Canada's food inflation has reached new heights — and what's driving it is regulatory policies. According to Statistics Canada, food inflation rose from 3.4% in October to 4.2% in November.This, says the Food Professor, also known as Dr. Sylvain Charlebois, who runs an agri-food analytics lab at Dalhousie University, does not even match inflation for food purchased in store — which rose to 4.7% the highest rise since December 2023.What's to blame for this rise — namely, the way the food system works — including how food is processed, transported, produced, regulated, and brought to market..Charlebois highlights even the feds are not blaming grocers for the high prices — something that is, in fact, quite telling."Not a single cabinet minister in the Liberal government has openly blamed grocery retailers for food inflation in nearly two years," he stated."That rhetoric has largely been confined to the NDP and the Green Party.""It suggests that the federal government increasingly recognizes that Canada’s food inflation problem is neither simple nor linear, and that slogans alone will not bring prices down.".This is how we know it isn't grocers: gross profit margins, the profit remaining after subtracting the cost of goods, have remained relatively stable across Canada's grocery retailers.If grocers were the cause of the inflated prices, their profit margins would be expanding, not remaining stable.Charlebois points to "structural and policy-driven" causes.Costs for energy, fertilizer, and labour remain high in the country..With Canada having such a vast geographical space, logistics costs and regulatory restrictions, like trade constraints and domestic production — these factors only make things worse. Charlebois points to the three most well-tasted meats, beef, pork, and chicken, whose prices are all rising.A great example of regulatory roadblocks is the beef supply — which keeps beef prices steep.Beef suppliers must request government-administered beef import permits, though the feds seem to be handing them out sparsely. ."A limited volume of beef can enter the country at a low tariff, but anything beyond that is slapped with a steep import charge," stated Charlebois.The permits are meant to provide supply without the steep import charges.The committee responsible for supplying these permits, the Beef and Veal Tariff Quota Advisory Committee, has not met since 2015, and as a result, no discussions have been had on making improvements to the regulations.In that lost time, those with a vested interest — mainly those who seek to limit imports — have been benefiting.For example, meat packing companies that dominate the industry in Canada — Cargill, based in the United States, and JBS, headquartered in Brazil..Charlebois' source said in a case where an importer had been waiting to be allowed into the country, even though the beef had been legally imported and properly documented — the importer had applied for a permit and was refused.The importer was refused because " the beef had been purchased abroad at a price 'too low' compared with U.S. prices—makes little economic sense."Without a permit, the importer would have to wait until the next quota year — or pay a full over-quota tariff.The feds collect tariff revenue..But it's not just meat — vegetables, coffee, and pantry staples are all experiencing rising prices.To understand the severity of the rising prices, looking at the rise in other G7 countries helps illustrate the point. Canada is near the top of advanced economies in the G7 when it comes to food prices rising faster than the broader economy."Only Japan shows a larger divergence," stated Charlebois."Canada’s gap stands at +2.0%, compared with +1.3% in the United Kingdom, +1.1% in Italy, and +0.5% in France.""In the United States, the gap is negligible (+0.1%), while in Germany food inflation is running below overall inflation (–0.5%).".Charlebois says the solution lies in reducing regulatory policies on the food process, "improving transportation and logistics capacity, encouraging investment in domestic food manufacturing, modernizing competition policy, and enabling firms to scale."This would help because it allows for better policy to deal with inflation."In Germany and the United States, food inflation is easing relative to overall inflation.""Their systems are not immune to global pressures, but they are better equipped to absorb them through scale, infrastructure, competition, and policy alignment."
