Agriculture Committee on Oct. 5th, 2022

[The Chair, Liberal, Kody Blois]

I call the meeting to order.

Dear colleagues, welcome to meeting No 30 of the Standing Committee on Agriculture and Agri-Food.

Today's meeting is taking place in a hybrid format. The proceedings will be made available via the House of Commons website. Just so you are aware, the webcast will always show the person speaking, as opposed to the entirety of the committee. Taking screenshots and photos of your screen is not permitted.

Colleagues, I've called for the first hour of this committee to focus on committee business. We have a number of motions that have been given notice. As opposed to disrupting the proceedings of the studies we've talked about and are currently under review, I thought it would be best to move forward and discuss the motions put forward.

We have a little bit of committee business to do.

Mr. MacGregor, I see you would like to move forward, so I will start with you.

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

Thank you, Chair.

To give credit where credit is due, I appreciate your booking an hour of the committee's time today to make room for this.

Colleagues, I'm going to formally move the following motion. I move:

That, pursuant to Standing Order 108(2), the committee undertake a study on profit-driven inflation in the grocery sector and the costs of groceries going up while large chains are making record profits; that the committee examine the record profits of large grocery chains and their CEOs in relation to employee wages and the cost of groceries in Canada; that the committee also examine the ability of large grocery chains leveraging their size to cut into the earnings of Canadian farmers; that the committee invite witnesses with specific knowledge on profit-driven inflation and affected stakeholders from the industry, including grocer CEOs, economists, unions and farmers or representative organizations; that no fewer than six meetings are set aside to hear from witnesses; that the committee report its findings to the House and that, pursuant to Standing Order 109, the government table a comprehensive response to the report.

Mr. Chair, I won't take too much time. I would like to spend just a few minutes outlining why I believe this motion is important. We are seeing excess profits in the corporate sector at a time of historically high inflation. We all know around this table that food is a core necessity. It is something that Canadian families see week in, week out. It's forcing them to make extremely difficult choices.

If you look at the earnings that are publicly reported, you can see that from 2020 to 2022, Empire's net profits jumped up by 27.8%. For 2021-22, Loblaws' net profits went up 17.2%. In the same time period, Metro's profits went up by 7.8%.

This, I believe is important because of our committee's jurisdiction not only over agriculture but over agri-food. Yes, I know we mostly deal with the producer and processor side of it, but I also feel that we have a duty to the Canadian public to launch a parliamentary inquiry into this matter to be sure that the stranglehold that these three companies have on the Canadian market—because I think they do have over 80% of the market—is not negatively affecting the choices that Canadians have to make.

We have had a number of economists on the record—Jim Stanford from the Canadians for Tax Fairness—who have all said that corporate profits are, to some extent, driving this inflationary practice. We also know that, on the other end, farmers have had their own problems with the grocery sector—processors and producers—which is why talks are currently under way on a grocery code of conduct.

I'll end with this, Mr. Chair.

Since last week when my notice of motion became public, we received an email from an employee who wishes to remain anonymous. I'm not going to reveal his name or the company he works for, but I will read this into the record. He states he is employed as a file maintenance clerk. He says:

My duties require me to make sure that retail price adjustments sent down from Corporate are properly represented at [the] store level on signage. I have noticed a worrying trend over the last year of large quantities of retail price increases being sent down on a weekly basis.... However cost increases on these items don't match increases of retail prices that are sent down.

He goes on to say:

I have noticed a trend where retail prices consumers must pay for products will increase, and cost increases will come down months after the fact, if at all. Based on what I know of our systems at store level this means that the profit margins on saleable goods will increase for the company until a related cost increase brings it back down. Thus prices consumers must pay are overinflated until costs align with the retail change.

He continues:

...I believe that a federal probe into grocery store price increases should be supported in our parliament.

I'll end there, Mr. Chair. I hope I can garner the support of colleagues around the table to launch this inquiry and get the answers Canadian consumers need.

Thank you.

[The Chair, Liberal, Kody Blois]

Thank you, Mr. MacGregor. Having engaged with the colleagues around this table, I believe that there will definitely be some thoughts and maybe some amendments.

