How the Iran war is affecting your grocery bills: ‘Everything will go up’ – National
The war in Iran has already driven up energy prices around the world, with the price of crude oil surpassing US$ 100 a barrel, but some experts warn that the pain will soon be felt in the grocery store.
While a small portion of Canada’s food imports go through the Strait of Hormuz, where traffic stopped during the war, University of Toronto professor and procurement expert Andre Cire says rising oil prices will have an impact on Canadian food prices.
“Energy is present in everything, you need to transport food from one place to another, you need to put fuel in those ships, we will start to see an increase in the price of food simply because the cost of transportation will increase,” he said.
Continued pressure on oil prices could mean Canadians will be paying 10-15 per cent more at the grocery store by the end of this month, Cire said.
“This affects the cost of goods,” he said.
The longer the crisis goes on, the harder it will be to ship anything anywhere, says University of Guelph food economist Mike von Massow.
“If it takes more days to ship things, we may see both an increase in cargo or at least a delay in incoming cargo. That supply chain disruption may have a negative impact beyond the products that pass through the Strait of Hormuz,” he said.
The procurement involved in getting food from farm to farm is “complex,” said Concordia University economist Moshe Lander.
“The biggest cost of food in Canada is shipping. We don’t live as close to farms as we used to,” said Lander, adding that the rise in oil prices could affect the grocery store.
“Canada is about 7,000 kilometers from coast to coast, not to mention from south to north.
In the short term, Canadians may start paying for certain types of rice at the grocery store.
“There are certain products – say, Indian basmati rice for example – that may be reduced or redirected and that will increase the price of those [for Canadians],” said von Massow.
The immediate impact will be on food prices in Europe and the Middle East, which receive the bulk of their food shipments through the Strait of Hormuz, he said.
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Reuters reported that as of last week, nearly 400,000 tons of Indian basmati rice were backed up at ports and warehouses, and export deals have dried up as commodity prices have more than doubled since the US and Israel attacked Iran in Feb. 28, said trade officials.
India is the world’s largest exporter of sweet, 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 exports.
“Approximately 200,000 tonnes of basmati rice are stuck on the road, and an equal amount is stuck in Indian ports as the war has disrupted shipping routes through the Middle East,” Satish Goel, president of the All India Rice Exporters’ Association, told Reuters.
Exporters are already moving stocks to the ports, but they cannot ship to the Middle East because of rising freight costs, and there is no other market that can absorb the volume, Goel said.
In 2023, when India restricted rice exports to control domestic prices, it had an impact on global food prices.
According to the 2022 report, two-thirds of the world’s calories come from four staple foods: wheat, rice, corn and soybeans. At least 72 percent of these crops are grown in just five countries: China, the United States, India, Brazil and Argentina.
This raises the fear of global food insecurity when an important route like the Strait of Hormuz is choked.
Fear of long-term inflation
US President Donald Trump said the war could last four to five weeks, possibly longer. A protracted conflict, which could push oil prices even higher, would be “catastrophic” for food prices, Cire said.
High oil prices are already causing inflationary pressures around the world.
“Everything is under pressure right now,” he said.
“I can say that this is a disaster in the long term, because in the short term, yes, we see an increase in oil prices and so on, in the long run everything will increase,” he said.
No matter how long the crisis continues, the uncertainty will be bad for pocketbooks, says von Massow.
“Even if the conflicts stop overnight, I think there will still be a lot of uncertainty about oil flows and oil prices,” he said.
– via files from Reuters
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