OTTAWA \u2014 Call it the coriander conundrum.\u00a0<\/p>\n
Like with parsley, carrots, dill, and most other members of the apiaceae family of edible plants, the retail price of coriander has been growing like a weed.\u00a0\u00a0<\/p>\n
While the prices of many items on grocery store shelves have been heading north in recent months and years, the price of fresh coriander \u2014 and the cilantro leaves that come from the same plant \u2014 tends to be even more volatile than most because the plant is a bit precious \u2013 it needs good weather, spoils quickly after being picked, and is usually imported. \u00a0<\/p>\n
That means its shelf price, which has\u00a0more than doubled in price in some markets since the start of the pandemic,\u00a0is\u00a0more\u00a0susceptible\u00a0to\u00a0exchange rate fluctuations and\u00a0fuel price spikes, such as those\u00a0that followed the recent attacks on Iran and the\u00a0subsequent\u00a0closing of the Strait of Hormuz.\u00a0<\/p>\n
The price of coriander is just one small component in the broader basket of items on Canadian grocery store shelves, the costs of which have been rising sharply in recent years. The Bank of Canada said earlier this year that grocery prices climbed about 22 per cent between 2022 and 2025, compared to a jump of 13 per cent for other consumer prices during the same period.<\/p>\n
But there are no policy options to deal with grocery prices that won\u2019t cause more harm than good, said Don Drummond, a former high-ranking official at the Department of Finance and chief economist at TD Bank.<\/p>\n
\u201cThere are no policy levers that would quickly and decisively lower grocery store prices,\u201d\u00a0he\u00a0said. \u201cAll they can do is re-distribute who pays and when.\u201d\u00a0<\/p>\n
Drummond says the rise in food prices is a trap\u00a0for governments because most efforts to do something will mean\u00a0borrowing more money,\u00a0thereby adding to the burden that future generations will\u00a0pay for\u00a0today\u2019s consumption.\u00a0Scratching more cheques for consumers is also dangerous because\u00a0it\u2019s\u00a0expensive,\u00a0adds\u00a0to the expectation that governments will bail people\u00a0out,\u00a0and\u00a0puts further pressure on inflation by boosting demand.\u00a0<\/p>\n
\u201cThere is nothing useful that can be done.\u201d\u00a0<\/p>\n
Many Canadians, however, believe their grocery bills have been climbing faster than the Bank of Canada\u2019s statistics show. The central bank says the average Canadian spends about 11 per cent of their budget on groceries, although that figure tends to be much larger for those with limited resources.\u00a0<\/p>\n
For many consumers, the conundrum has simply been about what to do about rising grocery prices, especially when they show few signs of heading back down. They\u2019re annoying for pretty much everybody, but a serious issue for those on tighter budgets. In some cases, the price hikes have changed their lives, leaving them unable to pay bills or even hungry. Statistics Canada reported a full four years ago, in the early days of the recent price hikes, that consumers were also responding to the post-pandemic food inflation by buying less and hunting more for bargains.\u00a0<\/p>\n
For governments, however, the conundrum\u00a0rests on\u00a0a misalignment between the economics of grocery prices and\u00a0the politics, leaving them struggling to try to do something about a major problem that is difficult to influence.\u00a0<\/p>\n
Analysts say the economics\u00a0are\u00a0that grocery prices are\u00a0largely\u00a0a\u00a0function of market forces.\u00a0Michael\u00a0von Massow, a food agriculture economist at the University of Guelph, said the grocery price hikes over the last five or so years have been a result of poor weather, global warming, currency fluctuations, rising energy and fertilizer costs, the wars in Ukraine and now Iran, and of course pandemic-related supply chain problems \u2014 many things, but not an industry conspiracy.\u00a0<\/p>\n
Grocery stores are still earning pre-tax margins of about 4 per cent on most items, von Massow said,\u00a0just as they were before the pandemic. \u201cThe\u00a0perception\u00a0of gouging is grossly overstated.\u201d\u00a0<\/p>\n
