Evidence of meeting #143 for Industry, Science and Technology in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was cards.
A recording is available from Parliament.
Senior Director, Agri-Food Analytics Lab and Professor, Dalhousie University, Agri-Food Analytics Lab
That percentage is increasing. Again, we'll see in April whether it has increased even more.
When you start to unpack the data we accumulated for this particular report, you'll notice that the younger generations aren't necessarily aware of how powerful their dollars are and how much they can buy. They don't necessarily understand exactly how inflation has impacted their buying power. If you buy through credit, your perception is severely impacted, as a result.
Conservative
Rick Perkins Conservative South Shore—St. Margarets, NS
Does perception of what's happening in food prices...? You know, there's a lot of talk out there. Does that affect people's behaviour, or is it just the reality?
Senior Director, Agri-Food Analytics Lab and Professor, Dalhousie University, Agri-Food Analytics Lab
It's a good question.
Last year, we surveyed 9,000 Canadians. We asked them how much food prices have gone up in the last five years—since March 2020, or COVID—without telling them. The average answer was 78%.
Conservative
Senior Director, Agri-Food Analytics Lab and Professor, Dalhousie University, Agri-Food Analytics Lab
Baby formula....
The truth is 24%. Therefore, perceptions are absolutely impacting behaviour. A lot of people are saying, “Oh, my goodness, food prices have tripled.” That's not true. There's no evidence of that. However, what this means is that, essentially, people feel the pain. That pain is real.
Conservative
Liberal
The Chair Liberal Joël Lightbound
I have a quick follow-up question about olive oil.
One thing I've noticed at the grocery store is that you'll now see, next to olive oil, a lot of canola oil and seed oils, which are arguably not as good or as healthy as olive oil.
Have you witnessed, first, a change? Certainly, there is a change if groceries are putting these other substitutes or products next to olive oil. They know there's a demand for it.
Also, you were talking about shrinkflation. Have you noticed a change in the quality of products offered? Are companies going for cheaper ingredients in preparing the products they're selling?
Senior Director, Agri-Food Analytics Lab and Professor, Dalhousie University, Agri-Food Analytics Lab
Yes, there is some substitution happening, for sure, in vegetable oils. There are many other options out there. When olive oil becomes too expensive, they will look at other options. There are options other than canola oil.
One thing that concerns us very much is food fraud, especially with everything liquid at the grocery store. That can be adulterated very easily. Olive oil is a huge target. Right now, we're working with some colleagues in Greece who believe that 20% of all olive oil in Europe is adulterated, because of higher olive oil prices. We don't know the answer here in Canada, because we're not testing.
Liberal
The Chair Liberal Joël Lightbound
Recently, Radio-Canada reported that, in the Bolognese spaghetti sauces sold at grocery stores, there was only a tiny bit of meat. We’re talking about two grams in the whole can, even though it’s advertised as Bolognese sauce. It’s rather peculiar.
If we want a sauce that contains even the least bit of meat, we have to pay $12, $13 or $14 a can.
Senior Director, Agri-Food Analytics Lab and Professor, Dalhousie University, Agri-Food Analytics Lab
I know that shrinkflation created an outcry, but I think food fraud is more serious. For example, by mixing canola oil with olive oil, an allergen is created. That’s not just a socio‑economic issue, it’s a public health issue as well.
Senior Director, Agri-Food Analytics Lab and Professor, Dalhousie University, Agri-Food Analytics Lab
Absolutely not.
I think that, without knowing it, everyone here has been a victim of food fraud over the last month, including myself.
Liberal
The Chair Liberal Joël Lightbound
I see.
Sometimes, it starts young. Often, my mother wouldn’t tell me exactly what she put her recipes. That way, she could get me to eat what I had to for my health, but that is not at all the same thing.
Thank you, Mr. Charlebois.
Mr. Turnbull, you have the floor.
Liberal
Ryan Turnbull Liberal Whitby, ON
Thank you, Chair.
Ms. Lang, I'm going to start with you. Thanks for being here today.
I want to go back to your opening statement, because I was connecting all of the stats that you put out quite quickly, which I think are very helpful for us, so I can go back in the record and look at exactly what you said, but I just want to make sure that I interpreted you correctly. I think what I heard you say is that credit card-caused insolvencies as self-reported are not perfect because it's an open text field on your website, I guess, and that these haven't worsened significantly as a percentage of the overall insolvencies in Canada. Is that true?
Superintendent, Office of the Superintendent of Bankruptcy
Yes, that's right. It stayed under under 1% compared to.... What was my comparison year? Was it 2019?
Liberal
Ryan Turnbull Liberal Whitby, ON
Yes, and then you also referenced the 2008 recession and said that it was higher during that time.
Given the fact that we've just gone through a once-in-100-year public health crisis that was pretty significant in its economic impact, sending tremors through the global economy and causing all kinds of effects—supply-side shocks, perhaps demand-side shocks—that rippled through, do you see the fact that insolvencies haven't significantly increased—they've decreased in comparison to the recession in 2008—as almost a sign that we're doing relatively well?
I'm not saying that any amount of insolvency is good. Of course, it's not, but it is reality. I'm just trying to get a historical perspective here.
If you compare back to the recession of 2008, we have fewer insolvencies today, but we've just gone through a massive global public health crisis that had major impacts on the global economy. Can you put that in perspective a bit?
Superintendent, Office of the Superintendent of Bankruptcy
It's hard to say what it signifies, but I think, generally, we expect the numbers to continue to climb back up to 2019 rates. I doubt that we'll see the 2009 recessionary rates unless we hit another significant recession, but there's not really any explanation as to why we wouldn't get back to 2019, possibly slightly above, given the increase in our population.
