A Sobeys store in Toronto on April 3, 2020.J.P. MOCZULSKI/The Globe and Mail
A parliamentary committee wants the CEOs of major grocery companies to appear for questioning on record-level food price inflation after representatives for Loblaw L-T and Sobeys EMP-A-T said there’s little they can do to prevent passing on costs to consumers.
Senior officials with the companies appeared in front of MPs on the agriculture committee on Monday as part of its examination into grocery business practices. The review – which saw MPs repeatedly questioning the officials on the issues of transparency and public trust – takes place against a backdrop of record-level rates of food inflation in Canada. Policy makers are scrambling to address a growing chorus of concerns over food prices.
Last month, the committee had sent invitations to the grocery retailers, asking for representatives to attend the Ottawa meeting. Present on Monday were Jodat Hussain, a senior vice-president of retail finance for Loblaw (who attended virtually), and Pierre St-Laurent, the chief operating officer of Empire Company Limited, which operates Sobeys.
But the MPs questioned why the CEOs themselves did not attend.
Grocery industry making progress on code of conduct, but work will stretch into the new year
“Is there a reason why Mr. Weston is not here?” asked Alistair MacGregor, the NDP MP whose House motion led to the committee’s examination, referring to Loblaw chief executive officer Galen Weston.
Mr. Hussain said that he was the best employee at Loblaw to answer the committee’s questions.
“The company sent me because I’m the closest to these matters, and able to respond to these matters with a high degree of specificity,” he said.
Still, the committee decided to again send its invitations to Loblaw, Sobeys and Metro, but this time specifically requesting the attendance of Mr. Weston, Sobeys CEO Michael Medline and Metro CEO Eric La Flèche. Spokespeople for the three retailers did not respond to The Globe and Mail’s request for comment.
Throughout Monday’s meeting, the representatives for the grocery retailers said they’re simply passing on to consumers the higher prices that they’re paying to their suppliers.
“Commodity cost pressures due to geopolitical events and extreme weather, soaring energy costs, supply chain disruptions, the weakening Canadian dollar and labour shortages have all created a perfect storm for our suppliers,” said Mr. St-Laurent from Sobeys. “And unfortunately, we’ve had to increase the price of our products.”
Mr. Hussain echoed this.
“When the costs we pay go up, our prices to customers have to go up, too,” he said.
Both retailers emphasized that their profit margins have remained flat in the past few years.
At the meeting, Karl Littler, a senior vice-president at the Retail Council of Canada, attested to this. He said that over the past five years, profit margins across the grocery industry have held steady, between 2 per cent and 4 per cent.
“Some commentators are rushing to judgment, when we would best be served by looking at the problem [of inflation] in all its complexities,” he said Monday.
The past year has seen record-level rates of food inflation – rising by 10.3 per cent from November, 2021, to September of this year.
Last month, Statistics Canada reported a 10.1-per-cent hike for October, compared with the same month in 2021. That far exceeded the general inflation rate for that month, which was up 6.9 per cent compared with last year.
Experts have attributed the rising costs to a number of factors. The COVID-19 pandemic and severe weather events as a consequence of climate change have led to supply chain issues and higher costs for everything from labour to transportation.
And Russia’s invasion of Ukraine aggravated matters further, causing the prices for critical inputs – fuel, fertilizer and grains – to skyrocket.
Around the world, this has resulted in higher food prices. In the U.S., prices were up almost 11 per cent in October compared with last year. In Britain, prices were more than 16 per cent higher for the same period.
Globally, policy makers and retailers have struggled to respond.
In Canada, grocery retailers (many of them the same brands that were implicated in 2017 for price fixing on bread) have found themselves facing accusations of profiteering and price-gouging.
And politicians have seized on the issue, with federal Conservative Leader Pierre Poilievre repeatedly blaming the federal Liberals. The NDP, meanwhile, have pointed to “greedflation.”
But experts say there’s been little evidence of abuse. Sylvain Charlebois, whose report on “greedflation” for Dalhousie University earlier this year failed to find evidence of price-gouging, said that doesn’t mean change isn’t necessary.
In his statement in front of the committee on Monday, he called for greater transparency in the grocery industry. He also called for the quick implementation of a grocery code of conduct – which the industry is already working toward.
Still, consumers aren’t likely to see relief any time soon. Canada’s Food Price report, released earlier this week, predicted another increase of up to 7 per cent over the next year – an increase that would cost the average family of four an additional $1,000 next year for groceries.