While farmers often feel the impacts of utmost weather events directly, the impacts on businesses further down the provision chain, similar to manufacturers and processors, are often indirect, Scali says.
Supply chains are generally designed to be as cost-effective as possible, which suggests the chance of disruption is higher, he said. This is the case, for instance, if you will have one large factory reasonably than several smaller ones, or if you happen to depend upon a single source for a key input. A disruption in a single a part of the provision chain can trigger a “domino effect,” he said.
But the COVID-19 pandemic and resulting supply chain shortages have shown firms that sometimes the lowest-cost option is simply too dangerous, Scali said. Many firms have mapped their supply chains, turned to multiple sources of supply or identified alternative sources. “That really put everyone a step forward,” he said. But such changes cannot mitigate every potential disruption, Scali said, and shortages and price volatility are prone to grow to be more severe.
Food delivery through Canada
Extreme weather conditions not only affect the raw materials themselves, but may affect transportation. The most up-to-date example, in line with Scali, is the fires in Western Canada, which shut down rail lines. “Yes, you can load goods onto trucks, but the truck capacity in the country is never enough to replace the rail. So you get delays and it gets more expensive,” he said.
If it’s a one-time disruption, the corporate normally tries to soak up it, he said, but longer-term disruptions or changes normally lead to prices having to rise.
What Canadians can expect from food prices
Canadians could feel the impact of utmost weather events on their food supply in two ways: when prices rise and when items suddenly grow to be unavailable.
In November 2022, lettuce prices skyrocketed because of a shortage of iceberg and romaine lettuce that was blamed on a virus in a serious lettuce-growing region in California. The following spring, the valley was hit by heavy rains and storms that caused flooding.
Earlier this 12 months, soaring cocoa futures highlighted the impact of high temperatures, weather conditions and disease in West Africa, which has caused crop losses.
