Interest rate hikes have yet to bring down food prices. Here are the tools governments could try

Your grocery bill is much higher than it used to be.

The latest inflation numbers from Statistics Canadashowthat while overall inflation fell to 5.9 per cent in January, food prices are up 10.4per cent compared to last year. That number is up slightly fromDecember's10.1 per cent.

"Since the onset of the COVID-19 pandemic, many factors have impacted prices at the grocery store, such as supply chain disruptions, labour shortages, changes in consumer purchasing patterns, poor weather in some growing regions, tariffs, higher input costs and higher wages," StatsCan said in a Nov. 2022 report aboutthe rising cost of food.

The report adds that Russia's invasion of Ukraine has also played a part because of the importance of both countries in food production.

The issue has proven serious enough to convince a parliamentary committee to launch a study of higher food prices and how government might address them. But experts tell CBC News governments don'thave many good options to bring food prices down although theycould offer relief for the poor and hungry.

Going after the grocers

While StatsCan has pointed to a wide range of factorsleading to higher food prices,NDP Leader Jagmeet Singh has blamed privately-owned corporations. Singh has labelled the rising prices "greedflation."

Singh has called for a new tax on grocery chain profitsto address the issue. He saidrevenue from that tax could be used to help those struggling with their bills.

"Fifteen super-profitable industries including the grocery sector are driving inflation in Canada," Singh said in a Dec. 2022 news release.

"Prime Minister Justin Trudeau should implement a windfall tax to make these big grocery chains pay what they owe."

Canadian grocery giant Loblawreported$529 million in fourth quarter profits earlier this week, beating analysts' expectations.

In testimony before the House of Commons agriculture and agrifood committee the committee studying food price inflation Jodat Hussein, Loblaw'ssenior vice-president of retail finance, said most of the company'sprofits are not coming from high margins on food. He said the company's food suppliers increased their prices, whichLoblaw then had to pass on to customers.

"We are dependent on what suppliers charge us when we set our retail prices,"Hussein told the committee in hisDecember 2022 testimony.

"Fundamentally, grocery prices are up because the cost of what grocers buy from suppliers have gone up."

Hussein said the company's profits were coming from other areas Loblaw does business in, such as pharmaceuticals.

Mike Von Massow, a food economist at the University of Guelph, said the committee's questioning of grocery executives amounted to "political theatre."

"I think there's almost no evidence that the grocers are taking excessive margins right now," he said. "It's easy to blame the grocers because that's where we're feeling the pinch."

Von Massow saidsales of non-food items and a higher volume of grocerysales driven in part by people eating out lesslargely account for the higher profits.

But Valerie Tarasuk, a professor in the University of Toronto's department of nutritional science, said the committee is doing important work by questioning the executives. She said there should be more government studies of how theCanadian grocery industry sets its prices.

"I think there needs to be more because I think it's a very real question ...There's a lot of mystery in terms of how big food retailers operate," she said.

"As we continue, month after month after month, to see these unprecedented levels of food price inflation, it begs the question of how come that's happening,andwhat does it take to get it under control?"

The government could introduce price controls on certain food products to address food inflation. The move wouldeffectively placea limiton how expensive those itemscould get.

Von Massow said such a policy could lead to empty store shelves.

"So if you say toa business ...that there are two products that you can sell, one of which is price-controlled, the other one which you can make your normal margin on,you're going to see them focus on the product that is that is more likely to give them a return," he said.

Rick Barichello, a professor in the University of British Columbia's food and resource economics program, agreed that price freezes aren't a good solution.

"They don't really solve the problem of how do you getmore supply on the shelves. In fact, they make that worse," he said.

Another option is to place export controls on the food Canada produces, barring it from leaving the country and possibly pushing down domestic prices.

Von Massow said such an approach could be more trouble than it's worth, given Canada's international reputation as a reliable trading partner.Export bans could damagethat reputation, he said.

Yet another option is for the federal government tobring in food subsidies. The governmentcurrently does thisin Canada's North through its Nutrition North Canada programs.

But Barichello said a subsidy on food products could be anexpensegovernment can't afford right now.

"It has to be paid for by the government," he said. "With government budgets being relatively constrained, thenthat'sa problem."

The supply management question

The federal government could also dismantle or change Canada's supply management system. The system allows the Canadian dairy, poultry and egg industriesto limit supply of those foodstuffs, sets minimum prices and provides those sectorswith protection from foreign competition.

Critics of supply management have saidit artificially inflates food prices. Its supporters say it's necessary to financially support Canadian agriculture.

Tarasuk said it's important to note that, unlike other products on grocery store shelves, the prices of supply managed items are at least partially under the federal government's control right now.

"I think it's worth the federal government thinking through what kind of leverage it has there," Tarasuk said.

"Because to see the price of commodities like milk rising in the way that it has, from a nutrition perspective, that's very concerning."

But Von Massow said abolishing supply management wouldbe a long and complicated affair and would be unlikelyto bring down prices significantly. Hecited research he and colleagues have done on the subject.

"[It's] always worth having a conversation about supply management,but there's not a switch we can clickand changethat," he said.

"I think people would be surprised at how how small the the benefit of getting rid of it might be."

Tarasuk and Von Massow agreed that governments' best short-termoption would be to providetargeted financial support to those affected most by food inflation, such as the poor and those on fixed incomes.

"There are a lot of people who are the working poor, people who are on assistance, people who are on fixed pensions who are strugglingand already aren't eating out and already are buying as cheaply as they can," Von Massow said.

"Perhaps there would be some justification to say rather than providing a universal subsidy for everybody, we provide some some direct payments to those people who need it the most."

Long-term solutions

Governments may have to concede that there's little they can do over the short term to address rising food prices.

ButBarichellosaidthe federal government can take stepsto improve the resiliency and productivityof Canadian food production and supply chains, which could lower prices over the long run. He said those effortscould include loosening border restrictions for goods and farm workers, investing in research and innovation to improve food processing and supply chainsand promoting more competition in the food industry.

"Even ifgovernments started being more active on this now, you wouldn't get any clear benefits on inflation forprobably five years or more,"Barichellosaid.

"So those are long-run things that we can be doing, and should be doing, but in the short run there's very little we can do."

Von Massow said there's another issue the government could address to bring down food prices in the longer term.

"Perhaps the best thing for us to do in the long run is to take more concrete action on climate change," Von Massowsaid.

"That's a big part of what's driving these extreme weather events and what's driving some of these price increases."