Liberal
Ryan Turnbull Liberal Whitby, ON
Okay. Thank you.
Mr. Charlebois, I want to ask you some questions.
I note that I was on the agri-food standing committee, and you appeared quite a number of times, so it's great to have you here at INDU.
The Governor of the Bank of Canada has recently said that climate change continues to be the main driver of food price volatility, which is interesting because you also indicated today as well to some degree that global commodity price volatility is caused by climate change. You've estimated that companies would be forced, in a way, to review their cost structure, and you anticipate another wave of shrinkflation in the future.
In the work that you do at the agri-food lab, have you done a study? Has your organization done a study on what is well regarded by some experts, including you, I think here today, that food price volatility is being led by or caused by climate change? Have you done a study on that?
October 31st, 2024 / 9:45 a.m.
Senior Director, Agri-Food Analytics Lab and Professor, Dalhousie University, Agri-Food Analytics Lab
The short answer is no, but I would agree with the governor. I do think that price volatility is probably the most significant challenge for consumers beyond food inflation itself, and that is something we did study. As soon as prices are volatile, you will push away consumers for a very long time.
It happened to beef in 2014-15. It's going to happen again. It's happening again right now, by the way. Beef prices, because of climate change.... The herd, the North American herd, has dropped significantly, because it costs more to feed cattle and prices are pretty interesting now. A lot of cattle producers are exiting the industry. Inventories are extremely low. That, indirectly, is linked to climate change, but beef prices will remain high until probably the end of 2025 due to climate change, and that's going to push consumers away from that category, unfortunately.
We've seen it. Every time the price of fruits, vegetables and meat is very volatile, it pushes consumers away, and they end up at the centre of the grocery store, where products are not necessarily as nutritional.
Liberal
Ryan Turnbull Liberal Whitby, ON
I know that when I shop, I shop around the perimeter. Just in saying that, I'm understanding of the nutritional density, and preparing your own food is certainly how I choose to eat, but every Canadian has their own choices to make.
I'm sort of interested in the fact that you've made comments fairly regularly about carbon pricing, and I disagree with you strongly, but I want to just tease out some of the things I've heard in connecting these things together and then put a question to you.
In February of this year, the Bank of Canada governor stated at another committee that at $15 per tonne annual increases in carbon pricing raise the average economy-wide price level by 0.1 percentage points. I would argue that this is a relatively small amount. It's not insignificant, but it's pretty small. Would it even show up in the CPI calculations? I'm not sure.
Trevor Tombe, who I think you probably know of, an economist at the University of Calgary, has said that the current cost of carbon pricing would be about 0.15%. That's 15¢ on a hundred-dollar spend at the grocery store. He then traced it through the supply chain and said that it might be as much as about 30¢ on a hundred-dollar spend. That's relatively small. When I hear the Conservatives wailing and screaming about this, it sounds like it's the end of the world, like it's $50 on a hundred-dollar grocery bill, to be honest, the way they make it sound. To me, I'm a fact-based person here. I'm trying to understand what is the real impact.
The other thing I want to say is that the European Central Bank did a study. They said that “higher temperatures alone will” push “up worldwide food prices by between 0.9 and 3.2 per cent every” year. That's way higher, so what I'm trying to say is, isn't the cost of climate change, the impact it has on our food prices, significantly higher—like 20 to 30 times higher by my really gross calculation—than the carbon price?
It's over to you.
Senior Director, Agri-Food Analytics Lab and Professor, Dalhousie University, Agri-Food Analytics Lab
First of all, I've looked at Professor Tombe's study and I've looked at the calculations used by the Bank of Canada.
I've actually made some comments publicly about how shallow the Bank of Canada's calculations were. They looked at only three components of the CPI. I want to register that very quickly.
In Professor Tombe's analysis, he uses statistics from the social science depository that is available to all of us—to you, to me—and that data is not clear. Again, I've said this earlier. To correlate the carbon tax policy with retail prices is dangerous, because you have to base it on several weak assumptions, and that's what Professor Tombe did. I did say that, and I actually sent an email to him about this.
Now, I'm not against the carbon pricing at all, by the way. I actually am supportive of it, but we also need to—
Senior Director, Agri-Food Analytics Lab and Professor, Dalhousie University, Agri-Food Analytics Lab
However, I was in Saskatchewan last week to talk about this, and I do believe that carbon is a tremendous opportunity for the agri-food sector. The carbon tax itself appears to be a policy driven by the idea that we can change the weather. We have to see this as an opportunity to grow the industry in a sustainable way. That's where we disagree.
Liberal
Ryan Turnbull Liberal Whitby, ON
Perhaps. You have said numerous times that making the calculations on the true cost of carbon pricing is challenging. You've challenged some of the assumptions with Trevor Tombe and others who have tried to calculate the cost along the supply chain in the agri-food system. You yourself have not been able to calculate that to prove those assumptions false, although you say that they're somewhat shallow. Is that right? You've said that here today, and that's fine. I don't want to disagree with that.
Even if it's 40¢ on a $100 grocery bill, 300 economists at least have said that they agree. Even the Parliamentary Budget Officer, I've had meetings with him, and he says he's a fan of carbon pricing. Carbon pricing is the most cost-effective way to address climate change. You're agreeing that climate change is the biggest driver of food price volatility, or commodity price volatility, which has an effect on food prices. You're agreeing, in a way, that we have to address climate change if we're going to address food price inflation. Do you not agree with that?