Thank you.
Good evening. My name is Gary Sands. I'm senior vice-president with the Canadian Federation of Independent Grocers, as the chair indicated.
Thank you for the invitation to CFIG to offer our perspective on the issue the committee is examining, that of food inflation. I will, of course, likely be repeating some of the same observations others have made to this committee, but I am glad that the perspectives of independent grocers are being solicited.
There are approximately 6,900 independent grocers in Canada, ranging in size from large to medium to single-store operators. Many of those independents are also located in semi-rural, rural and remote communities, where they are most likely the only grocery store in that community. Issues around fair supply and affordability in those areas are closely linked to food security for those communities.
Our members also have a sort of symbiotic relationship with the communities they serve: living in the community, hiring local, buying local and supporting local community activities and causes. This bond is why they are such an important part of the tapestry that makes up this country from myriad diverse communities.
Naturally, independent retailers are extremely sensitive to the concerns around affordability being felt by their customers, who are also many times their friends and neighbours. That is why the suggestion that there is “greedflation” or profiteering taking place in the food industry is something our members find unfortunate. As the study last August by Dalhousie's agri-food lab pointed out, “If 'greedflation' exists, the available data suggests grocers are not responsible.”
Let me be clear that while I am here today to represent independent grocers, we know that the cost pressures and challenges confronting the food industry are being borne by all. There is no bogeyman here—not retail grocers, not suppliers. When you're an independent grocer receiving price increase notices from all of your suppliers, which are most often in the double digits, if your margins are 2% to 3%, then we don't know what business model you can use. You can't help but pass those costs on to your consumers.
All of us in the industry have talked about the issues that have impacted us over the last couple of years. Some of the most significant have been the impact of catastrophic flooding in B.C.; adverse weather events in western Canada, including a virus and drought in California; of course, the continuing war in Ukraine; port, rail, and border disruptions; significant increases in fuel surcharges and transportation, which are felt more acutely by independents in rural and remote communities; and increases in input costs throughout the entire supply chain.
As I've said a few times, if someone were to tell my members that the Four Horsemen of the Apocalypse all now have jobs in different parts of the food industry, that would come as no surprise. It's really not about what has happened to hit the industry; it's more about what hasn't happened.
Another factor that I would draw to the attention of the committee is that over the last three years, we have seen a massive migration away from cash in favour of credit card transactions. This, in turn, translates into a massive increase in interchange fees paid by businesses to banks and credit card companies, currently estimated at around $10 billion a year. Again, those fees have a disproportionate impact on a narrow-margin sector like retail grocery, particularly for independent grocers, who pay higher fees than other large businesses. Those fees have an impact on food affordability. I would urge the government to look at establishing one lower interchange fee for any and all grocers where customers use a credit card to purchase food.
I would conclude by saying that the food industry has a shared commitment to making this industry one that continues to look for ways to better serve Canadians. We take that seriously.
Our industry is very interdependent and interconnected. Concerns around food security and affordability are top of mind for Canadians, which is why there is a great sensitivity throughout the supply chain around the issue of food inflation and affordability. Our desire to work together is why we are working to draft a grocery code of conduct for this industry. As a member of the steering committee, I can tell you that we're making great progress on that initiative.
I think that's my time, Chair. I'm happy to answer any questions later on after the other witnesses have spoken.
Thank you.