Created on 9/6/2022 10:41:15 AM
Written by Michael Graydon, CEO of Food, Health & Consumer Products of Canada
Published on March 16, 2022
Canada has no control over some factors set to further increase food and grocery prices in the very near future, making it all the more critical that we avert crises like the looming rail strike and finally fix longstanding weaknesses that are in our control.
Two weeks ago, Ukraine was Europe’s bread basket; today it is under siege by Russian forces. The most urgent goal must be to stop the war. Compounding the tragedy of lives lost in Ukraine, experts also fear the loss of the country’s previously bountiful agricultural sector will lead to food insecurity in the region and disrupt global supply chains already weakened by two years of the pandemic and other disruptions.
Ukraine is one of the world’s leading producers of wheat, sunflower oil, and fertilizers. While Canada is not overly reliant on Ukrainian supplies of these products directly, world market prices for commodities (not to mention energy and transportation) are expected to rise significantly as a result of the war and also as a result of sanctions on Russia. Oil prices are up by 25%, and North American fertilizer prices are up an estimated 10%.
Closer to home, the prospect of a breakdown in negotiations between Canadian Pacific Railway and the Teamsters Canada Rail Conference could lead to a rail strike that would seriously harm Canadian manufacturing and supply chains. CP Rail is a critical link in manufacturing supply chains.
The Teamsters’ 16,000 rail workers facilitate the movement of essential goods and ingredients throughout Canada, and a disruption in their work will be hugely damaging. Shipping and trucking disruptions, including the trucker vaccine mandate and protests, have caused significant delays and cost increases. The parties must urgently come to agreement, and the federal government must be prepared to take any steps necessary to avoid rail transport disruptions.
According to polling released by Canadian Manufacturers and Exporters (CME) on March 9, 90% of Canadian manufacturers are already facing supply chain disruptions; 60% say the disruptions are major or severe. Large majorities of impacted manufacturers have had to find alternative sources of key inputs (70%) and have been forced to raise prices for their customers (80%), such as retail stores.
Canada’s food and grocery manufacturers have advocated throughout the pandemic for government to prioritize actions that support secure, resilient supplies of essential food, health, and consumer products. While ending the war in Ukraine may be outside Canada’s immediate reach, government can and must take practical steps to address labor, transportation, and retail challenges.
After two years of non-stop disruptions from COVID-19 to extreme weather, Canada’s supply chain simply cannot absorb any further shocks. We must focus on solutions today and finally build an agenda for a future where our essential supply chains are a priority in a resilient and self-reliant economy.
We must act like Canada’s future depends on the strength of our food and grocery manufacturing and supply chains - because it does.