The perfect storm in food prices: Why prices keep rising?

Over the past few years, rising food prices have become a major concern for many families across Ontario and throughout Canada. Everyday essentials, from fruits and vegetables to meat, fish and basic grocery items, have seen significant price increases, forcing consumers and businesses alike to adjust to a new economic reality. Food inflation, supply chain challenges and rising production costs are just some of the factors experts point to in explaining this trend, which continues to put pressure on household budgets.

Behind the prices consumers see on supermarket shelves, however, lies a complex network of production, transportation and distribution that begins long before food reaches retail stores. From farms to distribution centres and finally to retailers, every step along the food supply chain involves its own costs and challenges that have intensified in recent years due to extreme weather events, labour shortages, rising energy costs and broader global economic instability.

To better understand what is truly driving the increase in food prices and how the industry is responding to these challenges, Milénio Stadium spoke with Filippo Anselmo, Vice President of Operations at Aenos Food Services, a company involved in the distribution of fresh produce within the Ontario market. Drawing on his experience in the food distribution sector, Filippo Anselmo explains the main factors putting upward pressure on prices, discusses the impact of transportation and logistics costs across the supply chain, and outlines how suppliers, distributors and retailers are adapting their strategies.

In this interview, he also addresses changes in consumer behaviour, as shoppers become increasingly price-conscious and attentive to promotions, and comments on how international geopolitical tensions, including the recent conflict in the Middle East, could continue to influence food prices in the months ahead.

Milénio Stadium: Over the past few years, food prices in Ontario have risen dramatically. From your perspective in the food distribution industry, what are the main factors that have driven this increase?

Filippo Anselmo: From the perspective of a produce wholesaler in Ontario, the increase in food prices over the past few years has been driven by a combination of global and local factors that affect every step of the supply chain.

First, transportation costs have increased significantly. Fuel prices have fluctuated at historically high levels, and trucking remains the primary way fresh produce moves across Canada and into Ontario from the United States and Mexico. Higher fuel prices, insurance costs, and equipment costs have increased freight rates, and those costs ultimately get built into the price of food.

Second, labour costs and labour shortages have had a major impact. Farms, packing houses, warehouses, and transportation companies have all struggled to find workers. Wages have increased across the industry, and while that is necessary to attract labour, it does increase operational costs at every stage.

Third, climate and weather volatility has affected crop yields. Produce markets are extremely sensitive to weather events such as droughts, floods, and hurricanes. Over the last few years, several growing regions in North America have experienced extreme weather that reduced supply, which in turn pushed prices higher.

Another factor is input costs for farmers, including fertilizer, seed, packaging materials, and energy. When the cost of growing and harvesting produce increases, that cost moves through the supply chain to distributors and eventually consumers.

Finally, currency fluctuations also play a role. A large percentage of fresh produce sold in Ontario is imported from the United States or Mexico, and when the Canadian dollar weakens against the U.S. dollar, the cost of imported produce increases immediately.

Overall, food pricing is the result of many interconnected factors, and when several of them rise at the same time, as we’ve seen over the past few years, it creates significant upward pressure on prices.

MS: Among the various pressures affecting the market—such as transportation costs, supply chain disruptions, labour shortages, and global commodity prices—which factor has had the greatest impact on the rising cost of food?

FA: While all of these factors contribute to rising food prices, transportation and logistics costs have likely had the greatest impact, especially in the fresh produce sector.

Produce is highly perishable and must move quickly from farms to distribution centers and then to retailers and restaurants. Because of this, there is very little flexibility in how it is transported, and most of it moves by refrigerated truck. Over the past few years, trucking costs have increased due to higher fuel prices, driver shortages, regulatory changes, and equipment costs.

Even relatively small increases in freight rates can have a large impact on produce pricing because many products travel long distances. For example, fruits and vegetables coming from California, Florida, Arizona, or Mexico must travel thousands of kilometers before reaching Ontario markets.

In addition, supply chain disruptions during and after the pandemic exposed weaknesses in global logistics, which created delays, product shortages, and price volatility. When supply becomes inconsistent, prices tend to spike.

While labour shortages and commodity prices are important factors as well, transportation tends to have the most immediate and visible effect on pricing in the produce distribution business.

MS: How is the food industry adapting to these rising costs? Are suppliers, distributors, and retailers changing the way they source products or manage prices?

FA: The food industry has had to become much more strategic and flexible in response to rising costs.

One of the biggest adjustments has been diversifying supply sources. Many distributors are working with multiple growing regions to reduce the risk of shortages or sudden price spikes. For example, if one region experiences weather issues or crop failures, distributors can shift supply to another region more quickly.

Another adaptation is greater emphasis on local and seasonal sourcing when possible. Ontario growers play an important role during the domestic growing season, and buying locally can sometimes reduce transportation costs and supply chain risk.

The industry is also focusing heavily on efficiency and inventory management. Distributors are tightening inventory cycles, improving forecasting, and using technology to reduce waste and spoilage. In produce distribution, even small improvements in handling and logistics can make a significant difference.

Retailers are also adjusting their pricing strategies. Many are increasing promotions on key items, offering more private label products, and trying to balance margins while still keeping staple items affordable for consumers.

Overall, the industry is adapting by becoming more data-driven, more diversified in sourcing, and more focused on operational efficiency.

MS: Have you noticed changes in consumer behaviour as a result of these higher prices—for example, shifts toward discount retailers, private labels, or different types of products?

FA: Yes, we have definitely seen noticeable changes in consumer behaviour over the past few years.

Consumers have become much more price-sensitive, and many are actively looking for value. This has led to increased traffic at discount grocery chains and greater demand for promotional pricing on staple items.

Another trend is the growth of private label products, where retailers offer their own brands at lower price points compared to national brands. Many consumers who may not have considered private label products in the past are now more open to purchasing them.

We have also seen some shifts in product choices. Consumers may switch to more affordable produce options or seasonal items when prices on certain fruits or vegetables increase significantly. For example, when imported berries or specialty items become expensive, demand may shift toward more affordable staples such as potatoes, onions, apples, or carrots.

In general, consumers are becoming more strategic about how and where they shop, often comparing prices across retailers and focusing more on value.

MS: With growing geopolitical tensions and the current conflict in the Middle East, to what extent could global instability further affect food prices in Ontario in the coming months?

FA: Global geopolitical instability can have indirect but meaningful effects on food prices in Ontario.

One of the most immediate impacts comes through energy markets. Conflicts in regions that influence global oil supply can drive up fuel prices, and higher fuel costs directly affect transportation and logistics across the food supply chain.

Global instability can also affect fertilizer production, shipping routes, and commodity markets, all of which play important roles in agriculture. For example, if shipping routes become disrupted or insurance costs for international transport increase, those additional costs can filter down through the supply chain.

Even though much of the fresh produce sold in Ontario comes from North America, the food system is globally connected. Changes in international trade, shipping costs, or commodity prices can influence input costs for farmers and distributors worldwide.

In the short term, geopolitical tensions tend to create market uncertainty and price volatility rather than immediate shortages. However, if instability continues or expands, it could place additional upward pressure on food prices over time.

MB/MS