Global Pandemic Pushes Food Prices Higher

What a year 2020 has been, and through it all, the researchers behind Canada’s Food Price Report have been paying close attention and carrying out research to forecast the impacts on food prices in 2021. In the 11^th edition of the report, founder Sylvain Charlebois has recognized a goal of expanding the report to a national collaboration, by including academics from the Universities of Saskatchewan[1] and British Columbia for the first time. The U of S and UBC join Dalhousie University and the University of Guelph in the preparation of the 2021 CFPR. It is anticipated that additional research can be conducted, resulting in the release of extra information and insights into Canadian’s relationship with food.

What to expect for food prices in 2021

For the vast majority of our nation, the Canadian agricultural food supply chain has functioned admirably during the past 9 months of the pandemic, however, it is predicted that food prices will rise in 2021. This is likely no shock to you as a reader, the pandemic has caused a lot of uncertainty and economic volatility in the markets, which trickles into our everyday lives, including our food prices. So what can we expect for food prices in the coming year? Meat and vegetable prices will likely experience the largest increase as much as a 6.5% increase from 2020 prices. Food price increases are anticipated across all 8 categories assessed in the report, and a family of 4 is expected to spend $13,907 on food in 2021.[2] This is an increase of $1,400 over food spending in 2020. Going into 2020, researchers predicted an increase of 2 to 4% in food prices overall, whereas, for 2021, they are forecasting an average increase of 3 to 5%.

2021 Food Price Forecasts

Food Categories	Anticipated Changes (%)
Bakery	3.5% to 5.5%
Dairy	1% to 3%
Fruits	2% to 4%
Meat	4.5% to 6.5%
Other	2% to 4%
Restaurant	3% to 5%
Seafood	1.5% to 3.5%
Vegetables	4.5% to 6.5%
Total Increase in Food Prices	3% to 5%

(Canada’s Food Price Report 2021, Table 1 p.7)

So, what is predicted to change for 2021 that is driving prices higher?

The increase can largely be attributed to the impacts the COVID-19 pandemic has had on the entire food chain, from farmers to consumers. There have been significant changes to the supply chain phases, including production, manufacturing, distribution and retail. These effects are expected to continue to plague the food industry in 2021. The business loss in the food sector, such as the closure of restaurants, will affect prices. Not surprisingly, restaurants have been particularly hard hit by economic lockdowns used to limit the spread of COVID-19. On average,  Canadians spend $13 billion on food a month, both in retail stores and restaurants. Before the pandemic, Canadians were making 62% of their food purchases in retail grocery stores and 38% was spent in restaurants or for takeaway purchases. In May, at the height of the spring economic lockdown, consumers made 91% of their food purchases in grocery stores and a mere 9% in restaurants. By November, this had recovered somewhat, with 74% of food purchases in grocery stores and 26% in restaurants. However, since this report was written, many provinces have re-implemented restaurant restrictions and it is anticipated the return to the previous spending ration will be a lengthy one.

The resilience of Canada’s food supply chain was evident by the limited number of bare shelves in grocery stores in the spring. Shortages were predominantly limited to shelves containing tuna, pasta, soup, peanut butter, flour, rice, and frozen fruits and vegetables. These shelves were empty at most for 2-3 days before a new shipment arrived and shelves would be restocked. As the panic-induced purchasing habits waned, empty shelves have been virtually unseen since springtime. While our supply chain kept trucking to meet the demands of panicked buying, and increased demand to make three meals a day at home for the family, we also saw the shift in e-commerce shopping from the grocers and a renewed interest in supporting local food supply chains.

What to watch for this year

While we expect the pandemic to play a major role in Canada’s food prices, there are other events to consider which will also play a role in 2021’s food supply chain and prices. As the pandemic continues in the forefront of the news, factors such as the ban on single-use plastics, efforts to mitigate climate change and our neighbours to the South’s presidential outcome will affect our currency, possibly food policy, and food prices. But what we need to remember in the coming year, is that while many of us may have a tighter budget in 2021, our agri-food supply chain has learned much from the first wave of COVID-19 and will work hard to adapt and carry forward to provide us with the necessary goods.

Be sure to check out the full report and previous years’ reports, as well as check out the following Twitter accounts and hashtags for more media coverage and information on the report.