Conditions may improve in the New Year.Ottawa-Weather disruptions and labour shortages have driven up the cost of food for Canadians during the second half of 2021 but might moderate in the New Year.That's the message from Farm Credit Canada and Statistics Canada reviews of crop conditions and other challenges facing food companies. In its Quarterly Economic and Financial Market update, FCC says rising food costs is a significant factor pushing up the economic inflation rate in Canada.“In the second half of the year, food inflation has been rising in response to higher input costs and labour challenges,” it said. “Challenging crop growing conditions in large portions of North America and Central Asia have contributed to tighter supplies and higher commodity prices.”The result could be “further pressure on imported nut, fruit and vegetable prices in the new year,” it said. “Livestock prices have also been trending higher than their five-year average in 2021 as the reopening of the economy led to stronger meat demand.”Meanwhile a shortage of workers in the food manufacturing sector means businesses “can't keep up with demand, and unfilled orders are trending up 50 per cent year over year.”Food manufacturers have passed on a net price increase of more than 8.1 per cent over 2020 and the companies will look to pass on any additional costs, FCC said.Reference prices for some grains, oilseeds and livestock have come down from their summer highs and the loonie has rallied recently, which has also offered relief to food inflation.“Canadians rely on the supply of imported food, and the higher dollar softens the blow of higher commodity prices in some areas like fruit and vegetable products, breakfast cereals, sugar, snack foods and coffee.”However FCC believes “food inflation will remain elevated for the foreseeable future. As supply chain disruptions and labour challenges ease and the supply of agricultural commodities rebounds, we should record lower food inflation. The difficult question is around the timeline associated with a return to average inflationary pressures.”StatsCan said its Farm Product Price Index (FPPI) increased 24.4 per cent in September 2021 compared with the same month a year earlier, as a result of higher prices for both crops and livestock and animal products.It was the 13th consecutive year-over-year increase in the FPPI.The oilseed index increased 39.6 per cent in September, continuing its year-over-year increase which began in May 2020. Canola, soybean and flaxseed prices have been boosted by tighter supplies and rising global and domestic demand for protein meals and vegetable oils.The livestock and animal products index rose 13.1 per cent in September 2021 compared with the same month a year earlier, the 8th consecutive year-over-year increase.Higher prices for hogs, up 31.4 per cent, were largely responsible for the increase in the livestock and animal products index in September 2021 compared with the same period a year earlier. The cattle and calves index increased 10.8% this September compared with September 2020, largely as a result of higher slaughter prices.Supply managed commodities also posted year-over-year increases in September 2021. While both poultry posted double digit increases in September 2021, dairy posted an increase of 0.4 per cent.