Food prices have soared 18% over the past two years, and while they won’t rise as rapidly, they’re not coming back down, according to a new report.
High food costs are “the new normal” as labour shortages and extreme climate events continue to plague the sector, an RBC report warns.
“As more people enter retirement and fewer enter the labour force labour shortages will persist long-term,” said Nathan Janzen, assistant chief economist at RBC and report co-author. “And extreme weather events will limit crop production putting more pressure on our supply.” Labour shortages for certain jobs, such as truckers, has been a decades-long problem, Janzen said. But now labour shortages are more widespread in the industry, burdening production.
The Russian invasion of Ukraine sent wheat prices skyrocketing, causing a surge in prices for fertilizer and natural gas. And severe drought conditions hit the Prairie provinces, prompting domestic crop production to drop sharply in 2021. “What happens if China invades Taiwan? You have to hedge against these odds,” he said. “There’s a lot of uncertainty with geopolitics and it’s making things less predictable.”
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