Wonderful.
As noted by previous witnesses, there have been excessive cost pressures on both the supply chain and the consumer. While the produce industry is seeing market improvements, we are still seeing parts of our system influenced by global markets and high-cost centres. As we saw last week, the 14th edition of Canada’s food cost report by leading Canadian universities shows projected increases to vegetables and other foods for 2024.
It is critical to understand that the food system is complicated. There are no singular solutions to drive down food prices. Labour costs across the supply chain continue to rise, production inputs remain high, and ongoing high interest rates, a high cost of borrowing and the regulatory burden all play a factor in business. The changing climate is also an ongoing issue. The cost of adjusting our supply chains to meet this challenge is extremely important to recognize.
As some on the committee are aware, I chair a global coalition of fresh fruits and vegetables that is focused on addressing supply chain issues. Earlier this year, we surveyed industry members on the global impact of costs to their business. The numbers are dramatic. While these numbers are improving, they tell a complex story of why Canadians are paying more for their fruits and vegetables. This is what we reported in Canada—packaging up 13%, labour costs up 18%, plant material costs up 16%, cost of crop production inputs up 21%, energy costs on average up 24%, and machinery and equipment up 20%. While retail wasn't included in this survey, I have had conversations with retailers in Canada. Costs in their operations are up as well.
While we are seeing food inflation slowly decline, these impacts continue on both consumers and our sector. Our concern now is declining fruit and vegetable consumption. In Q4 of 2023, we are seeing Canadians' daily consumption drop by a serving. If this continues, our data shows an increased cost of approximately $1 billion annually to our health care system.
According to our numbers, we know that fresh produce typically moves in the opposite direction of the consumer price index, or CPI, and not inflation specifically. When the CPI dropped in October, I would have expected consumption to increase, but it was not the case. Consumers are still reducing consumption, and this is a concern. I think Mr. MacGregor talked earlier at committee about the projected cost of food in 2024 increasing. We are very, very concerned about where this is going.
The Government of Canada needs to look at food as essential and frame policy to support this. The regulatory burden with proposed policy measures on packaging and heating costs are examples of driving up costs through poorly developed policy measures that do not look at the unintended consequences.
Before closing, I would like to note the grocery code of conduct. We have heard a diversity of testimony. As a steering committee member and now interim board member of the code, I can attest to the fact that everyone is working hard to reduce and stabilize food prices. The process of developing a code has made all key industry players talk to each other in a way that has not happened in the past but is positive in terms of moving forward. We may not have a perfect solution yet, but we are years ahead from where we were in 2020. Trade associations continue to work on solutions for all. While there is concern, I know, that not all major retailers are around the table, we are still negotiating. I will tell everyone that it is a negotiation, and we continue to do so.
In closing, we need to take a full food systems approach to finding a solution to food inflation. There is no silver bullet. We have a large geography to navigate. We have diverse urban, rural and remote communities to serve. The path forward needs to recognize all of these elements and consider all of the unintended consequences that could develop through poor policy frameworks.
Thank you for the opportunity. I look forward to questions.