Your pizza is likely to cost more this year, and economists predict it will cost even more in 2023. to COVID-19 will have a domino effect on your favorite comfort foods heading into the summer season.
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Should Quebecers going on vacation this summer expect to pay more, even at small roadside snack bars? It is very likely, confirms the economist and director of the Laboratory of Analytical Sciences in Agrifood at Dalhousie University, Sylvain Charlebois. And contrary to what one might think, this cannot be explained solely by the rise in food prices.
“It is in Quebec that we are seeing the biggest rise in prices in restaurants. It is because the sanitary measures have hurt the restaurateurs financially here more than elsewhere, ”he says. Forced to close and reopen repeatedly for the past two years, restaurant owners want to make up for lost time and profits.
“It is certain that there will be effects everywhere in the province. It will not be an easy summer for the cost of food,” concludes the economist.
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Everything will cost more
Two major phenomena are behind a global rise in food prices: problems in the global supply chain and the war in Ukraine, recalls Sylvain Charlebois.
“For the past year, health measures have caused a desynchronization between the markets, which causes delays and additional costs. The situation was starting to improve, but the arrival of a new variant in Shanghai suggests that the problems will persist until 2023,” he explains. The war in Ukraine has, in turn, caused an increase in the price of grain and fuel, which is felt across all sectors of the food markets.
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Shelled supers
To understand how these price increases influence each other, let’s take the innocuous example of a pizza. Each of the ingredients of this pizza experienced a price increase in Canada between March 2021 and March 2022 for reasons that are all more different from each other.
Flour (10.9% increase)
Ukraine is one of the largest grain producers in the world. The war that is taking place there obviously disrupted its commercial activities and caused a shortage, resulting in a rise in prices.
This shortage is not only linked to the war, nuance however Sylvain Charlebois.
“We had a very bad grain harvest year in 2021, especially because of the climate. There have been significant droughts in Canada, the United States and Russia, catastrophic floods in Germany.”
It is this shortage that drives up the price of all cereal and grain products, including flour, an essential ingredient for our pizza dough.
Photomontage: Marilyne Houde
Meat (10.7% increase)
The increase in the price of grain has a direct effect on the price of meat. Since the grain is used to feed livestock, ranchers have to drive up the price of their products to cover the deficit caused by the increase.
In 2021, the drought had already convinced breeders to slaughter a large part of their herd. The reduced supply of meat in the face of demand therefore increases prices.
The domino effect of rising grain prices is being felt on the retail price of meat, but also of processed meat products, such as charcuterie that sits on our pizza.
Photomontage: Marilyne Houde
Cheese (7.9% increase)
Unlike meat, the price of milk is regulated in Canada. As soon as production costs increase, the price of milk follows. As grain is once again used to feed dairy cows, its scarcity drives up production costs and therefore the price at which milk is sold to cheese makers, causing chain increases. This increase in the price of cheese will not calm down in the coming months, according to Sylvain Charlebois.
“Putin could not have chosen a better time to disrupt the global economy. As long as the war in Ukraine continues, everything directly or indirectly related to grain will increase.”
Photomontage: Marilyne Houde
Oil (24.7% increase)
The meteoric rise in the price of oil has more to do with the scarcity of raw materials and transportation. Many of the vegetable oils we use in Canada come from elsewhere, and the increase in fuel used for transportation is therefore driving up prices. But we are not at the end of our troubles: major changes in the market are likely to cause even more waves.
“Indonesia has announced a halt to all palm oil exports. Companies that use palm oil in their products will look for new alternatives, which will create pressure on the market and increase the price of oils used as replacements,” warns the economist.
Photomontage: Marilyne Houde
Mushrooms (12.5% increase)
Produced in greenhouses, mushrooms are not vulnerable to climate change like the vegetables that grow in the fields. The rise in prices is then more likely to be explained by a shortage of labor in the sector. Fewer employees to harvest results in less production and therefore higher prices. The closure of restaurants due to COVID-19 has probably had a significant impact on the market, believes Sylvain Charlebois.
“A very large part of the production went into catering, which caused a lot of loss and waste in this sector.”
Photomontage: Marilyne Houde
Canned tomatoes (8.7%) and soft drink (9% increase)
The price of canned food is generally more stable than that of fresh food. Even in this sector, the increase in the price of transport and raw materials is having an impact. Access to the metal is more difficult, which leads to additional costs for the manufacture of preserves. Nothing escapes it.