The Retail Council of Canada, which\u00a0represents\u00a0the large grocery chains,\u00a0says\u00a0that grocery store margins are lower than\u00a0the net income\u00a0of\u00a0farmers or\u00a0food manufacturers and processors. Grocery store profits, the group says,\u00a0have been\u00a0flat\u00a0in recent years\u00a0and\u00a0driven much more\u00a0these days\u00a0by\u00a0non-food items such as those in the health,\u00a0beauty\u00a0and pharmacy aisles.\u00a0<\/p>\n
As for the politics, it\u2019s as much about perception than the economic reality. When millions of voters are miffed about something, governments likely won\u2019t be stopped from doing something as a response, even if it\u2019s mostly to be seen to be doing something. Nor will opposition parties be stopped from accusing governments of not doing enough, or too much, or just doing it wrong.\u00a0<\/p>\n
The Carney government has already taken a number of steps to try to help, targeting both consumers\u2019 wallets and the industry itself.\u00a0<\/p>\n
In\u00a0a bid to help consumers, particularly those most in need, Ottawa brought in a new Canada Groceries and Essential Benefit. This measure, an expansion of the existing GST credit, includes a one-off top-up payment of 50 per cent, plus an increase in payments by 25 per cent for five years beginning in July.\u00a0<\/p>\n
The government also provided more money for food banks and local food programs.\u00a0<\/p>\n
To\u00a0encourage\u00a0grocery stores\u00a0to\u00a0lower their costs and\u00a0perhaps\u00a0their\u00a0prices, the Liberals spent $500 million on a Strategic Response Fund to help businesses absorb disruption costs, instead of just passing them on to consumers. They also spent $150 million on a Food Security Fund that was designed to support smaller players in the food business and brought in tax incentives to encourage the construction or expansion of greenhouses.\u00a0<\/p>\n
There were also measures to support greater competition in the grocery sector, including greater monitoring by the Competition Bureau.\u00a0<\/p>\n
All told,\u00a0said John Fragos,\u00a0a spokesman\u00a0for Finance Minister\u00a0Fran\u00e7ois-Philippe Champagne,\u00a0Ottawa\u2019s responses to the food price surge will save a single person about $905 a year, and a family of four about $1,890.\u00a0<\/p>\n
Opposition parties have proposed\u00a0more drastic steps.\u00a0\u00a0\u00a0<\/p>\n
Conservative Leader Pierre Poilievre says the government should tackle rising grocery prices by slashing taxes and input costs for truckers,\u00a0farmers\u00a0and\u00a0food producers, and taking measures to increase competition in the grocery store market.\u00a0<\/p>\n
NDP Leader Avi Lewi says the government should attack affordability by investing in a new chain of government-supported grocery stores that would compete against the private operators. The non-profit government stores would offer a smaller array of products, the theory goes, but could charge 30 to 40 per cent less than the private chains.\u00a0<\/p>\n
A report released last week by the conservative-leaning Montreal Economic Institute argued against\u00a0government-run grocery stores, saying\u00a0they\u2019d\u00a0fail to\u00a0provide\u00a0significant\u00a0savings\u00a0and\u00a0fail to\u00a0address the real drivers of rising food prices:\u00a0tariffs, interprovincial trade barriers, and\u00a0unnecessary\u00a0regulation.\u00a0\u00a0<\/p>\n
Provincial governments have also taken their shots at combatting rising grocery prices through tax credits and rebates targeted at low-income citizens, increased support for food banks and farmers.\u00a0<\/p>\n
But the Canadian Federation of Independent Grocers said governments could help even more with grocery prices by cutting the fees that credit card companies charge smaller retailers and doing more to address the disparity between business costs in rural and urban communities. \u201cIt\u2019s like an invisible border,\u201d said Gary Sands, the federation\u2019s senior vice-president.\u00a0<\/p>\n
The Liberals argue that the soaring food prices are a global phenomenon and that their measures have prevented prices from going up even more.\u00a0\u00a0<\/p>\n
The OECD says that Canada ranks somewhere in the middle\u00a0of the pack\u00a0of industrialized countries when it comes to grocery\u00a0price inflation\u00a0over the last few years. But that\u2019s cold comfort to\u00a0Canadian\u00a0consumers\u00a0who just want to feel like\u00a0they\u2019re\u00a0getting\u00a0a fair shake\u00a0as they make their way through the checkout.\u00a0\u00a0<\/p>\n
