Disruptions and supply problems were the main contributors. Ottawa—Higher food costs in Canada are a reflection of what is happening around the world, says Michael Graydon, CEO of Food, Health & Consumer Products of Canada. COVID-induced demand spikes, labour shortages, crop damage from extreme weather, transportation disruptions, and sharp increases in the price of energy and fertilizer due to the war in Ukraine are among the forces driving up food prices and the inflation rate, he told the Commons agriculture committee. “Unlike past trends, many of these conditions and pressures have been occurring simultaneously or in a more pronounced manner, leading to broad-based increases in prices.” The costs of producing, selling and buying food have risen sharply across the board, he said. “When costs increase, prices generally do as well.” Food manufacturers reported in an October survey an average 23 per cent increase in costs. “Wheat and oil prices have skyrocketed and sugar has increased over 12 per cent year over year. Plastic packaging costs rose 42 per cent and paper-packaging costs have increased by 36 per cent since January 2020.” On top of that, freight transportation costs rose 32 per cent while labour costs increased by almost 16 per cent. “In addition, our members are dealing with interest rate increases, the increased cost of debt servicing, and foreign exchange challenges, as many of the ingredients used in manufacturing are sourced from outside Canada. Our members expect these costs will continue increasing well into 2023.” Eighty per cent of them report labour shortages in their manufacturing plants while the trucking industry, which manufacturers rely on to transport more than 70 per cent of their products are also struggling with lack of drivers. “These global shortages, with limited to no domestic supply, impact our industry's ability to produce and deliver essential everyday products to Canadians.” To cope, food companies have temporarily reduced variety and sizes to concentrate on making the most necessary and in-demand products, Graydon said. “Most manufacturers are passing on significantly few of their costs to retailers.” Governments could help restrain cost increased building supply-chain resilience and bolstering economic capacity, he said. As well, “Canada needs a mandatory and enforceable grocery code of conduct with a broad scope that captures all essential everyday products on grocery shelves. “The Code will ensure the relationship between suppliers and Canada's grocers is transparent, stable and fair.” It will show “the unification of the industry with regard to fair practice, transparency and fair dealing.”