People shop in the produce area at a Loblaws store in Toronto on May 3, 2018.Nathan Denette/The Canadian Press
One of the biggest news stories of 2023 has been the cost of food. And for good reason: it is impossible not to be upset by grocery store prices, especially when they come on top of higher costs across the rest of the family budget, with housing and electricity among the more painful line items.
But just as bad was the politicization of food prices.
The Conservatives ludicrously pinned every penny’s increase in the cost of food on the Liberal government. The Liberals ordered the heads of the major grocery chains to appear before Parliament, and outrageously threatened to impose a punitive tax on them if they didn’t “stabilize” prices by Thanksgiving. The NDP accused the chains of profiteering by increasing markups, a charge not supported by the facts.
None of this was of any use to Canadians. Statistics Canada reported this week that the annualized rate of food inflation in November was 4.7 per cent, marking the fifth straight month that grocery-price growth slowed year over year. But that is cold comfort.
Prices are still rising, even if food inflation will likely fall into the normal historical range in 2024. The annual Food Price Report prepared collaboratively by Dalhousie University, the University of Guelph, the University of British Columbia and the University of Saskatchewan predicts prices will rise between 2.5 and 4.5 per cent next year.
All this inflation is locking in higher prices for the future. Pointed fingers and political theatre will do nothing to prevent that, or bring prices back down. But there is something politicians can do that might help, and that is address the high corporate concentration across the agri-food economy.
Consumers can see it best in grocery-store earnings. While there was no evidence of profiteering by the five companies that control 80 per cent of the market in Canada, their higher sales and profits in 2023 make it clear their dominance allows them to immunize themselves from the effects of inflation, such as higher wages and increased supplier costs.
Their ability to pass costs on to consumers without fear of losing business is, and will remain, an important contributor to the food affordability crisis even after inflation returns to normal levels.
There will be other factors, too. Climate change events, such as the destructive flooding and wildfires in Canada this year, are “the most substantial challenge facing the agri-food sector,” according to the Food Price Report. Overseas conflicts, such as Russia’s illegal invasion of Ukraine, can have an effect on supply chains and raise costs.
And then there is inflation itself, a natural feature of a growing economy that persists even during normal times, and which affects every sector.
But high corporate concentration in the agri-food economy – from seed suppliers to grocery chains – is definitely a factor. And it’s one Ottawa can do something about.
The Trudeau government took some modest steps in 2023 to address the grocery competition issue. Bill C-56, enacted just last week, gives the Competition Bureau more power to prevent abuses of dominance, such as big chains preventing smaller competitors from locating nearby, and it eliminates the efficiencies defence that has sometimes been used to justify mergers that are expected to harm competition (although never in the grocery sector).
But there is much more that politicians could do. They could start by ending the supply-management system that fixes the price of dairy products, eggs and poultry, while also imposing high import tariffs on those goods and setting quotas on domestic production.
They could listen to beef farmers, who say the fact that two companies control 99 per cent of Canada’s federally inspected beef slaughter capacity is harmful to them and consumers. Is there a way to encourage more competition?
They could find ways to support independent grocers, which have a tough time competing against the large chains. They could stop the big chains from using their dominance to charge suppliers to put their products on their shelves, and to charge arbitrary fees, instead of waiting around for the industry to adopt a code of conduct one day.
But none of these things are on the table for any of the parties. While Canadians spent 2023 watching their grocery bills rise, or cutting back on food to make ends meet, or going to food banks in record numbers, our MPs used the crisis to score political points. It’s been hard to stomach.