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Canadians can expect higher food prices well into the future due in large part to the pandemic and Vladimir Putin, the ‘Food Professor’ says.
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Dr. Sylvain Charlebois, senior director of the Agri-food Analytics Lab of Dalhousie University, said the coronavirus pandemic and public health measures implemented to keep people safe massively disrupted the food processing and distribution systems.
For instance, anyone importing a container of virgin olive oil from Italy will pay six times what it cost just two years ago, he said.
“I do believe that we’re at the dawn of a new era,” Charlebois said. “I actually believe that most households in Canada will have to dedicate a higher percentage of their budget on food moving forward. I think that’s really the new normal that everyone is facing.”
In December, the Canada Food Price Report predicted a 7% rise but that may already be too low, he said.
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Putin’s invasion of Ukraine was the start of another economic commodity super cycle which will force up food prices even higher, he said.
“What Vladimir Putin has done in 15 days is what the pandemic took two years to do,” Charlebois said.
When Ontario banned the sale of Russian vodka at the LCBO, consumers shifted seamlessly to “suitable alternatives” and overall vodka sales “remained steady,” a spokesperson for the alcohol retailer said.
Other products and commodities will not be easily replaced.
“The Ukraine conflict has completely destabilized the world economy starting with oil,” Charlebois said. “And oil is typically the first factor which will drive food prices higher over the short-term — mid-term would be grains and longer-term would be animal proteins.”
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Russia is the number one exporter of wheat in the world and Ukraine is number three, he said.
While Canada might be able to grow its way out of a wheat shortage, it’s very dependent on weather, he said.
Also, half the fertilizer imported by Canadian farmers comes from four countries — Russia, Ukraine, Belarus and China, he said.
“There’s also corn, and barley, lentil and sunflower — keep in mind that 25% of all black soil deposits in the entire world is located in that region, Ukraine,” Charlebois said. “Growing conditions are impeccable. Obviously, because of the conflict, it’s a war zone right now.”
In the United States, where food inflation is running at over 8.6%, consumers have the option of widely-available coupons to dramatically lower their costs, he said.
A handful of major players sell about 90% of the groceries in Canada, and volume buying is the promotion of choice here, he said.
A person either purchases five lemons — and maybe see several go bad before they’re used — or pay 30% more for one which is not a great option for individuals or smaller families, he said.
Most food promotions and lost leaders, products priced low to bring in customers, are being actively discouraged by Canadian food sellers, he said.
“There’s not a whole lot you can do right now,” Charlebois said.