Ottawa recently witnessed a dramatic scene, especially during the proceedings of the Parliamentary Committee on Agriculture, where a few witnesses chose to prioritize their agendas over assisting our elected officials in comprehending the complexities of food prices and the necessary actions to be taken.
One particular individual, an economist seemingly more interested in grabbing headlines and camera attention to boost fundraising and personal interests, made bold claims about “record and excessive profits” in the grocery sector for 2023. The term “excessive profits” has become a favourite slogan for those seeking to foster animosity towards businesses. However, it’s crucial to note that his argument relied on Statistics Canada data, which encompasses convenience stores and specialty stores in its dataset, not solely the major grocers. The sensationalized “$6 billion” figure quickly circulated in the news, causing considerable harm. The facts indicate that gross margins, a valuable metric for assessing whether a company overcharges for its goods, will remain at 3.4 percent, consistent with the 5-year average for Loblaw, Empire, and Metro.
Regrettably, we shouldn’t expect an apology from this economist. He seems intent on misleading Canadians, insisting that profits should continue to rise due to inflation, all the while resorting to attention-grabbing headlines and fearmongering tactics, which regrettably prove effective. This was a reprehensible misuse of a platform to advance a political, anti-corporate agenda—utterly disappointing and disingenuous.
Loblaw also made some questionable claims during their visit to Ottawa concerning the potential impact of a grocer’s code of conduct. The company admitted on December 23 that the Australian example cited by its CEO, Galen Weston, to justify their refusal to sign the code of conduct was inaccurate. At that time, Loblaw’s CEO expressed concerns to federal officials that the current code of conduct could potentially increase food prices by $1 billion, arguing that, in Australia, the third-party responsible for enforcing the code favoured suppliers seeking higher prices, which would harm consumers. None of these claims held.
At least Loblaw eventually acknowledged its error, albeit on December 23 when most of us were preoccupied with holiday preparations.
Leaving aside Loblaw’s failed attempt to obstruct the industry’s efforts to implement a more disciplined and fair code of conduct, Ottawa’s primary focus should be on fostering competition. Providing consumers with more choices and making the Canadian food market more attractive to external investors is essential. The code of conduct should be a non-government, third-party-led mechanism enabling companies to resolve disputes related to contractual terms rather than pricing per se. Currently, as grocers unilaterally raise listing and marketing fees imposed on suppliers, manufacturers, in turn, increase prices to offset these higher fees set by grocers. This results in a cycle that ultimately impacts consumers, often without their awareness.
This is the only way food prices can become more stable over time. In countries like Ireland, Australia, and the United Kingdom, where such a code exists, food price increases, adjusted for inflation between 2013 and 2023, have been negative, whereas Canada’s food price increase adjusted for inflation over a decade was 8.9 percent. While a code of conduct may not entirely curb food inflation, it will help the industry coordinate vertically and address market turbulence, which is often triggered by factors like climate change and geopolitics, leading to price volatility and sticker shocks.
Ottawa should compel all parties, including those who oppose the code like Loblaw and Walmart, to adhere to the code of conduct. That should be the shared goal of all Canadians for 2024.
Dear Sylvain C. Thank you for making sense of issues for people who might not be well versed in economy, law or politics. Loblaws has been making great profits on the backs of Canadians at a very difficult time. I recently wrote a letter to the Prime Minister but I think Loblaws won’t be rebuked. The Liberals should really take note, but I did change my store and Loblaws will deal with their reputation. Ugly money.
Thank you Mr. Charlevoix. D Tracey. N.falls ont.
Food costs have become so ridiculous people are going hungry. I hope Loblaws is enjoying there gains while others are suffering.
I used to be an avid superstore shopper. Once I witnessed his take home pay , his attitude before parliament the first go round and then his wage increase…wow. it will be a rainy day in…. Before I grace the doors of his store again. 6 billion profit and he takes home 8 million! He is a disgusting individual that needs to wake up
Monopolies have an inherent history of disregarding the customers they serve, but a fervor to share holder profits. The food we eat should not be a commodity only a few can buy.
As a Canadian who has spent time in New York and Michigan over the holidays I can tell you that many grocery prices are on par or higher than in Canada even before applying the 35 percent premium to exchange our useless dollar for American ones. Bottom line is that I can’t wait to come back and buy groceries in Canada where my dollar at least has some value. But wait, here some items that actually cost less even with the 35 percent exchange rate. Housing, gas, telco services, alcohol just to name a few. Taxation is probably the real culprit causing higher grocery prices. Remember that next time you cast your vote.
Agreed Doug, US prices same as here but add 35% currency and fee deals to be found in USA. I shop once a month in USA on average living in a boarder town.
Taxation caused prices to randomly skyrocket over the last year? i think your thought process is incredibly flawed.
Simple math.
Run @ a 25% markup. Last year cost $8. Sell @$10. Make $2 per unit.
This year cost $10. Sell @ $12.50 make $2.50 per unit.
Explains why profits are up in a nutshell.
Govt. collects the same g.s.t. % on a liter of gas no matter what the sell price is, grocers do the same with markup %.
