A shopper waits by the counter of a fish monger at Toronto's St. Lawrence Market. Over the past 12 months, salmon prices have increased 21 per cent amid a sharp drop in catches.Fred Lum/the Globe and Mail
Christina Caron is an economist and executive who has worked in the federal public service, four think tanks and the offices of two prime ministers.
If you think the price of food has been going up faster than almost everything else, you are right.
Inflation rose more than expected last month, according to a Statistics Canada report on Tuesday. In particular, grocery prices are up 4 per cent over the past year. The trend has been pegged to items including beef and coffee.
But this is not new. Over the past 10 years, food prices in Canada rose nearly 50 per cent faster than those of non-food items. And over the past 12 months, many foods have posted double-digit increases, including coffee (32 per cent), salmon (21 per cent), oranges (17 per cent), bacon (16 per cent), beef (13 per cent) and rice (13 per cent).
However, food price inflation isn’t just a Canadian phenomenon. Food prices are rising faster than other prices in most countries. And real global food prices, which had been trending down for decades, reversed course 25 years ago and have since been rising.
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During the past five years, a number of events have generated pressures that contributed to price increases – notably COVID, the Russian invasion of Ukraine, and U.S. President Donald Trump’s trade war. These pressures have been exacerbated by high retail market concentration – in Canada and elsewhere – that makes it easier for grocers to pass on rising costs and then delay price reductions when costs subside.
However, these events do not explain the longer-term rising global trend. So, what other causative factors are at play? Environmental developments, including climate change, have harmed food production in multiple ways, creating upward pressure on food prices everywhere.
Take fish. Global fish prices have tripled since 2001 – a reflection of crashing global fish populations as a result of overfishing, climate change and habitat damage. In Canada, fish catches have plummeted on both coasts, dropping overall by 60 per cent in the past 20 years – 80 per cent for that pricey salmon.
There have also been numerous crop failures around the world for which climate change – evident as drought, storms or extreme temperatures – has been the primary cause. The ensuing shortages have resulted in huge price spikes for many imported food products including Brazilian oranges, Spanish olive oil, California vegetables, Vietnamese coffee, Asian rice and West African cocoa. In Southern Europe, the European Central Bank found that the 2022 heat wave boosted food price inflation by nearly a full percentage point.
Domestic food production has also been affected. Last year, extreme cold in B.C.’s Okanagan region caused severe damage to fruit trees, wiping out most of the harvest and pushing up prices of peaches, cherries and plums. This year, prolonged drought in Canada’s West and the Atlantic region has resulted in higher prices for Alberta beef and Nova Scotia blueberries.
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Globally, agricultural productivity growth has slowed significantly since 2010 – a slowdown attributed to drought, heat waves and floods – and is now barely keeping pace with global population growth. A global food supply that cannot keep up with rising demand is a perfect recipe for food price inflation.
Pollinator losses have also pushed up food prices by reducing agricultural yields. Pollination is essential for three quarters of crops, including most vegetables and fruits, nuts, coffee and cocoa. However, populations of wild pollinators – bees, butterflies and birds – have been falling everywhere because of climate change, habitat loss, pesticides and pollution.
For those who are skeptical about pollinator impact, consider vanilla, one of the world’s most expensive food ingredients. Commercial vanilla is now nearly all hand-pollinated – a labour-intensive process that has pushed its price sky-high. Why? Populations of the Melipona bee, the only known species capable of pollinating vanilla orchids, have declined to near extinction.
Soil degradation and erosion are other factors that reduce yields, by up to 50 per cent in some regions. One third of all land has degraded soil with diminished productivity. And the UN Food and Agriculture Organization found that soil erosion has brought global crop yields down by 24 per cent since 1945.
Rising food prices are not just a Canadian phenomenon; they are occurring everywhere, and the most pervasive pressures are environmental. Moreover, these pressures are intensifying.
What are the implications? Real food price increases are not going away. They can be expected to continue as long as the underlying environmental stressors persist. The corollary is that a policy suite targeting the affordability crisis must include action to combat climate change and biodiversity decline.