A photo of the inside of a Loblaws grocery store.
The inside of a Loblaws grocery store. Credit: Raysonho / Wikimedia Commons Credit: Raysonho / Wikimedia Commons

The House of Commons committee looking into food price inflation held its first meeting on Monday, December 5, and the score so far is 1-0 for the food retail giants.

The MPs on the agriculture committee did not lay a glove on the industry spokespeople, who were well-prepared. The representatives of industry gave slick presentations and credible-sounding answers.

All of the MPs on the House agriculture committee, from all parties, seem to believe the current big profits of major retail chains, such as Loblaws and Sobeys, are at least partly responsible for the spike in food prices.

But industry executives and lobbyists deftly pushed back. 

The real culprits for rising prices, the industry folks said, are increased upstream costs for transport and energy, as well as supply chain disruptions wrought by the pandemic and the Russian invasion of Ukraine. 

As well, they added, Canada has been experiencing labour shortages. Some said those could be at least partly solved by bringing in more temporary foreign workers.

MPs have a lot to learn

The politicians were no match for the well-armed business representatives. 

The MPs marshalled few facts and figures to counter the industry arguments, and, for the most part, their questions were not designed to elicit hard information.

Most members of parliament have failed to learn the rule experienced interviewers observe, namely that clear, simple, to-the-point and open-ended questions elicit the most revealing responses.

Parliamentary committee members’ essential role is not to make speeches or grandstand. It is to get candid and useful information from witnesses.

Instead of systematically seeking facts and figures, some MPs on the agriculture committee used up much of their limited time indulging in long-winded bouts of rhetoric. When they did pose actual questions, more often than not those questions were of the sort their interlocuters could easily deflect.

A case in point: One MP asked the spokesperson for Loblaws, their senior vice president of finance Jodat Hussain, if he believed the industry had a lot more work to do to “earn the trust of Canadians.”

As you might expect, Hussain had some comforting, if vacuous, platitudes at the ready.

“We earn the trust of Canadians through what we do at the checkout counter,” he said, “and that will be 100 per cent of what we continue to do.”

The lesson for this MP is: If you ask a vague and general question don’t expect anything other than an equally vague and fact-free answer.

It should have been a tough day for the Loblaws man, who had the unenviable task of explaining his corporation’s record level profits. As one MP pointed out, before the pandemic Loblaws’ profit was $266 million. Now it is $387 million.

But Hussain calmly provided a simple explanation. 

Loblaws is a multi-faceted business, he pointed out. It does not just sell food. It also operates a bank and sells pharmaceutical and beauty products. It is those non-food lines that are making all the extra money, according to Hussain. Loblaws’ profit margin on food, he insisted, has not gone up.

Lobbyist Karl Littler, senior vice president for public affairs for the Retail Council of Canada, supported Loblaws. 

Littler decried “those who have deliberately sought to link inflation to grocers’ earnings,” and, like Hussain, talked about increased costs for everything from fertilizer to fuel. He also mentioned drought in the west and the cost of shipping.

The retailers’ lobbyist backed the argument that big increases in earnings for companies such as Loblaws come from non-food sources – from pharmaceuticals, health and beauty products – not food.

Littler added a not-too-subtle, ideological dig, aimed, no doubt, at New Democrats, who initiated this inquiry, and at Liberals on the left flank of their party

“There are some folks,” Littler told the committee, “for whom any level of profit is unacceptable, and I will not persuade them.”

The rest of us who are not profit averse, including pensioners whose funds are invested in the stock markets, should not begrudge food retailers a “modest profit of 2 to 4 per cent.” Those percentages, Littler added, are lower than the profit margin of many other Canadian industries.

Liberal MP Ryan Turnbull picked up on the fact that Loblaws, for one, has been raking it in on its non-food business, and asked if the company might consider helping consumers by using its massive, non-food profits to offset rising food prices.

Loblaws’ Hussain didn’t exactly say no dice, we’re not interested in that radical idea. Instead, he pointed to the fact his company recently froze prices on all of its no-name brands. 

No-name brands consist mostly of packaged and processed goods, many of them of low nutritional value. More importantly, the no-name family excludes most fresh fruit and vegetables, meat, poultry, eggs, fish or most dairy products. (Loblaws has frozen prices on what it labels “naturally imperfect” fruit and vegetables and it sells some no-name labelled frozen fruit.)

