Grocery buyers paying COVID-19 tax

The writer calls food inflation a hidden, regressive “COVID tax” that  is an issue for people who are struggling financially. | File photo

Canadians’ ballot decisions in the Sept. 20 federal election will likely differ depending on what they care about. But since everyone eats and most of us try to manage a limited food budget, the most important electoral issue will likely be inflation.

Or at least it should be.

Everything is costing Canadians more, including food. And the worst is yet to come, especially if the COVID-19 delta variant ruins it for many of us this fall.

By December, the average Canadian household will have to pay five percent more for groceries, or about $700 more a year.

This is the largest dollar-value increase in history. And it could be even higher in 2022.

As the impact of climate change made evident this summer, the situation will be increasingly unpredictable and chaotic for agri-food businesses.

And COVID has had its say in the operability of food chains and the costs that businesses must bear to make sure we have enough to buy at grocery stores and restaurants.

Due to COVID, global supply and demand for almost everything is distorted. Demand is strong for several products, including food. This pent-up demand puts enormous strain on supply chains.

The maritime transport industry has been particularly hard hit by the pandemic, which will have long-term consequences. Freight rates have increased by more than 200 percent on average over the past year.

The food chain is trying to absorb some of the costs caused by expensive transportation. But by this fall or winter, retailers and restaurateurs will have no choice but to increase prices.

Many federal policies don’t help.

Subsidized unemployment benefits have contributed to a shortage of workers of all ages, not just young people, which means employers must pay much more in labour costs to get people back to work.

Higher wages are desirable, but there are hardly any incentives to encourage work or retraining, especially among those aged 55 and older, where the level of employment has fallen the most in the last year.

If consumers haven’t noticed higher food prices yet, they will soon.

Since 2019, the Trudeau government has shown extreme generosity toward the agri-food sector. It has said yes to almost everything — the food waste program, compensation for farmers, financial support for food processing and food safety.

And if we add the programs created to mitigate the effects of the pandemic, such as the Canadian seafood stabilization fund, the emergency processing fund, the emergency food security fund, the recovery program food surpluses and the Nutrition North Canada program, the sums are colossal.

All these programs exceed $2.5 billion. That’s $65 per Canadian.

Canadian industry is in dire need of financial support. But by saying yes to everything, the federal government is offering policy without vision, without clear priorities.

Of course, the pandemic is not solely responsible for higher food inflation. There are multiple factors. The western world is grappling with an inflationary situation. Canada isn’t alone.

But the Liberal party generosity has created hyperstimulation of demand, causing prices to inflate at an unsustainable rate. Food isn’t immune.

The average Canadian pays more in taxes than for food, clothing, and housing or mortgage combined.

While taxes may not go up for many of us, the cost of living will. So the future cost of food needs to be addressed in this election campaign.

Otherwise, even if candidates running for office hammer home the message that taxes won’t increase, food inflation — a hidden, regressive “COVID tax” — is an issue for people who are struggling financially.

Sylvain Charlebois is senior director of the agri-food analytics lab and a professor in food distribution and policy at Dalhousie University.

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