I love the false narrative by the professor here. He missed that our dollar fell 30 cents in the last decade due too poor Liberal and NDP policies. That caused alot of our 8.9% food inflation since we import alot of our food from the US. Also, carbon tax, and high overall taxes to public corporations with Ontario being in top 5 highest tax zone in North America. Lastly, the prof missed the other retailers like Costco, and Walmart that compete with the 3 big chains mentioned. Ah, when academics misses reality thanks prof for your narrow scope presentation, my U of T and post grad CA, CPA would challenge your bias here.
I find that CEO’S of any company care about share holders and what goes in their own wallets ….when you see how many people are suffering it sickens me …..we need much more competition in grocery and cell providers . It’s disgusting
I think everyone criticizing Loblaws actions needs a business degree. He is talking sense … how about us? If you have a better idea, run for government. It is very easy to criticize what we don’t understand.
How illogical is it to want human rights to be put before profit? The issue we take is with there being profits while more and more people starve, and with every action taken by companies antagonizing us rather than caring in the slightest for the harm they cause. For your point on running for government, good luck making any headway if you have the slightest view differing from maximum profits. Each party claims differences and to be “for the people” but look at how many are landlords for example, while we are in the middle of a crisis directly caused by the existence of landlords, at least according to capitalisms idea of “supply and demand” which already has massive blind spots to the exploitation capital owners have just from being the class of “haves” rather than “have nots” so by their own actions those with the power to decide your political career (those subject to “lobbying” aka legal bribery, not voters) are incentivised to cull your career before you ever have the chance to reach television. “Just vote harder” or “Just get elected” doesnt work when the system itself encourages this behaviour, our only option is to show them we are done with the system as a whole, through protests, through support of those who are fighting for the betterment of humanity and equity. Do research into history, especially the relationships between workers and owners, and you realize many contradictions between the claims and actions of the owning class. You realize you arent educated sufficiently on the topic of your own countries economy, why do you feel it acceptable to remain ignorant and accept the words of those whos interests are directly opposed to yours, when you could simply do research. You are on the internet, so you have this information available at your fingertips. If you dont know where to start there are plenty of options, a few I would recommend if only to understand better where Im coming from are “Work” by Historia Civilis and “Das Kapital” by Marx. Unless you are part of the owner class, which very few people are, you will find in fact they historically have worked against your interests. Now if you are part of the owner class good for you and your position is understandable, just admit that you are rich and you support these policies because they encourage wealth pooling in the hands of the few at the top, rather than all this bluster about it definitely being good for the average person.
I think the grab stories for personal profit is sending the message that companies are required to “feed the world” without any regard to the actual truth. Being a senior on a fixed income puts me in the starving Canadian category news makers are trying to establish. I too feel the pinch… and have adjusted my spending. The lower prices are out there obviously…. thanks to shopping without prejudice!
I am very familiar with price checking! As well as individual abuse of the right to zero in on the extravagant. I too have walked down the aisles at the grocery and local drugstores. I refuse to take that picture of the ONE item that could give me appluase and possibly a pay for selling said picture. Besides… I don’t posses the Right to Express my common opinion with a snapshot of a long sought out item on a shelf. ALSO… takes very much time to walk the aisles with my index finger extended to the shelves.
Yes prices ARE up… Yes we are STILL spending… and… Yes we are being heard. We as common hungry persons do NOT need the food and/or drugstores to be GIVING us product at their loss… they are NOT a foodbank and we definitely ARE still shopping the shops… albeit much more carefully!
The notion companies will ever help us, be it canadian ones or foreign ones, has been proven incorrect time and again. The only way to stop this gross behaviour of murdering people because they dont have enough money is to remove the profit incentive until everyone has the bare necessities. I have no qualms with profits existing when outside of basic human rights such as, housing, food, water, why do we not nationalize these areas to ensure the people can have their basic needs met before any excess goes to those who already make plenty? Why do we not prosecute grocery chain CEOs for the murder of those who starved while they were walking away with record profits? Why do we not prosecute landlords who have denied the basic human right of shelter to those who need it, or even tax those who own multiple properties more harshly? Everyone deserves a place to live, so the inital place of residence deserves a low tax rate, but we live in a housing affordability crisis, anyone with a second home is inarguably doing better than most canadians, and those with more than two houses have the money to be able to be taxed at an exponential level. Before someone gets second helpings of a basic human right when they dont need it and others do, everyone should have the option to have their first helping. If that is an issue for anyone reading this I have no idea what to say to you, my argument is merely that if our society has enough to provide for all (which it does) we should provide for all. All people need to do is threaten to vote for parties with these policies and be more openly critical of the flagrant abuses of power to pressure the main parties into acting in our interests, the worst thing you can do is let yourself stay apathetic and believe this way of the world is the only way.
PS If someone still views my claims as not feasible, or more detrimental to our society than our current organization of the economy, read Das Kapital, I dont ask you to try for an outcome from reading it, merely read it to understand my belief of the way capitalism works, and if you have recommendations for a book explaining your understanding of capitalism from someone equally knowledgeable I would be more than happy to check it out, but historical analysis of working conditions tends to lead to anticapitalist sentiment. If you want proof of that in a youtube video (with proper citation so if you take issue with any claims you can verify) check out “Work.” by Historia Civilis, but I ask to check at least one of those aforementioned works before taking issue with my claims.