The debilitating cost of remittances

November 05, 2022
GZERO Staff

Dilip Ratha knows how hard it is to work abroad and send money home. Why? Because he had to go through the same hoops when he was a migrant.

It's the inconvenience and the cost, the World Bank's head of KNOMAD and lead economist says during a livestream conversation on closing the global digital gap hosted by GZERO in partnership with Visa.

Still, Ratha points out, these flows are a lifeline for millions of poor families around the world. And they keep the lights on in remittance-dependent economies like El Salvador or Lebanon.

With an average 6% commission, the amount lost each year is double all the aid that the US gives to the entire world or what sub-Saharan Africa gets.

OPINION

In Pakistan, the very migrants who support the economy with their remittances are called traitors

Remittances received from migrant workers living abroad make up almost 8.5% of Pakistan’s gross domestic product.

Rafia Zakaria, Dawn.com

Aamir Qureshi/AFP

In recent years, as Pakistan has hurtled from one catastrophe to another, remittances sent by Pakistani workers living abroad have been a source of some small amount of stability. When foreign investments have seemed scant and aid packages have dried up, workers sending money back to families, investing in and purchasing assets in their home country has served as a reliable source of foreign exchange.

Now this once reliable source of money entering the country also appears to be threatened by both global and domestic conditions. According to the Economic Outlook Report issued by the Ministry of Finance, the first 10 months of 2022 have seen foreign remittances drop by 3.6% to $7.7 billion.

Some analysts forecast that Pakistan’s removal from the Financial Action Task Force ‘grey list’ will lead to better numbers in the remainder of the year as foreign investment sees an uptick. This prediction, however, does not seem to account for the current political upheaval in the country following the murder of journalist Arshad Sharif in Kenya and the initiation of the latest long march and sit-in led by Pakistan Tehreek-e-Insaf chief Imran Khan.

While the removal of Pakistan from the grey list was a positive step, it may not deliver the country from its deep economic woes. For starters, the continuing catastrophe created by the floods and their aftermath means that much of the influx of cash seen in recent months will have to be utilised to stabilise the agricultural sector that has been all but devastated.

Second, while removal from the list means that Pakistan can issue bonds, the otherwise underwhelming performance of the majority of sectors in the country, along with the continuing threat of political instability, means that Pakistan will not be able to capitalise on these developments in the manner that would have been possible even a few weeks ago.

With few assurances about who will retain power in Islamabad and what they will do, one cannot fault foreign investors for being wary about putting their money in a country that seems to be jumping headlong into even more uncertainty than before.

Remittances received from migrant workers living abroad make up almost 8.5% of Pakistan’s gross domestic product. Unlike money from the World Bank, Asian Development Bank and foreign governments, remittances do not add to debt and do not need to be paid back.

For this reason, the comparison of remittance amounts to these other forms of capital inflow is inaccurate. While the money coming in from these other sources may prevent initial shocks from the reduced remittances, it is unlikely to do so in the long term. If anything, it will draw even more attention to whether Pakistan is going to be able to service its existing debts in the face of mounting new ones.

It is possible that a reduction in the official numbers for remittances reflects not an actual decrease in the amounts but rather a turn towards unofficial means of transmitting money such as hawala and hundi systems. The current political turmoil in the country has created serious doubts about the legitimacy and reliability of procedures, whether it is legal or financial institutions.

Undoubtedly, some migrant workers may be reconsidering whether they should send money home via official financial channels susceptible to government policies changing without notice. Anything at all can happen in Pakistan and that uncertainty can direct many people to use unofficial means as a way to play it safe.

It is beyond ironic, of course, that the feudals, industrialists and politicians that ply power in Pakistan (between runaway trips to Dubai and London) have invested much of their money outside the country. It sits in bank accounts in Switzerland, chateaus in France, flats in Kensington. Knowing that their fortunes cannot be seized by the country affords this class of people endless solace.

They may not be dual nationals but they know they can buy foreign citizenship with their money. This loophole allows them to present themselves as true patriots of the Pakistani people who have chosen to stay in the country as opposed to all the middle classes who have left. When they present this argument to the country’s poor, they emerge as truth tellers valiant and worth a vote.

