Last week, Justin Trudeau called on CEO to work on a plan to reduce prices or risk ‘taxation’ and/or other measures to reduce food prices in Canada. Is it really solely the grocery corporations’ fault that prices are high? Let’s discuss.
1. Carbon Tax: Food is grown on farms, which is then shipped to a few different places before landing on grocery store shelves. With the hiking of the carbon tax, it also hikes up the prices for farmers making the food (fuel for tractors, feed costs, etc), truckers and everywhere between. There’s no doubt that it has a significant impact on food prices as well.
2. Fertilizer Sanctions: In February 2022, the Canadian government put significant sanctions on all imported fertilizer from Russia because of the war in Ukraine. When the fertilizer is imported, the Canadian government are payed the sanction by the company who is importing it, which then goes out of the farmer’s pocket. Russia is not in any way affected by the sanction, and because of the lack of competition in the fertilizer marketplace, farmers are forced to pay these sanctions instead of buying it from somewhere else. Farmers in 2022 saw their fertilizer bill go up 100%.
3. Inflation: During the pandemic, the Bank of Canada printed 300% more money than before. Because the amount of money increased significantly and the amount of resources did not, this caused rapid inflation which hiked up the prices of everything including food.
4. Lack of Competition: Canada is renown for having a monopoly on many key industries including food. If you have a lack of competition, you have less reasons to be competitive when it comes to pricing food. The solution, however, is not threats by governments, it should be to encourage competition instead.
The government is not the solution to the problem that they helped created. While it is true that grocery companies do have a monopoly on food and that theoretically, that can artificially hike up prices, it is also due to all of the other circumstances such as the carbon tax, inflation, fertilizer sanctions. The only obvious solution to higher food prices is to encourage competition in the marketplace. If the government starts regulating how much food is allowed to cost, we are going to go down a very dangerous road. Buy from local farmers to get a fresher and great quality product.
Buy or sell local food on EarthCows here to create more competition in the food marketplace!