The federal government should investigate the soaring cost of groceries to get to the bottom of unexplained price hikes of goods like meat, and to address the “dangerous” number of Canadians who believe wrongdoing is to blame, according to food policy expert Sylvain Charlebois.
“Is there profiteering going on? There is a possibility, because we have concerns with some verticals in the grocery store,” he said. “Some of the increases we can explain. But a portion we just can’t.”
NDP MP Alistair MacGregor is set to introduce a motion at the House of Commons agriculture committee meeting Wednesday afternoon, asking MPs to study the profits large grocery stories are making while grocery prices increase.
Charlebois, a professor at Dalhousie University, said “it’s important to look into this for the Canadian public,” citing an August Angus Reid study in which 78 per cent of Canadians said they believe grocery stores are taking advantage of inflation to make bigger profits. He said makes for a “dangerous threshold” of Canadians who believe there is abuse.
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“A lot of people are losing faith here. And that’s a problem. And I think Parliamentarians should actually look into this,” he said.
NDP leader Jagmeet Singh told reporters Tuesday corporate grocery profits and bonuses are “clear evidence” that “something beyond the understandable” is driving the price hikes.
Singh said if the prices were simply increasing to “match the increased costs, you wouldn’t be seeing the bonuses and the record profits.” He added that while there are other areas where inflation is coming down, that’s not happening with food prices.
“All these things paint a picture that clearly there’s something going on,” he said. Singh pointed to the 2018 bread-price-fixing scandal as precedent.
But, Singh said, “it could just be as simple as corporate greed. It doesn’t have to be any more nefarious, but that is deeply a problem.”
Charlebois said there have now been “thirteen straight months, when the food inflation rate exceeded the general inflation in Canada. People are spooked at the grocery store. They’re wondering what’s going on.”
He added that given the bread price-fixing scandal, “there’s baggage there, which certainly would make some of the criticism deserved.”
Asked what profits the NDP is using as a basis for its claims, a spokesperson pointed to numbers from the most recent financial reports from Loblaw Companies, Empire Companies and Metro. They said Loblaw had $901 million in net profits in the first two quarters of 2022, up from $769 million in 2021. In the first three quarters of its 2022 fiscal year, Metro reported $680.8 million in 2022, up from $631.7 million in 2021. In its fiscal 2022, Empire reported a profit of $745.8 million, compared to $701.5 million the year before.
Loblaw has pointed to its drug retail division, which includes Shoppers Drug Mart, as the profit driver.
People are spooked at the grocery store
Charlebois said he looked into grocery chains’ profits and found that while profit numbers are going up, the percentages have been consistent over the past five years. “Two per cent five years ago does not look like two per cent today,” he said. He said that his study, which looked at Empire, Loblaw and Metro, didn’t find any evidence of “greedflation or abuse or profiteering at all in the last five years.”
But that doesn’t mean there aren’t questions about why prices of specific foods are going up, such as seafood, meat and bakery goods.
For example, future prices of beef have been down for a while, but retail prices are still going up. “That’s highly unusual,” he said. “Is it profiteering? Well, then let’s talk about this. Is it transportation? Is it consolidation?”
But he said a study needs to be holistic, looking at the whole system from farm to retail.
Rod MacRae, a retired associate professor at York University said Canada “has the most corporately concentrated food system in the Western world,” and it’s especially concentrated at the retail level.
He said that “creates the possibilities for the retailers to control price.”
Something beyond the understandable
MacGregor said he wants to committee to hear from the major grocery chains, a variety of economists, unions, and consumer advocates on the issue.
“I think the onus is on the grocery chains to be a little bit more upfront with Canadians,” he said. “All Canadians can see is basically what’s in front of them, week in, week out. They can see the huge… increases.”
The motion could have support from the other parties on the committee. Asked whether Conservative MPs on the committee will support the motion, the office of committee vice-chair John Barlow said he couldn’t comment on a motion he hasn’t yet seen, but that agricultural committee members “have had a long history of supporting studies proposed by members, regardless of party affiliation.”
Liberal MP Kody Blois said that he would hold his opinion until he’s seen exactly what’s included in the motion, but that there is “merit” to the issue that’s being raised.
When it studies an issue, a parliamentary committee’s primary role is to make recommendations to government, Blois noted. “But there’s nothing stopping the committee, if it felt that there was some type of behavior that was requiring further investigation, to have letters sent…trying to encourage federal agencies to take action.”
Charlebois said Parliament can “politicize the issue, and make sure that penalties are operationalized through agencies, like in this case, the Competition Bureau.”