The truth is far from this. Middle-class Pakistanis who have had to leave the country and go elsewhere for jobs are hardly traitors. Proof of this lies in the fact of the remittances themselves: these Pakistanis are choosing to send the money that they earn back home to pay for school fees, necessary medical procedures, the upkeep of parents and siblings, investment in property or in a business, etc. They too have the option to put away money in ‘foreign’ bank accounts but they put their faith in Pakistan.

Despite this, they are often portrayed as traitors simply because they have taken jobs abroad; never mind the fact there are no jobs in the country where they were born and would rather stay.

Such is the trickery of the very rich in Pakistan that they manage to turn the poor against the people who have just a little bit more. In this way, Pakistan’s very wealthy continue to insulate themselves from economic shocks: whichever government is in power makes sure to provide the particular people (all too often perceived to be thieves) it has assembled in its cabinet with a cut that can be safely stowed abroad.

Remittances are wanted in Pakistan but the workers who produce them are treated with ignominy and disrespect and labelled traitors for having left the country. In the meantime, the real traitors who are fixtures regardless of whichever political party is in power, fill their coffers with money borrowed in the name of the country. Pakistan has many tragedies playing out these days; the inability to distinguish between the real thieves and the real benefactors is just another one of them.

This article first appeared in Dawn.

‘Nuclear wars must not be fought,’ China President Xi says

Statement from Chinese leader Xi Jinping comes after a series of warnings about the deployment of nuclear arms as Russia’s war in Ukraine intensifies.

German Chancellor Olaf Scholz, left, meets Chinese President Xi Jinping in Beijing on Friday [Kay Nietfeld via Reuters]

Published On 5 Nov 20225 Nov 2022

China’s president has pressed world leaders to stop making threats and prevent the use of nuclear weapons in Europe and Asia as rhetoric over Russia’s war in Ukraine continues to heat up.

President Xi Jinping made the plea after meeting German Chancellor Olaf Scholz in Beijing on Friday, the official Chinese state news agency Xinhua reported.end of list

“The international community should … jointly oppose the use or threats to use nuclear weapons, advocate that nuclear weapons must not be used and nuclear wars must not be fought, in order to prevent a nuclear crisis in Eurasia,” Xi said.

A statement on Xi’s comments did not mention any specific nations related to nuclear threats, however, rhetoric by world leaders discussing atomic arms has heightened in recent weeks. Fears have intensified that Russia’s eight-month conflict in Ukraine could turn nuclear.

Moscow would face “severe consequences” if it uses any chemical, biological or nuclear weapons in its war with Ukraine, the Group of Seven (G7) industrialised nations warned on Friday.

‘Armageddon’

NATO began a round of nuclear exercises in October simulating the dropping of “tactical” B61 nuclear bombs over Europe. The manoeuvres occurred in parallel to similar Russian military drills. Both sides described the exercises as routine.

Russia alleged last month that Ukraine forces were planning to detonate a “dirty bomb” in Ukraine and blame it on Moscow in order to drive global opinion against it. A dirty bomb is a conventional explosive device laced with radioactive materials.

The United Nations nuclear watchdog said this week it found no sign of “undeclared nuclear activities” at three sites it inspected in Ukraine at Kyiv’s request following Russia’s allegations.

US President Joe Biden recently warned the world could face “Armageddon” if his Russian counterpart, Vladimir Putin, were to use a tactical nuclear weapon in Ukraine.

Putin said in September he was “not bluffing” about using nuclear arms if Russian territories – including regions in Ukraine illegally annexed – were threatened by NATO forces. He accused NATO nations of “nuclear blackmail” and planning to “destroy” Russia.

Moscow later downplayed the threat to use atomic weapons and said any confrontation with the United States and NATO was not in the Kremlin’s interests.

The Russian leader said last week that Moscow had no intentions of employing nuclear arms in the Ukraine war. “We see no need for that. There is no point in that, neither political nor military,” said Putin

Biden responded in an interview, if Putin doesn’t intend to use such weapons, then “why does he keep talking about it?”

SOURCE: AL JAZEERA AND NEWS AGENCIES

BANKING

Europe’s top bankers are pressing regulator to back off

Senior executives exasperated with long list of requests by European Central Bank’s oversight arm


The headquarters of the European Central Bank in Frankfurt

European bank executives are expressing increasing frustration with what they see as excessive interference and unreasonable demands from the region’s top financial regulator.