I saw your hand first, Mr. Perron. I think you waved to me. I know Mr. Barlow has also signalled.

I will start with you, Mr. Perron, if you would like to comment.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

I would like to welcome everyone here.

Mr. MacGregor, I would like to thank you for your motion that speaks to a very important issue in my eyes. That said, I have a few questions about the wording.

A little while ago, I gave our clerk a draft document that contains some amendments. I propose that a copy of this document be sent to committee members and that we look at it together once everybody has received it. In the meantime, I would like to get my colleagues' opinion on a certain issue.

Inflation is obviously a big concern, and grocery store prices are climbing faster than inflation in general. We have all noticed that something is going on, and I think the issue merits study.

But if there were to be a study on the retail trade and its operations, as well as profit margins, such as what is suggested here, shouldn't that work be done by the Standing Committee on Industry and Technology?

I am not against the proposed study. Indeed, I have come up with some amendments that will guarantee my support. However, I am just wondering if it really falls to the Standing Committee on Agriculture and Agri-Food to look at the issue of grocery store prices.

This is a very technical issue, and I am not sure if we would be able to get answers from public servants.

Do you wish to answer now or would you rather that I continue to talk about my proposed changes?

[The Chair, Liberal, Kody Blois]

It would probably be a good idea to continue. Your colleagues will have an opportunity to give you some feedback when they have the floor.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

All right.

At any rate, these were the questions that popped up in my mind.

Let's have a quick look at what I am proposing. I spoke earlier with Mr. MacGregor and members of the subcommittee, and gave them a copy of my suggestions. Nothing is written in stone here, obviously. Looking at what I drew up in French and in English, the English wording may not be word-perfect, because I wrote it today. I will therefore read the French version:

“That, pursuant to Standing Order 108(2), the Committee undertake a study on inflation [...]. ”

I would take out “profit-driven inflation.” We don't actually know yet if this is actually the case, because we haven't studied the issue. I think we have to be careful about the way the recommendations are worded so as not to come up with conclusions before having done the study. We will probably learn that it is indeed the case, but we won't know for sure until we do our study.

For the same reason, I would cross out the part that says, “and the cost of groceries going up while large chains are making record profits.”

I'm not against the part of the motion that deals with CEO salaries and the wages of their employees. I do wonder, however, if we should be looking at this now or in the context of another study.

I am also wondering if this issue might not rather be the remit of the Standing Committee on Agriculture and Agri-Food.The motion deals with the way companies manage the wages of their employees and the bonuses given to their CEOs.

We have, of course, all seen the news reports about huge bonuses that seem inappropriate, but I think that delving into this issue would take up a lot of time. Right now, I wouldn't include it. We could possibly undertake another study on the issue later.

I omitted “and their CEOs in relation to employee wages.” Then, rather than stating that the large grocery chains are leveraging their size to cut into the earnings of Canadian farmers, we could say, “examine the supply mechanisms with the producers and transformers. ” Again, I'm not stating that we will not come to this conclusion, but I don't think that we can do so before doing the study. The same goes for the other part that I crossed out earlier.

Finally, I would initially set aside four meetings for this issue, rather than six. We could always add meetings later, if need be.

Those are my proposals.

Colleagues, I await your reactions.

[The Chair, Liberal, Kody Blois]

Thank you very much, Mr. Perron.

Over to you, Mr. Barlow.

[John Barlow, Conservative, Foothills, AB]

Thanks, Mr. Chair.

Thanks, Mr. MacGregor, for bringing this forward. I think this is a very important issue.

Many of my concerns with the motion as it reads are quite similar to those of Mr. Perron. I am not opposed to supporting a study of this nature. I guess my concerns would be on a few things.

I believe there is a balancing act here between industry and finance. I believe this is being done at finance right now or something similar. When we get into the discussion of wages and CEO actions, I think we're talking about competition, which I don't think is necessarily under our mandate. I think there are ways we can tighten this up, and I would concur with probably most of Mr. Perron's amendments.

One other thing that we would like added, Mr. MacGregor, if we get down that far, is something about increases in input costs and the impact that's having on groceries. We can have more discussion on the impact this is having at the farm gate, on farms and on grocery prices as well—not just further down the supply chain.

