The federal government has the means to intervene to prevent consumers’ grocery bills from continuing to inflate. At least that is what the report of the Standing Committee on Agriculture and Agri-Food concludes, which recommends in particular to tax the large grocery chains more in the event that it is proven that they are making excessive profits.
Having access to more information on the evolution of prices throughout the supply chain and setting up a mandatory and enforceable code of conduct to govern relations between retailers and suppliers, these are other recommendations issued by the House of Commons Standing Committee on Agriculture and Agri-Food to look into supermarket price increases.
With the significant increase in the grocery bill, the Committee had been mandated, following a motion tabled by the New Democratic Party (NDP) last fall, to undertake “a study on inflation in the food supply and the rising cost of groceries, while the big chains are making a profit”.
The Committee’s report, titled Grocery Affordability: An Examination of the Rising Cost of Food in Canada, was finally tabled in the House on Tuesday.
“It hits hard. People complain about the cost of groceries. Each week, they have to reduce their purchases. And the report demonstrates that government can play a bigger role in helping families, in reducing the cost of groceries,” NDP Leader Jagmeet Singh said in a phone interview with La Presse.
After hearing testimony from 58 stakeholders, including the heads of major chains such as Metro, Loblaw (Maxi, Provigo) and Sobeys (IGA), between November 2022 and April 2023, the Committee presented the government with 13 recommendations “to combat the factors and impacts of food inflation”.
Among them, the deputies suggest in particular that Ottawa consider, in the event that it is proven that the large retailers are making excessive profits, “the introduction of a tax on windfall profits applicable to large companies which fix prices in order to deter excessive increases in profit margins for these products”. During their appearance before the committee, the bosses of the big chains had all said that they had not taken advantage of inflation to inflate prices on the shelves.
“Big corporations are making record profits [while at the same time] people are struggling more than ever to make ends meet and pay for groceries,” the New Democrat leader insisted. “Corporations have the right to make profits, but do they have the right to make record profits at the same time that people suffer from inflation? “, he asks.
Saying it was “reassured” by the report’s findings, which recognizes that the price of food on the shelves depends on many “upstream” factors, the Retail Council of Canada (RCC) still believes it would be “tricky » that the government intervene in an already complex industry.
The association, which notably represents the main grocery brands such as Metro, Sobeys, Loblaw, Costco and Walmart, does not hide its reluctance in the face of the report’s recommendation proposing to tax the large chains more if it is proven that they reap excessive profits.
“The facts show that the cost of food has increased to a lesser extent in Canada than elsewhere in the world. If we want to change a situation that is not perfect, but less worse than our neighbors, we have to ask ourselves the question: does it take more intervention? asks Michel Rochette, president for Quebec of the CCCD. We will always be open to comments. In this case, the problem is when the government interferes through commercial processes in which there is a package of information [to know] to fully understand the ecosystem. When and how could the government interfere? It’s always very tricky. »
When it comes to greater transparency on price developments along the supply chain – another recommendation from the report – Rochette also takes issue with it. “There are competitors in that universe,” he recalls. Asking [retailers] to make the whole equation of their entire supply, negotiation and distribution chain accessible to neighboring competitors, it can become a bit complex. »
“There is a limit to sometimes interfering in business processes,” he adds. We must preserve competition, the free market. We must be careful before framing to the point that it becomes officials who make decisions on prices in an ecosystem that is planetary. »
In its report, the committee also notes that those who produce our food must deal with large increases in operations themselves, whether it is the price of grain or that of fuel. Same thing for transformers. In both cases, it is also necessary to take into account the scarcity of labour, which does not facilitate operations.
Representatives of these industries who have participated in the work of the Committee have noted this well: their expenses have increased more than the prices of food in their final version.
Good news, one of the report’s recommendations is to better help farmers and the agribusiness have “adequate” cash flow in times of inflation. “Climate change means that the risks are more and more important. Profit margins shrink and risk increases. And there is no access to short-term credit,” says Patrice Léger Bourgoin, general manager of the Association des producteurs maraîchers du Québec, who is very happy with the report’s recommendations. He hopes that they will be well received by Ottawa and quickly put in place.
Like the one where it is a question of facilitating the employment of temporary foreign workers.
“It is about time for the government to succeed,” said Patrice Léger Bourgoin. We have been talking about it for a long time and it is not a complex measure in itself. »
Besides, it won’t cost the treasury a penny, he says.
One thing is certain, “nothing in this report indicates that there was abuse or that we took advantage of the inflationary wave to increase prices,” notes Sylvain Charlebois, from the Laboratory of Analytical Sciences in Agrifood of Dalhousie University, on the behavior of major Canadian chains.
According to him, the priority is therefore to first convince new players to get into the food business and protect small players.
Moreover, in addition to filing this report, the Competition Bureau of Canada is also looking into the matter. In October 2022, he announced that he would be scrutinizing rising supermarket prices and looking at competition among major retailers. The findings of the study are expected to be published shortly.
“Best before” claims on a portion of foods are increasingly being challenged as they can contribute to food waste. The committee recommends that the government look into the matter and examine the possibility of eliminating them. It also calls for facilitating the diversion of surplus food to organizations that help Canadians in need.
The rising cost of food creates stress in a part of society that struggles to keep up with this inflation. As part of its work, the Committee heard several testimonies to this effect and noted that the country’s food banks are overwhelmed and frequented by people who have jobs, but can no longer buy their full baskets of groceries. .
The executive director of the Fruit and Vegetable Growers of Canada, Rebecca Lee, indicated that this increase led to an overall decrease in the consumption of fruits and vegetables in the country.
Indigenous peoples are particularly affected by food insecurity. Chief Byron Louis of the Okanagan Indian Band told Committee members that changes in lifestyle greatly affect food sovereignty in communities. It was agreed: The Committee recommends that Ottawa provide “additional funding to Indigenous-led initiatives in remote and northern areas aimed at improving infrastructure that promotes food security in their communities.”
Almost half (47.1%) of First Nations households living on-reserve experience food insecurity, according to a study conducted between 2011 and 2018 involving the University of Montreal.