Bankers are now becoming more vociferous about a raft of long-held irritations with the European Central Bank’s oversight arm, led by Andrea Enria.

These include more day-to-day gripes, such as burdensome data demands, but also more significant debates over lenders’ freedom to pay out dividends and bonuses as well as the level of intrusion that supervision warrants, according to executives familiar with the matter.

With dissatisfaction rising, Lorenzo Bini Smaghi, chairman of France’s Société Générale SA and a former ECB executive board member, wrote to the central bank in October to protest against officials’ requests to be present in bank board meetings, according to a document seen by Bloomberg. He argued that the practice damages the effectiveness of the management discussions.

“To my knowledge, no other authority in the major advanced economies attends board meetings and committees in its supervisory activity,” he wrote. “Not the Federal Reserve, nor the Bank of England, the Swiss national bank nor Finma. Some European supervisors have adopted such practice in the past, with apparently very little benefit and serious concerns raised by the supervised entities.”

After almost a decade of oversight from the ECB, which set up the Single Supervisory Mechanism as part of the region’s response to the sovereign debt crisis, banks weathered the pandemic era largely unscathed thanks to better capitalisation and significant government backstops. And while the industry also ultimately benefited from years of ECB pressure to reduce bad loans and improve risk management, bankers argue that it is now going too far.

While banks and their supervisors often have frictions, the latest come amid ECB calls to prepare for the high level of oncoming risk in the economy. In September, the European Systemic Risk Board issued an official warning on vulnerabilities in the financial system amid spiking energy prices and surging inflation.

Officials have also been proved prescient in their warnings in recent years about the risks mounting in the business of leveraged lending, as global banks have racked up billions of dollars in mark-to-market losses from that area over the past six months.
Risk warning

On Friday, Enria warned in a presentation that while lenders balance sheets are generally sound, risks are building in a number of areas including the residential real-estate market amid rising interest rates.

The SSM “was created to foster the safety and soundness of the banking sector, and we are committed to fulfilling this mandate and assessing the banks against very high standards,” an ECB spokesman said in a statement. “We have always been and remain open to dialogue about the efficiency and effectiveness of our supervisory processes.”

The chairman of France’s Société Générale wrote to the ECB last month to complain about officials’ requests to be present in bank board meetings

In the letter, addressed to Ramon Quintana, a director general at the ECB, Bini Smaghi said he had called for a meeting with Enria and the chairs of other major European lenders “to exchange views on how to ensure a proper assessment of banks’ governance.”

The ECB has previously said that occasional attendance by its staff as observers at board meetings is one of the tools it uses to assess banks’ governance frameworks. Société Générale declined to comment on the letter.

Bankers interviewed by Bloomberg argue that the ECB’s de facto ban on payouts at the height of the pandemic damaged them in the eyes of investors, and that moderation now isn’t justified given their bumper earnings.

Firms from Deutsche Bank AG to Banco Santander SA reported double-digit gains in lending income in the third quarter, helping bolster earnings even as central banks’ rapid increases in interest rates squeeze companies and consumers with higher borrowing costs.

Amid that tension, how the watchdog carries out oversight on a day-to-day level is grating more than usual. One executive compared the watchdog to the Federal Bureau of Investigation, claiming that supervisors ask the same question a number of times to separate bank staff, in order to compare answers.

Some requests are seen as probing deep into the business decisions of private companies, for example into specific drivers of profitability, says one of the people familiar with these interactions. Conversely, some bankers also allege that the teams assigned to them by the ECB and national regulators are often inexperienced or ask for reports that are highly granular and end up not being read.
Focus on minor issues

Agendas for board meetings at banks are seen as overly focusing on comparatively minor issues at subsidiaries raised by the regulator, one executive said. Meanwhile, committees below board level are being obliged to provide the watchdog with transcripts of meetings, according to another, giving a sense of unnecessary intrusion. Compliance teams complain of trouble retaining staff burnt out by the growing demands.

Still, the issue of dividends shows the ECB and bank are still able to work together. ING Groep NV, a Dutch lender that has one of the highest capital levels among European banks, said on Thursday that it would buy back as much as €1.5 billion of stock after getting approval from the watchdog. Chief Executive Officer Steven van Rijswijk said conversations the bank has had with regulators have been “constructive.”

