Reference no: EM132908479

Turmoil in Canada's Food Supply Chain Points to Summer Shortages

Jen Skerritt May 14, 2020

The Canadian government is worried about the country's food security as the Covid-19 pandemic disrupts supplies and causes labor shortages.

Food prices may rise and some products could become unavailable in supermarkets, Agriculture Minister Marie-Claude Bibeau said.

The threat comes after the spread of Covid-19 temporarily shut down one of Canada's largest beef processing plants in April and forced some poultry and pork facilities to temporarily idle or slow output. A similar wave of outbreaks at meat plants in the U.S. has already withered available supplies at grocery stores and driven up retail prices for beef and pork.

"We have plenty of food that will continue to reach grocery stores on a regular basis. But it is clear that Covid-19 is causing significant disruptions in our food supply chains," Bibeau said by email. "As a result, Canadians could see less variety in grocery stores or a fluctuation in food prices."

An outbreak at Cargill Inc.'s beef plant in High River, Alberta sickened nearly half of the facility's 2,000 workers. Virus outbreaks at JBS SA's plant in Brooks, Alberta have also prompted slowdowns and the supply squeeze is already forcing companies such as McDonald's Corp.'s Canadian unit to import beef to supplement their needs.

The two Alberta plants account for roughly 85% of Canada's beef slaughter capacity. "We will continue to use imported beef until there is a continuous and consistent supply of Canadian raw material," McDonald's Canada said Wednesday in an email.

60,000 Foreign Workers

In Canada, there's also a huge dependency on temporary foreign workers to plant, tend and harvest fruit and vegetable crops. More than 60,000 workers help do everything from prune apple trees to plant asparagus and farmers are struggling to get enough labor to do the work. So far, only about half the workers have arrived.

Some Ontario vegetable growers are worried yields will drop 30% as farms struggle to fill roles, feeding through to consumer costs, according to the Arrell Food Institute at the University of Guelph.

Disruptions to labor mean Canada could face food supply problems as early as June, according to economist Armine Yalnizyan.

"It's completely foreseeable if you don't bring in migrant workers or if they start getting really sick and they are used so heavily in the food production industries, that our food security will be imperiled at some level," she said. "This isn't a for-sure thing at all, but it's not beyond the realm of possibility."

The federal government said it is working with provinces and territories to ensure the country's food supply remains strong and that farmers and food businesses receive the support they need.

In early May, Prime Minister Justin Trudeau announced C$252 million ($179 million) in funding for farmers and food companies. This includes money to help the agriculture industry get access to personal protective equipment, extra storage to help avoid food waste and other costs resulting from the virus.

1 Identify the impact of higher labour cost (or shortages) in a demand-supply graph.

2 Identify the shortage.

3 Proposed a policy that could help food prices. Equally talk of the impacts which your policy will have, which may not be very positive.