Sylvain Charlebois covers this in a report on Carbon Taxing Policies in Canada. While unable to give an exact percentage, as the metrics are many and varied, as the impact goes well beyond the nickel more that you see as an increase in the cost of items at the grocery store, the report states that it is undeniable that there is an impact. The tax goes further in how it impacts the competitiveness of Canada's agri-foods.
In the midst of polarized debates about the carbon tax and its impact on Canadians, one truth often gets buried: this is not just a conversation about food prices. The real issue lies in the competitiveness of Canada’s agri-food sector and the broader economic dynamics shaped by carbon pricing policies.
Our latest peer-reviewed paper,
“Implications of Carbon Pricing on Food Affordability and the Agri-Food Sector in Canada: A Scoping Review,” co-authored by 11 scholars, offers a comprehensive dive into this topic. Complementing this is an upcoming special issue of Trends in Food Science and Technology, set to be released in early 2025, for which I served as guest editor. This issue features 11 new peer-reviewed studies exploring the relationship between carbon taxes, food supply chains, and food affordability. These works highlight insights that demand attention:
1. Carbon Taxes Impact Economic Dynamics, Not Just Retail Prices
Retail food prices fluctuate daily due to promotions, consumer behaviour, loss-leading strategies, and other market forces. It’s misleading to attribute retail price changes solely to the carbon tax.
Instead, the tax exerts its influence upstream in the supply chain. By increasing production and transportation costs, carbon pricing pressures domestic producers, making their goods less competitive. To maintain affordability, grocers often resort to importing cheaper food, masking the real impact of carbon pricing on the Canadian agri-food sector. Over time, this erodes the resilience and competitiveness of our domestic food system.
2. The Hidden Cost of Competitiveness
Our studies show that carbon pricing indirectly undermines Canada’s agri-food competitiveness. Increased production costs force producers to cut margins or pass costs onto the supply chain. Grocers, facing consumer resistance to higher retail prices, often absorb these costs by importing more affordable alternatives. While this may keep grocery prices relatively stable in the short term, it creates a long-term structural problem: domestic food producers struggle to compete, weakening Canada’s food sovereignty and security.
3. The Bigger Picture: Food Security and Equity
The burden of carbon pricing doesn’t fall evenly. Low-income households spend a larger portion of their income on essentials, including food. Carbon taxes, by reducing disposable income and increasing indirect costs, exacerbate existing inequalities. This is especially troubling in a country like Canada, where food insecurity has risen sharply in recent years.
While proponents of the carbon tax argue that rebates offset increased costs, our findings challenge this assumption. Rebates might cushion households temporarily, but they do little to address the underlying issue of rising production and transport costs in the food sector.
When scholars argue the carbon tax has minimal effects on retail food prices, they fail to acknowledge that retail prices are an unreliable metric for assessing policy impacts, given the myriad factors influencing them. Instead, our work highlights wholesale price analysis as a more accurate lens for understanding the carbon tax’s real effects.
Grocers must recognize that while carbon pricing may not directly affect retail food prices, it significantly impacts supply chain costs and the competitiveness of domestic producers. To sustain long-term resilience, they should prioritize partnerships with Canadian suppliers, invest in sustainable practices, and advocate for policies that balance environmental goals with food affordability.
Sylvain Charlebois
I agree with you wholeheartedly about Galen Weston.
I maintain that you have your head in the sand, when it comes to fuel costs and how they play a role in the rise in grocery costs and it's not just me saying it, the Bank of Canada uses this as a metric, when it speaks about inflation;
https://www.bankofcanada.ca/2024/07/what-drives-up-the-price-of-groceries/
" So, when energy prices go up, so too can food prices. Farmers, fertilizer producers and transportation companies all have to pay more for fuel. That makes it more expensive to take food from the fields and get it to grocery store shelves. These costs may be passed on to consumers and can contribute to price increases."
Also, Dalhousie University backs this further;
https://cdn.dal.ca/content/dam/dalhousie/pdf/sites/agri-food/Canada's Food Price Report 2023_Digital.pdf
Without regurgitating the whole report, it states that high fuel costs impact the cost of food, right down to the end and its transportation to the consumer. Just for clarification purposes, Carbon Taxing is part of the rise in fuel costs, not just the market price for oil.