And Intesa Sanpaolo SpA CEO Carlo Messina said that while supervisors do pressure banks, he doesn’t see a need to change how things operate.

“Our relations with the ECB are good,” Messina said on an earnings conference call Friday. “To date it’s still an acceptable relation, but undoubtedly, the supervision shouldn’t go beyond the way in which we operate at the moment. So I do not agree with the need for a strong clarification with the supervisor.”

Set up in 2014, the ECB’s banking supervision arm is unlike any other regulator, in that it coordinates financial oversight across the euro area’s 19 countries.

The watchdog has previously faced accusations of overstepping its mandate, notably for how Enria’s predecessor pushed banks to shrink their mountain of bad loans.

Today, bankers - and even some regulatory officials - grumble that the ECB’s plans to police climate risks go too far or that authorities are taking a heavy-handed approach to the lucrative business of leveraged finance.

While much of the frustration among bankers is over interaction with the ECB on a working level, big ticket projects like this year’s climate change stress test are also a sore point.
Supervisory review

The labour-intensive exam was billed as a “learning exercise” for regulators and lenders alike, yet several banks Bloomberg spoke to said they were disappointed that the initial criticism wasn’t more constructive given the effort they put in.

Enria, 61, has long been at the core of the effort to improve the financial health of Europe’s banks. Before taking over as Chair of the ECB’s Supervisory Board at the start of 2019, he led the European Banking Authority, which helps implement regulation and holds stress tests for lenders in the region.

The Italian national has made the ECB’s supervisory activities more transparent, for example spelling out how it treats bank mergers, and has sought to remove hurdles that banks face in moving liquidity across borders, albeit with mixed results.

In September, the ECB started a review of annual supervisory process, which is known as SREP. The European Banking Federation, a lobby group, said via a spokeswoman that there is “room for improvement” in SREP despite being an “achievement” and it would use the review to engage with the ECB over it.

Enria himself has recently hinted at the tension in the relationship with banks, but has doubled down on warnings that individual institutions need to focus on future risks rather than shower investors with cash.

In a speech last month, he said that optimism at banks over bumper earnings this year have generated “a certain reluctance on the side of banks to seriously engage in supervisory discussions” about economic risks.

Even so, Enria has acknowledged that the ECB and other authorities were overly pessimistic in their warnings earlier in the pandemic.

“We might be suffering the same fate as the boy who cried wolf in Aesop’s Fables, and a tendency might be spreading among banks to dismiss their supervisors’ calls for prudence as unjustified conservatism,” he said.

©2022 Bloomberg L.P.

Armed protest quelled inside overcrowded British detention center
By Simon Druker


Detainees at the Harmondsworth immgration removal center near London armed themselves and staged a “disturbance” on Saturday. Photo courtesy of detentionaction.org


Nov. 5 (UPI) -- Detainees at an immigration removal center near London armed themselves and staged a "disturbance" on Saturday, Britain's Home Office said.

The protest began after an early-morning power outage when the detainees left their rooms and congregated in the courtyard of the Harmondsworth detention center.

They eventually returned to their rooms and nobody was injured, the Home Office reported, saying they did have various weaponry.

Dozens of detainees were armed with knives and lumps of wood, CNN reported.

Members from the Metropolitan Police were called in to assist.

The detention center is located not far from the city's Heathrow Airport and houses hundreds of people, ranging from adult male asylum seekers to foreign offenders awaiting deportation as well as men who are in Britain illegally.

British officials raised concerns less than a week ago about overcrowding and other issues at the facility as well as the country's migration system as a whole.

Conservative lawmaker Roger Gale called the entire system "wholly unacceptable" as it currently stands. Gale made the comments outside the Manston migration center in Kent, in southeast England, which houses 4,000 people despite being designed to hold only 1,500.

"[Staff are] trying to do a good job under impossible circumstances," Gale told reporters Monday.

About 100 people at the Harmondsworth detention center were due to be moved to Manson on Saturday, before the protest broke out, despite the overcrowding issue.

This follows a separate incident at an immigration center in Dover on Oct. 30.

During the attack, a number of crude incendiary devices were thrown outside the premises by a man who arrived at the scene alone in a car.

Police say that attack was "motivated by a terrorist ideology."

