The Rising Cost of Food in Canada: More Needs to be Done

By: Jeff Liu

As the world recovers from the COVID-19 pandemic, a new crisis emerges as countries around the world are facing food security issues due to global inflation. Even in a relatively wealthy country such as Canada, many are suffering from food insecurity. In a recent Canadian national survey conducted by the University of Saskatchewan, 30.7% of nationwide respondents said they had eaten less healthy food in order to save money while almost five percent of respondents have stated they had stolen food. Food banks are becoming strained as an increasing number of Canadians have become reliant on them. Senior citizens and disabled persons are among the most affected by this crisis. According to Food Banks Canada, senior citizens currently make up 8.9% of food bank clients, up from just 6.8% in 2019. Meanwhile, individuals who rely on social assistance or disability support as their primary income make up nearly half of all food bank users.

Due to the Bank of Canada’s decision to increase interest rates, inflation has slowed down significantly in recent months. However, most of the reduction in inflation has been due to the reduced cost of gasoline; prices continue to rapidly increase for food and other commodities such as clothing and housing. Despite the Bank of Canada’s efforts, the prices of store-bought food grew at a year-over-year rate of 11.4% in September of this year, the fastest growth rate since August 1981. It may take a while for the Bank of Canada’s policies to take a noticeable effect on food prices, and until then, people across Canada will continue to struggle with putting food on the table.

In the meantime, the government of Canada needs to do more to ensure Canadians have cheap and sufficient access to food since the Bank of Canada cutting interest rates will not suffice. Some members of parliament have already started looking into resolving this issue. As a response to the dramatic increase in food prices, a member of parliament from the Cowichan-Malahat-Langford district has launched an investigation into major grocers like Sorbeys and Loblaws. The investigation, which was been supported unanimously in parliament, “will include inviting grocery CEOs before the committee to challenge their record profits while food prices are reaching record heights”. The MP who successfully called for the investigation has also advocated for strengthening competition laws and making the penalties for price-fixing more severe. However, a financial analysis report by Dalhousie University states that there is currently no evidence of profiteering by these companies. Although the revenues of corporations like Loblaws and Sobeys have increased, their gross margins have remained constant. While multibillion dollar corporations make for an easy scapegoat for populist politicians, taking a tougher stance on corporations will do little to nothing to help solve the ongoing food crisis as the root causes lie elsewhere.

The rise in food prices can largely be attributed to Russia’s invasion of Ukraine. Both countries are major exporters of wheat, contributing up to a quarter of the world’s wheat exports in 2020. The invasion of Ukraine and the subsequent sanctions placed on Russia have disrupted the flow of important food commodity exports. As the war drags on, the global supply of wheat and other important staple foods will continue to stagger. It would be in Canada’s best interest to see this war end as soon as possible as that would mean the global supply of wheat and other food stuffs would return to normal. However, neither side seems willing to surrender. As the current situation stands, there does not seem to be an end to this war in the foreseeable future.

While being harsher on corporations will not stop rising food prices and the costly war between Russia and Ukraine seems far from over, there are still a wide variety of policy tools that Canada can implement to alleviate food insecurity within its borders. Policies such as enacting a universal food program in schools, increasing funding to community gardens and food banks, and subsidizing groceries are all supported by a majority of Canadians. Another solution is to provide a federal food emergency benefits program, similar to the Canada Emergency Response Benefit payments offered during the COVID-19 pandemic. These policies have yet to be implemented on a federal level and may not fully resolve the crisis. Nonetheless, the government of Canada needs to be willing to try whatever they can to help alleviate food insecurity. While there is no easy fix to the complex and multifaceted issue of food insecurity, economic initiatives and political leadership may prove to be essential in getting Canada through this crisis.

Jeff Liu is a Master of Public Policy candidate at the Munk School of Global Affairs and Public Policy. He graduated from the University of Toronto in 2021 with an Honours Bachelor of Science in International Development Studies and Physics. His research interests include international security, economics, and public health policy.

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One Comment Add yours

  1. Great article, but I must flag that gross/net profit margins are but one way to measure the performance of a firm. Using the measure return on equity, Loblaws has exceeded that of TD Bank in the last year or so. Even prior to the pandemic, these two corporations had a comparable ROE in some years. Additional context like this should be kept in mind. Loblaws/Sobeys etc are not passive, lucky firms who simply have generated large profits because gross revenues are up due to inflation.

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