I don't think I have much more to add other than that I understand where Mr. MacGregor is going. I don't think I have a problem with that. I just have an issue in terms of what the mandate of our committee is. We are the agriculture and agri-food committee. I get what Mr. MacGregor is saying, but when we start getting into some of the stuff about CEOs and costs in relation to the wages for their staff, I think that's not really in our scope.

I do agree with Mr. Perron as well when we talk about profit-driven inflation and record profits. I think we're already assuming the outcome of the study before we've even started it, so I would much prefer to take some of that language out, but I think the essence of that is still there.

In summary, I think if we were able to tighten this up and be more focused on the agriculture side, we could still get to what Mr. MacGregor is talking about. I know he has an opposition day motion tabled tomorrow. Congratulations on that, Mr. MacGregor. Thanks for more work for me. Apparently he has a bee in his bonnet, which we will talk about later.

I do think I understand where you're trying to go. I think we can get there. I just have some concerns with the scope of what the motion says in terms of what is under our mandate for the Minister of Agriculture and Agri-Food to actually action the items that would come from the study.

The last thing I will mention is what we would like to see inserted in this. I agree with Mr. MacGregor that this is important, but obviously you know where we stand with C-234. I want to see C-234 finished. We would like to add in there that we start this study as soon as the clause-by-clause on C-234 is finished.

[The Chair, Liberal, Kody Blois]

Thank you for those reflections, Mr. Barlow.

I see Mr. Drouin's hand and then Mr. Turnbull afterwards. My apologies—Mr. Turnbull is before. Then I see Mr. MacGregor.

Mr. Barlow, thank you for those reflections. I hear the subamendment on Bill C-234. Perhaps that was the only actual added language. If you have something specific that you would like to see, maybe I will give you a moment to think about that or Mr. MacGregor might wilfully try to adopt that into his own motion.

Let's go to Mr. Turnbull and then Mr. Drouin.

[Ryan Turnbull, Liberal, Whitby, ON]

Thanks, Mr. Chair.

Thanks, Mr. MacGregor, for bringing this at this time, which is great because it didn't disrupt some of our other meetings, which I appreciate very much.

Thanks to the chair for creating some time for committee business for this discussion.

I think this is an important motion. I generally share your concern with the fact that.... I think you're quite rightly pointing to the net profits of the three major companies as your evidence that indicates this as an area for inquiry. Certainly, there is some conversation that could be had about whether this is the best committee to study it. I think Canadians don't particularly care about that. What I think is that our committee covers the agri-food industry. We've probably prioritized producers more in our work and some of the supply chain that excludes retailers, but I don't see why that should necessarily exclude us from studying this, especially given that this topic is so important today with the cost of living being something that we're all talking about every day in the House of Commons. I certainly hear in my riding that people are concerned about the rising cost of living.

There's a tendency to look at the inflationary pressures globally and to talk about that divorced from some of the businesses that control a lot of the supply chain. I think, in this case, you're talking about net profits, and net profits are excluding costs—over and above the cost to operate a business. I ran a business for many years. I was the CEO of that company, and I know that net profits were hard to come by, so those companies' claiming those massive net profits is a concern at a time when Canadians are feeling those pressures.

I support the motion generally. In terms of wording, I think others have made some good suggestions. I appreciate Mr. Perron's suggestions. I also think that there might be an opportunity to look at the impact on farmers and also to look at the supply chain in general. One of the concerns I've often had with our agri-food system is that there is a lot of consolidation that's happened within the processing.... The whole supply chain has been consolidated over many years. That gives more market share to fewer companies that thereby have more influence on the market. Ultimately, the consumer, at the end of the day, stands to feel it, especially if those companies are claiming large net profits. I think we should all be concerned about that at a time like this.

I appreciate your reading the anonymous statement as well, because I've heard some similar things in my riding. I appreciate that. I appreciate your bringing it forward, and I think we should study it. I'd just suggest that perhaps we could look at the supply chain and the impact on farmers, which I think coincides with some of the other comments that were made.

I'll stop there, but thanks.