Riot police deployed following 'disturbance' at London detention centre

Home Office says authorities have been sent to Harmondsworth centre in west London

The Harmondsworth Detention Centre near Heathrow airport. AFP

The National
Nov 05, 2022

Police and riot teams have reportedly been deployed to Harmondsworth detention centre following an overnight disturbance.

It occurred after a power outage at the west London centre, a Home Office spokesperson told Sky News. No one has been reported injured, and power was still down at the site as of 9am local time.

It comes as the Home Office comes under fire over its treatment of migrants and asylum seekers held at detention centres, and Home Secretary Suella Braverman's claim of a migrant "invasion."

It withdrew an earlier claim that detainees "armed with various weaponry" left their rooms and entered the courtyard.
READ MORE
Man found dead after petrol bombs thrown at Dover migrant centre
Thousands of lone migrant children living in UK hotels, says watchdog

Work is currently under way to resolve the issue and the appropriate authorities have been notified and are on the scene, the Home Office added.

Around 100 inmates staged a protest in the courtyard after the power outage, The Guardian reported.

The protest halted a move of about 100 residents to the Manston processing centre in Kent, it added as authorities were preoccupied with the power outage.

No one held at the site is said to have left the premises, known as the Colnbrook immigration removal centre, located close to Heathrow Airport.

In July, a demonstration was held outside the centre over plans to send asylum seekers to Rwanda.

The disturbance comes less than a week after a man threw petrol bombs at a migrant centre in the southern port town of Dover. The suspect was later found dead.

Dover is the focal point of British processing of asylum seekers as the country tries to curb the number of people trying to sail the dangerous English Channel route.

The entrance to the Manston immigration holding facility. AP

Nearly 40,000 have arrived in the UK so far this year after attempting the treacherous trip from France, crossing one of the world's busiest shipping lanes in dinghies and other small boats.

Conditions at Manston have also drawn ire.

The Refugee Council has called for "urgent action" to tackle conditions at the site, which is holding at least 1,000 people more than its capacity.

The situation in Manston is not what it should be,” cabinet minister Michael Gove said last week, adding the situation at the centre is "deeply concerning."

Prison-like center puts focus on UK’s response to migrants

By SYLVIA HUI

yesterday

1 of 10

A young girl runs towards the fence carrying a message in a bottle inside the Manston immigration short-term holding facility located at the former Defence Fire Training and Development Centre in Thanet, England, Wednesday, Nov. 2, 2022. Details about overcrowding and inhumane conditions at a migrant processing center in southeast England have shocked Britain and reignited a heated debate about how the Conservative government is handling a sharp increase in the number of asylum-seekers arriving on U.K. shores. (Gareth Fuller/PA via AP)


LONDON (AP) — Behind wire fences in southeast England, children wave their arms and chant “freedom” to grab the attention of people on the other side. A young girl throws a bottle with a message inside. “We need your help. Please help us,” the note reads.

The children are among thousands of people being held in dangerously overcrowded conditions at a closed airport serving as a processing center for migrants who recently arrived on British shores after crossing the English Channel in small boats. The situation there has reignited a heated debate about the Conservative U.K. government’s treatment of asylum-seekers.

Located at the site of a former British air force base that had a short life as the civilian Manston Airport, the center in Kent was designed as a short-term processing facility housing about 1,600 newcomers. Up to 4,000 were staying there at one point this week, with some reportedly detained unlawfully for a month or more.

Independent government inspectors said they saw families sleeping on floors in prison-like conditions that presented fire and health hazards. The inspectors warned of the risk of outbreaks after cases of scabies, diphtheria and other conditions were reported.

“Welcome to the U.K,” read a headline in the Metro newspaper, accompanied by a close-up photo of young children gazing out from behind metal fences.

Facing pressure over the situation, U.K. Home Secretary Suella Braverman defended the government’s policies and described the increasing number of migrants arriving via the English Channel as “ an invasion on our southern coast.” Her comment drew widespread condemnation.

The conditions at the center in the village of Manston has put a spotlight on wider problems in Britain’s asylum system, which is struggling to cope with a record number of small boat crossings at a time when border officials are trying to clear a massive backlog of refugee applications.

