long-term price trend for an extended period, usually a decade in length. Extreme demand and shipping bottlenecks are mostly to blame as economies began to reopen. Consumer behaviour has changed with more people stockpiling their groceries and eating more meals at home, which leads to increased food waste.
We are also seeing China buying more raw materials such as corn, wheat, and soybeans. A buying spree spurred in response to hog herds rebounding from a devastating African swine flu that occurred two years ago in northern China. The country leads the world in pork production, which eats up commodities like soybeans for hog feed.
We also saw the end of a trade war between the U.S. and China, with Beijing signing a deal pledging to boost U.S. agricultural imports. In 2020, China imported 55.5 million tons of agricultural commodities, which equals one-quarter of all farm shipments coming out of the U.S., with demand expected to grow further. This increase in demand leads to processors having to pay more for their ingredients. Eventually, even Canadian consumers will have to pay more for specific products.
COVID-19 lockdowns and restrictions caused logistical challenges in our food supply chain with worldwide shortages of shipping containers. This shortage is due to a shift in consumer spending habits from services to goods. As demand for shipping containers increased, we saw shipping congestion, and some companies could not secure containers on time.
Climate Change and Weather
Grocery prices are very susceptible to climate change. The 2020 wildfires in California were driven by climate change as the number of hot, dry and windy days have more than doubled since the 1980s. Last year’s wildfires in California were the worst the state has ever seen. Stronger and more frequent wildfires in California have impacted Canadians as we depend on the state for much of our produce.
The Earth also experienced a La Niña, which began in the summer of 2020 and petered out in May 2021. A La Niña event is a large-scale cooling of the east-central equatorial Pacific sea surface temperature. It is the antithesis to El Niño, which is characterized by warmer than average ocean surface temperatures. It can cause droughts in some areas of the world and flooding in other areas.
In particular, the U.S., Brazil, and Argentina experienced significant droughts. Brazil received below-average rainfall, impacting corn, soybean, grain and coffee prices. Almost half of the continental U.S. experienced drought, which affected wheat, corn and soybean crops, specifically in the Midwest. Drier conditions in Argentina affected corn and soybean yields. These droughts shook up an already turbulent year for commodity prices.
Five tips to help to control your food costs
As Canadians, our grocery bills are getting increasingly expensive, and the reasons behind it are primarily out of our control. However, we could adopt better habits in response to higher food prices. Here are five tips to help control your food costs:
- Reduce food waste: According to the United Nations Environmental Program (UNEP), the average Canadian family wastes 79 kilograms of household food per capita annually. Food waste can help you save money because it means fewer trips to the grocery store. Learn more about limiting food waste.
- Check what’s in season. Seasonal fruits and vegetables are always cheaper.
- Give beans and lentils a go! They are a cheaper alternative to animal protein, and they offer an array of nutritional benefits.
- Get creative with leftovers or even saving them for your lunch the next day.
- Learn how to properly store your vegetables and fruits to keep them as fresh as possible for longer.
Farmwork to Feed Canada (F2FC) is a national volunteer not-for-profit initiative by Canadian communication professionals, students, and recent graduates in communications. F2FC collaborates with farmers, and agri-businesses amid COVID-19 pandemic-related challenges to Canada’s food supply and food security, to engage Canadians, pro bono, with compelling stories about their food system and build support for Canada’s farmers, food producers, and their essential skilled workers.