Industry insiders and experts are predicting double-digit percentage price hikes on certain food and consumer goods in 2022, continuing the current trend of a rising cost of living.
Canadians can expect to see a minimum 20 percent price increase on groceries and essential products, such as food, toilet paper, pharmaceuticals, home building materials, and gasoline due to supply chain challenges, said Ron Foxcroft, founder and CEO of Fox 40 International Inc., a Hamilton, Ont.-based company specializing in sporting and marine products that are sold in 140 countries.
“I talked to people living that,” Foxcroft, who is also chairman and president of Fluke Transportation, told The Epoch Times. “We’re living it, being a trucker, warehouse, [and involved in] logistics, manufacturing.”
Foxcroft said industry players have observed prices surging since the start of the COVID-19 pandemic.
“Fluke delivers to all grocery stores, all big-box stores, and we truck things like toilet paper, sanitizer, and so on. When the pandemic started, we were trucking 25 loads a day of toilet paper, and they tell me that since March 2020 to today, toilet paper costs have gone up 20 percent.”
Sylvain Charlebois, professor and senior director of the Agri-Food Analytics Lab at Dalhousie University, says food prices won’t be decreasing anytime soon.
“We’re in the second inning of a nine-inning game, or at the very beginning,” he said in an interview.
Charlebois said meat and dairy products are costing more in 2021 compared to last year.
“For meat products, we’re looking at increases of anywhere between 10 to 15 percent on average,” he said. “Dairy is up on average 4 or 5 percent.”
Vegetables are actually mostly cheaper this year, he added, although food prices in general “are only going to go up and will remain high for quite some time.”
“This is our new reality,” he said.
“I see [an increase of] over 10 percent in the next 60 days,” he said in an interview with Fox Business on Oct. 18. And the trend will not reverse “anytime soon,” he noted while discussing his concerns about rising inflation and supply chain bottlenecks currently plaguing supermarkets and other retailers in the United States.
Sysco Corporation, one of the biggest food distributors in North America, highlighted product cost inflation of 10.2 percent in its latest quarterly report, mainly in the poultry, meat, and paper and disposables categories.
Charlebois says he is expecting the grain market to push food prices even further next year.
Contributing Factors
From the manufacturing perspective, Foxcroft said the sector almost came to a halt during pandemic lockdowns in March and April 2020.“Corrugated plants, paper plants, car part plants—I believe most of them were not declared by the federal and provincial governments to be essential services—stopped production, stopped building inventory,” he said.
Since “inventory in warehouses is essential to an efficient supply chain,” problems arose when demand for those products returned and there wasn’t any supply. This caused prices to spike, said Foxcroft.
Labour shortage in the agri-food sector is not helping, Charlebois said. “It’s compelling companies to increase wages, [which is] great news for employees, but for employers in a high-volume, low-margin environment, you have to adjust prices.”
The supply chain problem is exacerbated by employees unwilling to return to work, Foxcroft noted. He said that some fear contracting COVID-19; some, after evaluating their work-life balance, decided not to return to their jobs that have long shifts; and some became “comfortable sitting and enjoying government subsidies.”
The shortfall also comes from people being forced to leave the labour force in some jurisdictions for not being vaccinated, he added.
Trucking HR Canada, a non-profit organization that addresses human resource issues in the trucking and logistics workforce, reported a shortage of 18,000 truck drivers in Canada in the second quarter of 2021.
Food transportation costs also complicate the issues, Charlebois said. According to a Fraser Institute analysis published on Oct. 21, the per-barrel price of Western Canadian Select crude oil, which averaged US$45.13 in January, increased to $64.78 by the first week of October.
Charlebois said consumers will have to adjust their expectations.
“Food will remain affordable, relatively, but it’s going to get rough for a while,” he said. “People should expect fewer choices, fewer options, maybe some empty shelves here and there, but it doesn’t necessarily mean that we are going to be running out of food.”
The Toronto and Hamilton areas are also facing a huge shortage of public warehouse space to store grocery and other essential products, Foxcroft said.
His warehouses have had 20 percent “pushed out” to make room for pandemic safety products such as masks, shields, and sanitizer.
“Everybody’s in the same boat,” he said. “You can go into a big-box store and a grocery store, and just about everything on the shelf, you’re gonna see shortages and price increases.”
Foxcroft also pointed to a backup of containers at ports on the west coast of Canada and the United States, noting that one of his business associates who used to pay $5,000 for a 40-foot container of goods to come to Canada from offshore now has to pay $25,000 for that freight.
Deputy Prime Minister Chrystia Freeland said on Oct. 14 that the government is monitoring the supply chain and Canadian ports “very, very closely.”
“We are definitely mindful of the supply chain issues in the Canadian economy,” Freeland told reporters at a press conference at the Canadian Embassy in Washington, adding that she was optimistic about the “strength of Canada’s economic recovery.”
‘Be smarter, more innovative’
Statistics Canada reported on Oct. 20 that the consumer price index (CPI), a key inflation gauge that measures change in how much Canadians are paying for goods and services, jumped again in September. It was up 4.4 percent compared to September 2020, the “fastest pace” of increase since 2003.Canada’s CPI has now exceeded the Bank of Canada’s inflation-control target range of 1 to 3 percent for six consecutive months, while the U.S. CPI was up 5.4 percent in September year-over-year.
Foxcroft said some elected officials’ suggestion of taxing the rich more doesn’t solve problems.
“The so-called rich are the people employing people [and] carrying charities,” he said, so in taxing them more “you’re going to have unintended consequences.”
While cautioning that there is no quick fix, he proposed reducing the size of government to cut costs and addressing the labour shortage by prioritizing getting the skilled labour force back to the required level.
“Let’s promote, and let’s come up with programs to attract, maintain, and keep and reward people that are going into the skilled trades,” he said.
He also suggested reducing dependence on imports by building up domestic manufacturing capacity in Canada, with an emphasis on greater diversity of products.
“Being smarter and more innovative, like we do in the private sector, is the way you solve problems,” Foxcroft said.