“We’ve got this kind of perfect storm of more people coming — which the government was warned about — and added to the mix we have this huge waiting list of around 100,000 individuals who have sought asylum,” said Jonathan Ellis, the policy and public affairs lead at Britain’s Refugee Council. “There’s a lack of political will, a lack of political focus, and therefore, (a lack of) the associated resources to really tackle this issue.”

Around 40,000 people from countries that include Iran, Afghanistan, Iraq and Albania have crossed one of the world’s busiest shipping lanes in dinghies and other unseaworthy boats from northern France so far this year, hoping to start new lives in the U.K.

That’s the highest number ever recorded, and it represents an exponential increase from 2018, when only 299 migrants were detected arriving in England in small boats without authorization, official data showed. Last year, there were 28,536.

Dozens of people have lost their lives attempting the passage, including 27 who died when a packed smuggling boat capsized in November 2021.

Braverman, who is known for an uncompromising approach to immigration, has blamed criminal gangs for facilitating the crossings and focused on what she called spurious claims by some of those seeking refuge.

She told lawmakers in Parliament this week to “stop pretending that they are all refugees in distress.” Her harsh language has drawn criticism, including from within the governing Conservative Party. Some critics accuse Braverman of fueling anti-immigration hate.

“The government rhetoric since I arrived has been scapegoating migrants, blaming us for the problems of this country. But it’s gotten a lot worse,” said Hassan Akkad, a documentary maker who fled Syria in 2012 to seek asylum in the U.K.

“When you have a home secretary comparing asylum-seekers to an invading enemy, you are giving a green light to the public to attack them,” added Akkad, who works with refugee charity Choose Love.

The overcrowding at the Manston center reached a breaking point this week after hundreds of people were moved there from another migrant processing center nearby that was hit with gasoline bombs. Police said the man who carried out the Oct. 30 attack and killed himself afterward was likely driven by a “hate-filled grievance.”

Braverman also faced accusations that she blocked hotel bookings for asylum-seekers to ease overcrowding at Manston and ignored legal advice on the matter. She denied the claims.

Critics say government incompetence in managing Britain’s asylum system extend beyond Manston and precede Braverman becoming interior minister in September. The opposition Labour Party said only 4% of asylum claims from small boat arrivals were processed last year, meaning that more than 100,000 people are in limbo waiting for their applications for protection to be considered.

The U.K. is a preferred destination in Europe for migrants who speak English or have family connections in the country. Before the coronavirus pandemic, many tried to cross from northern France by hiding in freight trucks traveling through the Channel Tunnel. COVID-19 travel restrictions and stricter security measures on the route made the hazardous sea journey a more viable way to enter the U.K.

But despite the unprecedented increase in people arriving in small boats, the U.K. receives far fewer asylum-seekers than many other European countries, including France, Germany and Italy. Last year, 48,540 people applied for British asylum, compared to 148,200 applicants in Germany and more than 103,000 in France.

A controversial deal the U.K. government struck with Rwanda in April added to its reputation of not being the most welcoming. The agreement called for deporting some asylum-seekers to the African country, where their claims would be processed and successful applicants would be allowed to stay in Rwanda. The plan was meant to deter people from entering the U.K. illegally, but no one to date has been deported because of legal challenges to the policy.

U.K. authorities have also sought to work with their French counterparts to stop the Channel crossings. The two sides engaged in tense wrangling over the issue last year, but relations appeared to improve after Liz Truss — and her successor Rishi Sunak — became prime minister.

In a call with French President Emmanuel Macron last week, Sunak said the U.K. and France were “committed to deepening our partnership to deter deadly journeys across the Channel that benefit organized criminals.”

Ellis, at the Refugee Council, said authorities ultimately would need to focus less on hostile rhetoric and deterrence and more on safer routes for legitimate asylum seekers to apply for refuge.

“We need to challenge this political rhetoric that people should only come to this country through legal routes,” he said. “Ostensibly that’s reasonable, but for someone who’s fleeing the Horn of Africa, where are they meant to go? What are those safe routes? There is none.”

___

Sylvie Corbet in Paris contributed to this report.

___

Follow AP’s coverage of global migration at https://apnews.com/hub/migration

Soaring food prices could have major impact on Canadians' health

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Cost of food rising at highest rate in 41 years, putting millions of Canadians at risk

Adam Miller · CBC News · Posted: Nov 05, 2022 

Food prices have soared to their highest rates in almost half a century — and that could lead to some serious impacts on Canadians' health. (Evan Mitsui/CBC

• Rising food prices are putting a growing number of Canadians under financial strain.
  

