Donald Trump’s looming US presidency could lead to a rise in Canadian food prices, according to the latest Food Price Report out of Dalhousie University.
According to the report compiled by nine experts from four faculties, Canadians may pay up to 5% more for food in 2017, or up to $420 more for an average family.
Among the many reasons Trump’s policies could impact how much Canadians have to pay for food, the report cites his pledge to deport illegal migrants.
That would hit the US agricultural industry hard; an estimated 2 million illegal workers help US farmers throughout the year and at harvest time.
“Without such support, US production levels will be negatively affected and could push prices higher,” say the authors.
Not only that, but the Farm Bill due to be written by the Trump-Pence administration could see subsidies to US farms drive commodity prices higher too.
“The Trump administration could spell a period of US protectionism aimed at improving domestic issues, which could possibly be at the expense of the international community, including Canada,” say the authors.
And, they say, there is also the issue of energy policy and the potential initiation of a “commodity super-cycle.”
“At the very least it is fair to assume that the Trump victory could have major implications on energy geopolitics around the world,” says the report.
The authors note that Trump has called for more fossil fuel exploration within the US, fewer
regulations and a complete withdrawal from the Paris Climate Change Agreement.
“Commodity prices could go higher in 2017 and increase input costs in processing,” says the report. “All of these measures could potentially initiate the next commodity super-cycle, as we witnessed with the Bush administration a decade ago.”
Also to blame for the food price rises, say the authors will be the Canadian Dollar, which is likely to continue to drop in 2017 due to lower interest rates in Canada.
“After Donald Trump’s election, [US] interest rates are even more likely to rise since markets are expecting the US under the Trump administration to sink even
further into debt,” said the report.
“As bond markets tumble, equity markets are souring and while a high inflation rate is expected in the US, a very different scenario is emerging in Canada.”
Here, say the authors, low inflation will keep rates lower for some time, pushing the value of the Canadian dollar lower against the US dollar – making imports more expensive.
“The biggest factor will be the falling Canadian dollar,” explains Dr. Sylvain Charlebois, dean of the Faculty of Management and lead author.
“Given how many food products we import from abroad, our food economy is vulnerable to currency fluctuations.”
The impact of a low Canadian dollar on food prices was seen earlier this year, in the form of the humble cauliflower, which became a luxury priced at $8 due to import costs.
“The falling Canadian dollar and the Trump administration’s year one agenda are
the two most influential factors for Canadian food prices in 2017,” concludes the report.
“Consumers should be observant and always remain price conscious to eliminate all forms of luxury cauliflower, whether foreign or domestic.”