While farmers often see direct impacts from extreme weather events, for those further along the supply chain, such as manufacturers and processors, the effects are often indirect, Scali said.
Supply chains are often designed with very low costs in mind, which means the risk of disruption is high, he said, such as having one large factory instead of many smaller ones, or relying on a single source for key inputs. A disruption in one part of the supply chain can create a “domino effect,” he said.
However, the COVID-19 pandemic and supply chain snarls have shown companies that sometimes the most expensive option is the most dangerous, Scali said. Many companies have mapped their supply chain, turning to multiple sources to find inputs or identify spares. He said: “Put everyone first. But these kinds of reforms cannot alleviate all potential disruptions, Scali said, and shortages and price volatility are likely to worsen.
Food sourcing across Canada
Severe weather not only disrupts the goods themselves, it can also disrupt transportation. The fires in Western Canada are the latest example, Scali said, where rail lines are being shut down. “Yes, you can put things on trucks, but there is not enough truck capacity in the country to cover the railway. So things will be delayed, it will be more expensive,” he said.
If it's a one-time disruption, the company usually tries to absorb it, he said, but long-term disruptions or changes often mean prices will have to go up.
What Canadians can expect from food prices
Canadians may notice the effects of extreme weather events on their food supply in two ways: when prices increase, and when supplies suddenly become unavailable.
In November 2022, lettuce prices spiked amid iceberg and romaine shortages, caused by a virus in a major lettuce-growing area of California. The following spring, the valley was hit by heavy rain and storms, causing floods.
Earlier this year, spiking cocoa futures highlighted the effects of high temperatures, weather conditions and diseases in West Africa, where crop yields were damaged.
Source link