• That could create major effects on our health as more Canadians may opt for unhealthy food or skip meals altogether due to rising costs.
  

• Research shows food insecurity is tied to far worse health outcomes, and that could lead to added pressure on our already overburdened health-care system.

---

Food prices have soared to their highest rates in almost half a century, leaving many Canadians feeling more financial pressure at the checkout line and eating less healthy food to save money — something that could lead to serious impacts on our health.

Canada is now in the grips of a growing food insecurity crisis, with many low-income and fixed-income households faced with the difficult decision to either pay their bills or put food on the table at a time when even the price of staple items has skyrocketed. 

Prices on food purchased from grocery store shelves shot up by 11.4 per cent in September — the fastest annual increase in 41 years.

The price of fresh fruit went up by 12.9 per cent, fresh vegetables by 11.8 per cent, baked goods by 14.8 per cent and meat by 7.6 per cent — putting the healthy diet recommended in Canada's Food Guide further out of reach for many Canadians. 

"I'm a Type 2 diabetic and I also have hypertension as well, and so I'm supposed to eat a very healthy high fibre diet — well, that's not happening," said Tracy Ross, who lives on a fixed income on a disability pension in Spruce Grove, Alta., and struggles to afford groceries.

"The repercussions of all of this down the line, I don't even want to think about it. People's health issues are going to get worse, people are going to be dying. Our hospitals are already overworked and understaffed."

WATCH | 'I can't afford anything healthy': Winnipeg advocate on social assistance

I can't afford anything healthy,' Winnipeg man on social assistance says

3 days ago

Duration5:00

Todd Donohue, who suffers from Crohn's disease and is on social assistance, says the price of food is so high in Manitoba that people like him cannot afford healthy food and often have to choose between buying groceries and paying rent or bills.

Ross said she has also been finding it harder to pay her monthly utility bills due to the rapid rise in food prices, whereas previously she was able to keep up month-to-month. 

"So what, are you going to go cold or are you going to go hungry?" she told CBC News. "I need a new winter jacket — it ain't gonna happen this year."

Even the price of essentials have reached new heights, with a three-litre bottle of vegetable oil rising more than 40 per cent between August 2021 and August 2022 in Canada, topping the list of most expensive food items this year.

• Food keeps getting more expensive even as overall inflation slows

The number of Canadians using food banks across the country also reached record highs this year, with nearly 1.5 million visits in March, up 15 per cent over the same time last year and 35 per cent more than in March 2019, prior to the pandemic. 

More than 30 per cent of Canadians said they were eating less healthy food due to rising costs, while almost 20 per cent said they skipped meals to save money in a new national survey from the Canadian Hub for Applied and Social Research at the University of Saskatchewan.

The cost of feeding a family of four in Ottawa with healthy food rose more than 20 per cent during the pandemic to more than $1,000 a month, up from just over $900 in 2019, according to a new survey from Ottawa Public Health. 

• Family of 4 must pay more than $1,000 per month for healthy food, study finds

And there appears to be no relief in sight at the checkout line.

Dairy prices are expected to rise again in the new year, even as Canada's top three grocers all posted higher profits this year compared with their average performances over the last five years.

More than 30 per cent of Canadians said they were eating less healthy food due to rising costs, while almost 20 per cent said they skipped meals to save money in a new national survey. (George Frey/Bloomberg)

'Accepting far worse health outcomes for millions'

"We're talking about millions of people being unable to access food in one of the richest countries," said Dr. Andrew Boozary, executive director of health and social policy for Toronto's University Health Network. 

"There is no way that we can shirk what we are talking about here, this is really about accepting far worse health outcomes for millions of Canadians."

A growing body of research has found that food insecurity is tied to much poorer health outcomes for adults and children, something that could lead to more pressure on the already overburdened health-care system down the road. 

"In adults, we're talking about Type 2 diabetes, heart disease, high blood pressure, poor bone health — all the reasons why a healthy diet is important," said Valerie Tarasuk, a professor of nutritional sciences at the University of Toronto's Temerty Faculty of Medicine. 

