Why Food Prices May Not Drop Despite Removal of the Consumer Carbon Tax

A customer browses an aisle at a grocery store in Toronto on Feb. 2, 2024. The Canadian Press/Cole Burston

The impact of Ottawa’s decision to drop the consumer carbon tax to zero may not be noticeable on the prices of items in grocery stores, a food security expert says.

Prime Minister Mark Carney issued a directive to bring the consumer carbon tax to zero when he was sworn in on March 14. The move took effect on April 1, the day the carbon tax was set to increase by $15 more per tonne.

But the change is not likely to reduce food prices, according to economics professor and director of Agri-Food Analytics Lab at Dalhousie University Sylvain Charlebois.

“Rebates are gone now. Gas is going to be cheaper, that’s fine, but at the end of the day, will people actually see some stability at the grocery store? My guess is that they won’t,” Charlebois told The Epoch Times.

Charlebois said Carney has left the industrial carbon tax in place, which will still be passed along to consumers. As well, there are other global factors at play that are keeping food prices high, he says.

“The compounding effect of the tax remains in place,” Charlebois said in a post on the X platform. He said that impact has made the industry less competitive.

“It’s like throwing a rock in the river or in the lake. When you throw a rock at the point of contact, you'll see a small circle. Then that circle becomes bigger and bigger and bigger and bigger. That’s the carbon tax within the supply chain,” he added in the interview.

In a recent opinion piece on the issue, Charlebois noted that the carbon tax accumulates as food products move through the supply chain. He said farmers face rising costs on items like fertilizer, fuel, and equipment. Compounding that is the cost of transporting the food items to mills for production, he added.

“By the time a loaf of bread reaches the consumer, multiple layers of carbon tax have been applied at different stages, increasing the final retail price,” he wrote.

“While politicians often focus on the direct tax that consumers see at the register, the real economic pressure accumulates throughout the supply chain. And Carney’s policy shift does little to alleviate this burden.”

Charlebois told The Epoch Times that the real question is one of the link between industrial competitiveness and food prices, not consumer carbon taxes and food prices.

But he adds that there are several other factors that have driven up the cost of food in recent years as well. A November 2024 paper he co-wrote outlines some of the factors.

“The global food supply chain has been unsteadied since 2020,” the paper said.

“Global agricultural regions have seen a decrease in production due adverse weather or geopolitical conflict. The escalation in energy prices has exacerbated the difficulties in obtaining food, particularly for the most impoverished countries worldwide, coupled with shipping bottlenecks due to COVID-19 restrictions, lead to a decrease in commodities stockpiles and an increase in their yearly price fluctuation.”

U.S. tariffs and Canada’s retaliatory tariffs are also expected to increase the prices of some food items.