[The Chair, Liberal, Kody Blois]

Mr. Drouin.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

I don't want to repeat what Mr. Turnbull just said. With regard to what Mr. Barlow said, I don't know if input costs actually have an impact on the price of food. The only reason I say this is that we've heard time and time again from farmers in terms of how they are price-takers. They don't necessarily choose the price of the grains that they sell; this is determined on markets worldwide. That's the only thing I would say.

There might be an opportunity to address some of those issues with the current study, as we will have input providers here in less than an hour, and those are some of the questions that we can ask them. I just don't want to dilute this particular study because the agri-food sector is fairly large. That would be the only caution, but it's not a hill I'm going to die on. If we can all agree on something, then I think there's a way that we can move forward on this.

[The Chair, Liberal, Kody Blois]

I will go to Mr. MacGregor, but just before I do, procedurally, Mr. Perron, I believe, has signalled his intention to move an amendment, and he has distributed those copies.

Mr. Barlow, at least verbally, has moved what I would see as a subamendment. Certainly, the language is something to the effect that this study wouldn't take place until after Bill C-234 is reported back to the House.

Mr. MacGregor, you've heard some of the comments of the Liberal colleagues on the bench. Technically, we would have to actually vote back up towards the motion, and if my Liberal colleagues here to my right would like to move a motion or actually move something of a language change in what Mr. MacGregor has proposed, that would ultimately be the time to do it.

However, why don't we hear from Mr. MacGregor about his thoughts on what he's heard so far.

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

I'll address the comments in the order I heard them.

I understand the concerns about whether or not this particular issue belongs at the industry committee and whether the language should be tightened up a bit more. I would argue no. I think that this committee, in other studies, has dealt with things like the grocery code of conduct, which has come up repeatedly. You could argue that belongs at the industry committee. We have heard from witnesses like the Retail Council of Canada. We've heard from many organizations that represent grocers; they have appeared here.

Our committee's mandate is to follow food from the farm to the factory to the fork. If Canadians are having trouble accessing healthy, nutritious food because of the cost, that means something in our system is broken. I've read into the record an email. I'm keeping it anonymous because the person who wrote us said they fear reprisal if their name becomes public. I'm not going to read their name into the record, but I can tell you that it's a real email.

We have someone from in-house confirming what I'm alleging. We have a correlation between record net profits and high food prices for consumers. Yes, costs are going up across the line, but grocers are still able to make a high profit above and beyond those high costs.

I have the benefit of having in-laws who live in Australia. Australia's food market is dominated by two chains, and they have had news stories in previous years in which those food chains would announce the price that they would buy carrots at, for example. It was up to the farmers to try to match that price. These are total cutthroat business tactics. It goes to that point of farmers being price-takers. They don't always have the option. They have to try to compete at the price the grocer sets.

I would argue that this very much is within the mandate of our committee. I agree with Mr. Turnbull in that I don't think Canadians much care about specific mandates of committees. That aside, I think we do have a proper mandate here, but what Canadians care about is what they're seeing week in and week out. I think they need to see their parliamentarians respond to those very real concerns.

On Mr. Barlow's suggestion, I agree on Bill C-234. I think this is an important motion, but I know my Conservative colleagues have been waiting for a while on C-234, so I will agree with not upsetting the current order of things. As soon as that bill completes its journey here, I would like to see our committee embark on this study.

[The Chair, Liberal, Kody Blois]

We have Mr. Drouin and then Mr. Perron.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

Just so I understand clearly, Mr. MacGregor, what you're proposing is that we toss aside the subcommittee we just adopted last week and we prioritize Bill C-234. Then we move on to the study that you're suggesting, should it be adopted today, after Bill C-234.

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

What Mr. Barlow wanted was to not have Bill C-234 interrupted. I don't know if he had any more specificity beyond that. I'm going to agree with him on that point. I won't interrupt its current proceedings before our committee.

[John Barlow, Conservative, Foothills, AB]

I'm willing to make a little bit more of a concession here to Mr. MacGregor to get this going faster, if we can. I know the chair is very passionate about the food security study, which I think we all are. I honestly don't believe that we need a bunch more meetings on Bill C-234. We did it last Parliament. We're going through the same witnesses and the same testimony, again. I think we can have one or two more meetings, maximum, on Bill C-234. We've gone down this road before. We can get yours to the table.

