OTTAWA, June 11 (Reuters) - Canada will invest more than C$1 billion ($715.72 million) to promote competition among grocers and food processors, Prime Minister Mark Carney said on Thursday, adding that efforts to combat high food inflation would also enhance national security.
Canada has one of the highest food inflation rates among Group of Seven countries and just five companies dominate 75% of its grocery market. Voters are increasingly concerned about spiking grocery prices.
Carney said the investment into food terminals and hubs would help independent grocers compete by making it easier to buy from farmers and food processors, while also strengthening Canada's food security.
"To protect our sovereignty and take control of our future, we must take control of our food system," Carney said at Canada's biggest food terminal in Toronto. He said the country has an "overreliance" on foreign markets for essential foods and that the growing seasons in Canada are too short for farmers to keep up with demand.
To address those and other issues, Carney announced an additional C$1 billion fund to back food and farming projects. He said the broader food strategy would lower prices by removing regulatory barriers and increase competition among grocery stores.
According to April data from the Organisation for Economic Co-operation and Development, Canada had the second-highest rate of food inflation among G7 countries in April after Japan, at 3.8%. In comparison, Germany and the U.S. reported food inflation rates of 1.5% and 2.9%, respectively.
Polls have shown voters want Carney, who has made a name for himself on the global stage by seeking to make Canada less dependent on the United States, to focus more on cost of living issues.
In January, Carney announced that Canada’s 12 million poorest people would get a tax credit for the next five years to help offset the price of groceries, in addition to C$500 million to help businesses deal with supply chain disruptions and to allow producers to write off greenhouse expenses.
Michael von Massow, a professor of food agriculture and economics at the University of Guelph, welcomed the government’s new strategy but warned it was unlikely to lower grocery prices.
“The problem is that most of the things that are causing food price inflation are beyond the control of the federal government,” he said, naming climate change, extreme weather events and volatile geopolitics as major problems.
According to data this month from the pollster Angus Reid, 44% of Canadians say they are finding it hard to pay for their weekly groceries.
Shachi Kurl, president of polling firm Angus Reid, said the strategy is likely an effort by Carney to address the daily concerns of Canadians.
“The Prime Minister is rightly focused on things like AI, trade policy and national unity, but the larger issue for most Canadians is that two out of five of them are struggling at the checkout to make the grocery bill fit what they can afford,” she said.
($1 = 1.3972 Canadian dollars)
Reporting by Maria Cheng; Editing by Nia Williams