A highly concentrated industry

Loblaws’ vice-president Hussain and other industry spokespeople repeatedly asserted that theirs is a competitive industry, which, they claimed, helps keep prices down.

The only expert to appear before the committee on its first day, Sylvain Charlebois, a professor at Dalhousie University in Halifax, forcefully disputed that claim.

Charlebois told the committee there is in fact little competition in the Canadian food retail sector. It is a highly concentrated industry, dominated by three huge companies – Loblaws, Metro, and Empire (which owns Sobeys).

The Dalhousie expert told the Committee how U.S. regulators are far tougher on mergers and acquisitions than their Canadian federal counterpart, the Competition Bureau. 

The Dalhousie professor excoriated the Competition Bureau for its slow pace and lax attitude to takeovers and to potential price-fixing in the food industry.

In the U.S., the grocery giant Kroger is currently seeking to acquire another chain, Albertsons. There is a lot of concern about this merger and its possible impact on food prices. Members of the U.S. Congress from both parties have spoken out. If it approves the deal, it is likely the U.S. regulatory agency will impose stern conditions.

Professor Charlebois explained that U.S. regulators are expected to force Kroger to “let go of 400 of its stores in order to create a rival to the new mega-grocer.”

Nothing of that sort would ever happen in Canada, Charlebois said.

When Loblaws took over Provigo, Metro acquired A&P, and Sobeys bought Safeway “barely anyone raised an eyebrow during the Competition Bureau’s proceedings.”

“The Competition Bureau constantly fails,” Charlebois said, “when it simply endorses acquisitions, and when it oversees investigations with little or no vigour.”

Over the years, the Halifax-based expert explained, Canada has seen many independent grocers disappear as a result of Competition Bureau inaction. Now, “Canadian consumers feel unprotected.”

Code of conduct and lagging workers’ pay

Charlebois raised the prospect of a code of conduct for the grocery sector, such as exists in the U.K. and Australia. 

“Canadians do not realize that food suppliers must pay grocery chains to get their products on the shelves,” Charlebois told the Committee. 

There might be some justification for this practice, as a means, for instance, of compensating the grocers for marketing and promoting products.

But Charlebois worries about abuses, which could cause increases in prices for consumers, and harm food suppliers. He wants to see a mandatory code of conduct for the industry, and, for the Committee’s benefit, he listed some of the benefits of such a code. 

For starters, a code would provide a counter balance to the huge power of the retail giants. 

In addition, it would help stabilize prices, accentuate innovation, help assure the security of our food supply, and encourage investment in Canada’s agri-food sector.

We need this code, Charlebois argues, to fix a “broken economic model” in the food industry. 

Committee member Liane Rood, a Conservative MP who represents a rural Ontario riding, strongly supported such a code, as did another of Monday’s witnesses, Rebecca Lee, Executive Director of Fruit and Vegetable Growers of Canada.  

Lee expressed concern that the retail prices of cabbage, lettuce, green beans, broccoli, strawberries, apples, carrots, onions and potatoes is so out of line with what her members, the farmers who grow the crops, receive. She would like to know why, and has yet to receive an answer. 

As for the workers in the food retail industry, they only came up once during the meeting. 

New Democrat Alistair McGregor pointed out that while prices have gone up by 10 per cent in one year, wages have only increased by 5.4 per cent.

The British Columbia MP wanted to know why Loblaws does not compensate its own workers enough to keep up with the prices of products it sells. 

Hussain was not flummoxed. He pointed out that most Loblaws operations are unionized and the compensation is determined by collective agreement. 

“Our employees are the lifeblood of Loblaws,” he added.

This one meeting is just the beginning of a long process. The MPs on the committee, and their staffs, will want to do a lot of digging through numbers and details that are not always readily accessible as they pursue their work.

As Sylvain Charlebois quite accurately pointed out, food is not just another commodity like lipstick or t-shirts (both of which retail giants such as Loblaw sell). 

We cannot live without food, and so there is an essential ethical component to food production, marketing and sales which politicians and industry people alike must never forget.

Karl Nerenberg

Karl Nerenberg joined rabble in 2011 to cover Canadian politics. He has worked as a journalist and filmmaker for many decades, including two and a half decades at CBC/Radio-Canada. Among his career highlights...