MPs grill grocery giants on food affordability


The debate over food inflation moved from the grocery aisle to Parliament Hill Monday.

Senior grocery executives were grilled by the Standing Senate Committee on Agriculture and Forestry, with members of parliament demanding an explanation for the soaring cost of groceries.

Taking note of higher earnings seen by retailers during the global COVID-19 pandemic, Liberal MP Ryan Turnbull suggested the wealth could be spread around.

“If you’re able to drive profits … in some of your business, couldn’t you afford to distribute those to hand down cost savings to the average Canadians who are your patrons?” Turnbull asked Loblaw executive Jodat Hussain.

In its third quarter, Loblaw had net earnings of $556 million — up from $431 million in the same period last year. Empire Company Limited, which operates grocery retailers including Sobeys, FreshCo and Farm Boy, saw fiscal second-quarter profits drop slightly to $187.5 million, down from $188.5 million a year ago, partly because of investments in its Voila delivery arm.

The price of groceries rose 11 per cent year over year in October, a drop from the 41-year high of 11.4 per cent seen in September. That’s the 11th straight month grocery inflation has been higher than the overall “headline” number.

Pasta rose an eye-popping 44.8 per cent, margarine rose 40.4 per cent and lettuce rose 30.2 per cent, year over year. Gasoline prices rose 17.8 per cent compared to a year ago.

Hussain bristled and said Loblaw fought back against price increases from suppliers, arguing that resulted in roughly half a billion dollars in costs savings for Canadian consumers.

“That’s our job to offer the best possible value to our customers. We’re in the customer business. Our principal motive … is to have the best possible prices in our stores at all times,” said Hussain, who pointed to Loblaws’ fight with international snack-food giant Frito-Lay earlier this year. Frito-Lay, owned by PepsiCo, stopped shipping to Loblaws for a few weeks amidst a battle over costs.

“For weeks, most of our chip aisles were empty, interrupting our business and impacting our customers. That shows we take our job seriously,” said Hussain, senior vice president of retail finance at Loblaw Companies Inc.

Hussain also pushed back against questioning from Bloc Québécois MP and committee vice-chair Yves Perron, who suggested that it wasn’t a coincidence Loblaw announced a temporary price freeze on 1,500 No Name products the same day as a parliamentary motion calling for a food inflation investigation was passed unanimously.

NDP MP Alistair MacGregor demanded to know why Hussain was appearing, and not Loblaw CEO and executive chairman Galen G. Weston.

“Is there any reason Mr. Weston isn’t here?,” MacGregor asked.

“In our company, I’m the best suited to answer these questions,” Hussain insisted.

Pierre St-Laurent, chief operating officer at Empire, denied that grocers were profiteering as inflation soared. St-Laurent pointed to increased prices from suppliers, increased transportation costs, and labour shortages as factors that helped drive up food prices.

“Inflation is also bad for our business,” said St-Laurent. “Food inflation is a global issue.”

Karl Littler, senior vice president of public affairs for the Retail Council of Canada, said profit margins for Canada’s large grocery chains has remained between 2 and 4 per cent for the last five years, even if their total profits have risen.

“Grocery is a high-volume, low-margin industry, the profits from which need to be looked at percentage terms not nominal dollars. Inevitably, in an inflationary environment and with a growing population, the dollars are going to increase over time, but it is the percentages that matter,” said Littler.

A representative of Canada’s packaged food industry denied his association’s members were raking it in as inflation soars. The supply chain woes caused by the COVID-19 pandemic made costs soar for manufacturers, said Michael Graydon, CEO of Food, Health & Consumer Products of Canada.

“Most manufacturers are passing on significantly less of their costs to retailers,” said Graydon.

Sylvain Charlebois, head of the Agri-Food Analytics Lab at Dalhousie University also said a lack of competition is hurting consumers and feeding their suspicions that they’re being gouged. Charlebois called on the federal Competition Bureau to be bolder when grocery chains buy smaller competitors.

“The Competition Bureau is constantly failing the Canadian public by not providing forceful support to lawmakers in Canada when it simply endorses acquisitions and oversees investigations with little or no vigour,” Charlebois said.

In October, the bureau announced it will be investigating whether concentration in the grocery sector is contributing to rising food costs.

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