Despite the global increase in inflation, economists say Canadian governments have also played a role by throwing too much coal on the fire.\u00a0During the pandemic, at a time when the global economy was already experiencing a number of supply shocks and increased consumer demand, the Trudeau government embarked on an unprecedented spending spree.\u00a0<\/p>\n
In 2020, near the start of the pandemic, about\u00a020.7 million Canadians out of an adult\u00a0population of 30.3 million\u00a0received income from one of the federal pandemic-related programs,\u00a0according to a 2022 report<\/a>\u00a0from Statistics Canada. During that year alone, the programs are estimated to have cost\u00a0$270 billion\u00a0\u2014 about 12.5 per cent of Canada\u2019s gross domestic product (GDP).\u00a0<\/p>\n While the programs provided relief to individuals and businesses and offered a short-term economic cushion during the\u00a0crisis, the C.D. Howe Institute noted that injecting that much extra money into an economy with strong employment will\u00a0almost certainly\u00a0lead to inflation.\u00a0<\/p>\n Von Massow,\u00a0the University of Guelph\u00a0economist,\u00a0said\u00a0today\u2019s\u00a0higher\u00a0food\u00a0prices might not seem fair, but\u00a0market forces can also work the other way too. In recent months, for\u00a0example, coffee, olive oil, pasta, some\u00a0berries\u00a0and some seafood have been among the grocery items to fall\u00a0in price, he said.\u00a0\u00a0<\/p>\n Consumers, however, tend to notice the rising prices, notably of some imported fruits, chocolate, beef, and fresh vegetables, much more than those that are falling, von Massow said. \u00a0<\/p>\n Economists also point out that food prices\u00a0haven\u2019t\u00a0jumped that much more than inflation overall, which has averaged 2.8 per cent over the last three\u00a0completed\u00a0years, or 3.8 per cent if 2022\u2019s 6.8 per cent is included.\u00a0<\/p>\n \u201cThey\u2019re tough,\u201d\u00a0Von\u00a0Massow\u00a0said about the grocery price hikes over the last few years, \u201cbut they\u2019re not as tough as we make them out to be.\u201d\u00a0<\/p>\n He suggests that consumers try to control what they can control, such as what they buy and when.\u00a0For example, buying\u00a0produce that is in-season and\u00a0grown\u00a0nearby\u00a0can help, he said.\u00a0\u00a0<\/p>\n Coriander, by contrast, is largely imported to Canada from warmer places, mostly Mexico, Arizona and California in the winter, dried seeds from India, Morocco and Egypt in the winter. That makes the spice among the items on the grocery store shelves most susceptible to fuel price hikes and other supply chain fluctuations \u2014 and a small piece of a big conundrum for both consumers and governments.\u00a0<\/p>\n National Post\u00a0<\/p>\n Our website is the place for the latest breaking news, exclusive scoops, longreads and provocative commentary. Please bookmark nationalpost.com<\/a> and sign up for our daily newsletter, Posted, here<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"OTTAWA \u2014 Call it the coriander conundrum.\u00a0 Like with parsley, carrots, dill, and most other members of the…\n","protected":false},"author":2,"featured_media":51392,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[98],"tags":[5275,23138,18180,229,13291,23136,5271,111,23137,1672],"class_list":["post-51391","post","type-post","status-publish","format-standard","has-post-thumbnail","category-mark-carney","tag-consumers","tag-don-drummond","tag-food-prices","tag-government","tag-governments","tag-grocery-prices","tag-grocery-store","tag-mark-carney","tag-price-hikes","tag-statistics-canada"],"_links":{"self":[{"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/posts\/51391","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/comments?post=51391"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/posts\/51391\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/media\/51392"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/media?parent=51391"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/categories?post=51391"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/tags?post=51391"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}