Ottawa-Wholesale food prices are much higher in Canada than the U.S. due to several government policies including the carbon tax, says Sylvain Charlebois, Senior Director of the Agri-Food Analytics Lab at Dalhousie University.

Since the carbon tax was implemented in 2019, food wholesale prices in Canada have increased by 37 per cent more than in the U.S., he told the Commons agriculture committee. The higher prices are due to several factors and “the carbon tax did not help our cause.

“Wholesale food prices are putting way more pressure on retail, making our food essentially more expensive. Now, again, you could speculate that wholesale prices are being pushed up by policies like the carbon tax.”

In the U.S., wholesale producer prices are passed on more directly to consumers, with a more immediate reflection of rising costs at the retail level, Charlebois said. U.S. retailers may have more of a buffer or are more inclined to adjust consumer prices in response to producer price increases.

“Instead of looking at retail prices or the retail landscape, it's critical to look at the supply chain and wholesale prices.”

“With lower and no federal carbon pricing in the U.S., American food producers are not burdened with the same environmental costs, creating an uneven playing field in the North American market. We often talk about benefits given to farmers and different stakeholders across the supply chain. Even if you provide financial support to different stakeholders in the supply chain, you still will see inflation and increasing costs because of the compounding impact throughout the supply chain, making, again, the agri-food sector less competitive overall.”

The inflationary pressures on food prices also comes from supply chain, transportation and other costs “even when partially mitigated by government programs, still make the Canadian food industry less agile and competitive on the global stage. The carbon tax likely adds a significant cost burden to the Canadian food industry that is not faced by U.S. producers, making Canadian products more expensive and less competitive, both domestically and internationally.”

The competitiveness of the agrifood sector “is being jeopardized by not focusing on competitiveness and by not measuring the impacts of certain policies that we implement.”

He told John Barlow, he Conservative agriculture spokesman, that it would be premature to say that the carbon tax is solely responsible for the difference in Canadian and American food prices between the two nations. We don’t know for sure to what extent. That would need to be clarified.”

The Analytics Lab at Dalhousie has released a report about food expenditures in Canada, which says that retail-wise, food expenditures have remained flat despite higher food prices. “This only means that people are avoiding the periphery of the store where fresh products are. It's where good vitamins and minerals are, including vitamin C. People will go to the centre of the store to escape from inflationary pressures. That's exactly what's happening right now. A lot of families are facing that reality.”

He also said that “support for farmers is absolutely crucial when we talk about supporting our agricultural sector to make it more competitive.”

This news item prepared for National Newswatch