It's not that I don't trust everybody here, but these are not decisions necessarily made by this group. They are sometimes made above us. I would like an amendment in your motion that the study begins after clause-by-clause on Bill C-234., just so I feel comfortable that, when we vote to support your motion, I know we're covered as well.

[The Chair, Liberal, Kody Blois]

If we would also agree that we only need a couple more meetings on Bill C-234 at the most....

Go ahead, Mr. Perron.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Thank you, Mr. Chair.

Quite a few things were brought up, and I want to be sure that I followed everything.

I'm in full agreement with Mr. Barlow about the fact that we are redoing the study on Bill C-234. This study has already been done, but we are able to fix this.

As to my amendment, I would like to know if Mr. MacGregor agrees with the changes that I suggested. I also want to reiterate that I'm flexible.

Mr. Turnbull, I believe I understood that you wanted to keep the part at the beginning of the motion that says, “the Committee undertakes a study on profit-driven inflation.” I just want to be sure that I understood correctly. Personally, I have no problem with that.

Very few of you spoke about what I suggested. Do we keep that in or not?

[The Chair, Liberal, Kody Blois]

I want to help facilitate here. I think Mr. Barlow made it very clear that, at least as far as I know, the Conservative position was not against any of the amendments Mr. Perron brought forward.

I don't know if Mr. Turnbull or Mr. Drouin would like to speak on whether or not you, on the Liberal side, have any issues with what Mr. Perron has suggested for amendments to Mr. MacGregor's original motion, and then I think we can start to clean this up. We can start to vote on the subamendment and the amendment and go from there.

Are there any comments from this side of the room? Mr. Turnbull.

[Ryan Turnbull, Liberal, Whitby, ON]

I reviewed the proposed amendments by Mr. Perron. I don't have a huge problem with any of them. There's one word in English that may not be translated. It says, “with the producers and transformers”. I think it should be “processors” perhaps.

Other than that, I think the spirit of the motion is still there even if you eliminate the word “record” and just keep the word “profits”. I think it's there. I think the supply chain is already included, so I don't see any particular problems.

I note that there's one change to it, which reduces the number of meetings, so I don't know if Mr. MacGregor sees any challenges with that. It says “no fewer than six meetings” in the original motion Mr. MacGregor moved. Mr. Perron, I think in your version it says “no fewer than four”. We're only specifying the minimum, so it's not really a problem.

[The Chair, Liberal, Kody Blois]

Mr. Turnbull, I'm going to stop you there. Pardon my “rookie-ness” in the chair, here.

We should probably stay on Mr. Barlow's subamendment. Mr. MacGregor has given his thoughts on that, and I'm going to open up the comments for Mr. Barlow's suggestion that this particular study would start after the last clause-by-clause meeting when Bill C-234 is reported back to the House.

That's essentially, Mr. Barlow, what you've moved. Let's focus on that—I apologize for steering Mr. Turnbull a little bit wrong—and then we'll go back to Mr. Perron's.

[Ryan Turnbull, Liberal, Whitby, ON]

In terms of Bill C-234, I may differ in opinion regarding the number of meetings we need, but I do agree with keeping the sequence. We're sort of disregarding the subcommittee's agreement on the top three priorities. We've been mixing meetings and having one on world food insecurity and one on Bill C-234. We said we'd do both of those before we moved on to agriculture and the environment. That's what our agreement was.

Now this is a new motion coming forward. I get that there's some pressure in terms of what the public will be expecting us to look at, so I get that it may interrupt that to some degree.

What I want clarification on is this: Are we just talking about doing Bill C-234 and then moving to this motion now, or are we still finishing the study on food insecurity?

[The Chair, Liberal, Kody Blois]

I'll turn to Mr. Barlow. I don't think there was any mention of dropping the global food security study. I think, as Mr. Barlow highlighted, once Bill C-234 is done, then Mr. MacGregor's proposed study could move forward, but not until such time as the clause-by-clause was done on Bill C-234.

Am I correct in saying that, Mr. Barlow?