"People who are food insecure are way more likely to turn up in an emergency department, they're more likely to be hospitalized for a variety of conditions, and once hospitalized, they're more likely to stay longer, and they're more likely to be readmitted." 

WATCH | Food insecurity can shorten lifespan:

A new study shows that food insecurity, the lack of access to nutritious foods, can shorten someone’s lifespan by nine years.

Canadians living in food insecure homes are also more vulnerable to infectious diseases, poor oral health, injuries and chronic conditions like depression, anxiety, heart disease, hypertension, arthritis and chronic pain, according to U of T's PROOF research program.

Statistics Canada reported Friday that more than one in three Canadians over 15 live in households that are finding it difficult to cover necessary expenses, including transportation, housing, food, clothing and other costs — up from just one in five in October 2020.

"Living in poverty puts you at higher risk of developing almost every chronic health condition, acute health condition, higher risks of even being in accidents, experiencing trauma," said Dr. Gary Bloch, a family physician at St. Michael's Hospital in Toronto.

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"It also puts you at higher risk of worse outcomes from all of those conditions."

A 2018 Ontario study published in the journal PLOS One found that adults who live in food insecure homes had more than twice the risk of developing Type 2 diabetes compared to those who had ready access to food, an issue Tarasuk said may be worsened by the rising cost of groceries.

"They have higher rates of chronic conditions than food secure Canadians and that includes both mental health and physical health conditions," Tarasuk said. "So now, you turn up the heat on them with these increased prices — they're less able to manage." 

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The latest data from Statistic Canada's Canadian Income Survey found 5.8 million Canadians, including 1.4 million children, lived in food insecure households in 2021.

"We're seeing it play out in the health-care system with far worse health outcomes for people who are having to try to make these impossible choices between putting food on their table, paying rent or renewing their medication," said Boozary. 

"These are the impossible choices now that are more impossible than ever for families and people across the country." 

A volunteer places products on shelves at the Kanata Food Cupboard in Ottawa on Oct. 7. The number of Canadians using food banks across the country reached record highs this year. (Adrian Wyld/The Canadian Press)

No relief in sight

With no signs of food inflation slowing down anytime soon, experts are calling for more to be done to support Canadians who may be finding themselves struggling to afford groceries — or looking for ways to stretch their budget and avoid eating unhealthy food. 

Abby Langer, a registered dietitian and nutrition expert in Toronto, also suggested people consider things like grocery store price matching, using coupons and opting for less expensive food options that can still create nutritious meals including beans, lentils, tofu and eggs. 

"You don't have to buy a ton of animal protein or think that you have to buy fish or whatnot to get that protein. Like you could have an omelet for dinner and it's an inexpensive protein-rich meal," she said, adding that canned and frozen foods can also be stored much longer. 

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"I want people to know you don't need to buy organic food at all. It's such a marketing ploy, you're not going to live longer if you eat organic food and it's so much more expensive. So please don't feel pressure to buy that kind of food — buy what you can afford."

Food banks and other charitable food assistance are also touted as solutions to the problem of food insecurity, but Boozary said they merely act as a Band-Aid to a systemic problem.

"Food banks are not the solution to food insecurity, the same way that shelters are not the policy solution to homelessness," he said, adding policy-makers need to ensure that social assistance programs rise on par with inflation and that living wages are provided. 

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"Everyone out there who's having to try to navigate these impossible choices knows that the root cause here is poverty and financial constraints. Not necessarily just food and food choices." 

Tarasuk said there is no evidence to suggest charitable food assistance groups like Food Banks Canada can solve the problem of food insecurity, noting policy interventions such as universal basic incomes are other ways to get at the root of the problem.

"I hope that in this time, everybody is conscious of these rising prices," she said. "I think people that haven't really thought much about it now are wondering how people are affording these costs." 

WATCH | No relief for rising food costs despite overall inflation slowing:

No relief for food prices despite overall inflation showing signs of slowdown

17 days ago

Duration2:33

Food prices in Canada rose at the fastest pace since 1981, despite Statistics Canada's latest figures showing overall inflation cooling down for the third month in a row.

For Ross in Alberta, the challenge of rising food costs isn't going away anytime soon. 

"I have two kids and they have spouses and I have a grandchild — how am I even going to afford to get some stuff for Christmas? It's just awful," she said. 

"And how am I even going to cook Christmas dinner?"