Thank you, Mr. Chair and committee members. I would like to thank you for inviting me again for this important discussion on food affordability.
As food prices rise, many are quick to blame grocers for profiteering and taking advantage of consumers. The notion of profiteering has emerged as one of the most talked-about issues in the last few months.
In one of our recent reports, we used publicly available data to look at the gross profit for each of the three big Canadian grocers: Empire/Sobeys, Metro, and Loblaws. We calculated their respective “best” and “average” performances for the last six years. We failed to see any evidence of profiteering on all accounts.
This doesn’t mean that changes are unnecessary. Grocers are incredibly diversified and sell cosmetics, drugs and clothing. Margins are different for these verticals, and of course, the ethics and social responsibilities of selling bananas or eggs are quite different from when selling lipstick. Grocers have started to report their food sales separately from their non-food operations. Unlike selling T-shirts or perfume, selling food, a necessity of life, is inherently ethical, and the stakes are very different. That needs to continue.
Still, some higher prices remain difficult to explain as we remain concerned about certain verticals. Meat and bakery items are good examples.
The Competition Bureau has constantly failed 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.
The bread price scandal is a good example. After seven years, the investigation is still ongoing. We’ve also seen investigations into meat and salmon, neither of which has provided definitive results. Our nation has seen consumer trust being compromised, which is spilling over into our relationship with grocers due to the Competition Bureau’s baggage—that is, the awkward unfinished business it has with many files. Canadian consumers feel grossly unprotected.
In the U.S., things are very different. Kroger is currently trying to acquire Albertsons for almost $25 billion, which would make Kroger the second-largest grocer in America. Kroger could be asked to let go of almost 400 stores, creating a rival to the new grocer. This would never happen in Canada. When Provigo was acquired by Loblaws in 1998, or when Metro acquired A&P in 2005, or even when Sobeys bought Safeway out west in 2013, barely anyone raised an eyebrow during the proceedings. Over the years, we have seen many independent grocers disappear as a result. Consumers everywhere deserve more retail options.
The code of conduct is necessary. Many Canadians are unaware of the fact that in the grocery industry, suppliers have to pay grocers to do business. The charges are justified by the costs of merchandising and shelf space, which everyone expects.
However, things have changed in recent years. Companies like Loblaw, Walmart and Metro are going too far, and some fees have been imposed quickly and also randomly and unilaterally. In Canada, it is now more difficult for processors and independent grocers to be competitive.
This code is meant to change the culture of an industry in which vertical coordination and collaboration barely exists. It is also about dealing with a broken economic model. A code could neutralize the balance of power in the chain, stabilize retail prices, put the emphasis on value and innovation for consumers, improve the security of the country's food supply, and encourage investment in the agri-food sector.
Thank you, Mr. Chair.