The Iran war has already raised energy prices globally, with the price of crude oil going past US$100 a barrel, but some experts are warning that the pain will also be felt soon at the grocery aisle.
While a relatively small portion of Canada’s food imports move through the Strait of Hormuz, where traffic has come to a virtual halt amid the war, University of Toronto professor and supply chain expert Andre Cire says skyrocketing oil prices will have an impact on food prices in Canada.
“Energy is in everything. You need to transport food from one place to the other, you need to put fuel in those ships. We’re going to start seeing some increase in food prices as well, just because the transportation costs are going to go up,” he said.
Sustained pressure on oil prices could mean Canadians will pay 10-15 per cent more at the grocery store by the end of this month, Cire added.
“This has an impact on freight costs,” he said.
The longer the crisis continues, the harder it’s going to get to ship anything anywhere, says University of Guelph food economist Mike von Massow.
“If it’s taking more days to ship things, then we might see both an increase in freight or at least a delay in freight coming through. That supply chain disruption could have some ripple impacts beyond just products that move through the Strait of Hormuz,” he said.
The supply chain involved in getting food from farm to shelf is “complicated,” said Concordia University economist Moshe Lander.
“A major cost of food in Canada is transporting it. We don’t live next to farms the way that we used to,” Lander said, adding that higher oil prices could hit the grocery sector.
“Canada is about 7,000 kilometers from coast to coast, let alone going from south to north. A lot of stuff has to be moved by truck and by plane,” he added
The price of rice
In the short term, Canadians may start to pay more for certain kinds of rice at the grocery store.
The more immediate impact would be on food prices in Europe and the Middle East, which receive a significant amount of their food shipments via the Strait of Hormuz, he said.
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Reuters reported that as of last week, about 400,000 metric tons of Indian basmati rice were backed up at ports and in transit, and export deals have dried up as freight rates have more than doubled since the U.S. and Israel attacked Iran on Feb. 28, trade officials said.
India is the world’s largest exporter of aromatic, premium basmati rice, with buyers in the Middle East, including Saudi Arabia, Iran and the United Arab Emirates, accounting for more than half of its shipments.
“Around 200,000 tons of basmati rice are stuck in transit, and an equal amount is stranded at Indian ports as the war has disrupted shipping routes across the Middle East,” Satish Goel, president of the All India Rice Exporters’ Association, told Reuters.
Exporters have already moved stocks to ports, but cannot ship to the Middle East because of rising container freight costs, and no alternative market can absorb the volume, Goel said.
In 2023, when India limited rice shipments to control domestic prices, it had an impact on food prices globally.
According to a 2022 report, two-thirds of the world’s calories come from four staple foods: wheat, rice, maize and soybeans. At least 72 per cent of these crops are grown in just five countries: China, the United States, India, Brazil and Argentina.
This raises fears of global food insecurity when a crucial channel like the Strait of Hormuz is choked.
Long-term inflation fears
U.S. President Donald Trump has said the war could last four to five weeks, maybe longer. A prolonged conflict, which could see oil prices soar even higher, would be “disastrous” for food prices, Cire said.
High oil prices are already causing inflationary pressure across the world.
“Everything’s under pressure right now,” he said.
“I would say that this is disastrous in the long term, because in the short term, yes, we see some increases in oil prices and so on. In the long term, everything is going to go up,” he said.
Regardless of how long the crisis continues, the uncertainty is going to be bad for pocketbooks, von Massow said.
“Even if hostilities stopped overnight, I think there would still be significant uncertainty with respect to oil movement and oil prices,” he said.
— with files from Reuters
fuel prices sky rocket of course the price to transport goods will increase. You didn’t expect the multi billion dollar companies and their shareholders to foot the bill did you?
Prices do NOT rise and fall – company staff decide when/if to raise prices. To some degree price increases are self-fulfilling prophesies.
There we go again.
Blame it on covid. Blame it on Putin. Blame it on Harper. Blame it on Trump.
Blame it on Iran. Blame it on CO2.
Did I miss anyone? Probably. It’s hard to keep track of all the excuses Liberals keep inventing, to deflect from the real cause of the rising costs which is the “carbon tax”. Ever noticed how it made everything expensive and didn’t fix a single thing about environment?
It hurts us to not develop our own industry capabilities and to be self sufficient!
I’m tired of having my elbows up and blaming Trump for all our woes.
I have extreme TDS and hope my meds come in soon.
Blame it on Trumpeter!!
But was it not the Liberal government that preached that all their various taxes did not impact the cost of living? Now all the ‘experts’ say fuel price increases do impact this cost. Love the hypocrisy.
Who cares about money as long as the liberals are in power !
Elbows up
Trump is a catastrophy for the whole world. His egotistical adventure in Iran is going to cost us dearly.
I love Carney and sniff biicycle seats like JV
Bill Roach blaming Carney for ped0 Trump’s war? Wow you idiotic Conservatives are getting more and more desperate every day. There’s a reason you stupid Cons in Alberta are the laughing stock of Canada these days. Freedumb and Make Alberta Great Again hey dumbass
nacho business Too bad you still live in your mom’s trailer in Alberta
The last time oil was over $100, food prices rose but when they fell, did groceries go down? Now the price of oil is up and we’re told to “hold on” as food will go up even more. Starting to feel like a dairy cow!
Message for the “Elbows up ” crowd
Carneys davos speech that you all swooned over is going to cost Canada dearly. WHY because he mocked the US do you naive people think its a coincidence that Trump dealt with Venezuela before Iran ? the US will get their oil from Venezuela americans won’t see increased food prices just Canada and you can thank Carney and his ego for that.
Move to the southern states and have a year round garden and eat the invasive species.
We literally can’t take anymore….
Just when people were at their breaking point, expect another 30% rise.
My spring fuel bill just went up 50%. This will cost me $10,000 more just for fuel. And parts, and lubricants, and fertilizer, and and and.
Better get in the bread lines now fellow elbow uppers.
Yeah, just go ahead and stack those additional costs on top of all the carbon and packaging taxes that Canadians voted for.
Iran can cut off the straight of Hormuz pretty easily but Randy here thinks oil is more stable than renewables????
And when the April 1st carbon tax increase kicks in everything will go up even more.
Just like the Carbon tax did. Just like the industry carbon tax is still doing…
Just like Liberal promotion of battery powered cars, they get the money from all of us to give to a few of us, causing all of us to have to charge more for goods and services to pay the extra taxes.
Yep, anything that either takes money from the average person, increases the price of things.
The professor is wrong, this has happened before, and the response to lack of oil and the response to the return of oil is almost the same speed. (it never returns to the same point…)