Agriculture Committee on Feb. 13th, 2023

[Martin Caron]

It's a key issue, absolutely.

Farms invest money to bring workers to Canada. Unfortunately, sometimes these workers, most of them from certain countries, leave the farms for no reason, and that means farmers have to start over again. We can all agree that this issue needs to be looked into, and we've spoken to Global Affairs about it so they can keep us up to date.

As I said earlier, people ask a lot of the farming sector. We're learning how to rise to the challenge and be efficient and productive, but we want this looked into. It's not just for our sake, it's also for the sake of these workers, who may be in places where they're not being treated well.

[Richard Lehoux, Conservative, Beauce, QC]

Thank you, Mr. Caron.

I really believe this is a major issue with a direct impact on price increases, because obviously farmers can't afford significant wage increases to respond to the one-upmanship happening between various industries, in my region and others.

How much time do I have left, Mr. Chair?

[The Chair, Liberal, Kody Blois]

You have about 45 seconds left.

[Richard Lehoux, Conservative, Beauce, QC]

Thank you, Mr. Chair.

Mr. Caron, you said you were open to being reimbursed for the surcharge on Russian fertilizer. Do you feel there is a real willingness to find a solution for reimbursing the some $34 million taken from farmers' pockets?

[Martin Caron]

After Ms. Freeland's economic update and the announcement by Minister Bibeau, we were told that the process to reach an agreement was underway. It remains to be seen if—

[Richard Lehoux, Conservative, Beauce, QC]

However, you have yet to see one red cent of the money. Is that right?

[Martin Caron]

No, not yet.

[Richard Lehoux, Conservative, Beauce, QC]

Thank you, Mr. Caron.

[The Chair, Liberal, Kody Blois]

Thank you, Mr. Caron and Mr. Lehoux.

Mr. Louis, you have the floor for about four minutes.

[Tim Louis, Liberal, Kitchener—Conestoga, ON]

Thank you, Mr. Chair.

Thank you to the witnesses.

This is very helpful today, and these are important conversations because we've heard over and over again that food is a fundamental need and that households don't have the flexibility to reduce their spending on food compared with other commodities. I'm happy to be here today addressing the frustration that Canadians are feeling with the rise in food costs.

Dr. Stanford, you've cited that average grocery prices have increased 11% in the last year, which is about double the overall inflation rate of 6.3%, and that, even though housing prices and gas prices are coming down, food inflation is still stubbornly high and that food retail profits have nearly doubled compared to prepandemic norms.

We heard from both you and Professor Brander that shortages at the beginning of the pandemic made it possible to raise these costs. Demand was up during the height of the pandemic, as people were staying at home, but even though people are buying fewer groceries now than during the height of the pandemic, profits are increasing on average for supermarkets.

Can you explain in simple terms how we are going to dispute major grocery chains' arguments that this is business as usual for them? How can we explain how prices seem to go up fast but are very slow to come down?

[Dr. Jim Stanford]

This is one area where I think a longer historical perspective is very important. We've often seen commentary, or perhaps some of the other witnesses who've appeared before you compare profit margins or aggregate profits just on a year-over-year basis and say, “Our profits aren't much higher than they were last year. They're a little bit higher but not much higher, and our margin isn't much different than it was last year.”

The longer historical analysis, which I compiled from Statistics Canada data, shows that the aggregate period of time since the lockdowns has been marked by increased profit margins that have stayed high, and aggregate profits that have more than doubled since prepandemic norms. That historical perspective is, I think, very important.

In terms of what's going to happen in the future, I think it's an open question. We may see some downturn in those profit margins as a result of the stabilization of supply chains internationally. Of course, we can't predict what's going to happen with some of the factors that Professor Brander mentioned earlier, like climate events and episodes like the bird flu, whether there's going to be further expansion of hostilities in Ukraine or whether there'll be another energy price spike. We can't project all of that, but, in the absence of further major shocks like that, I frankly would expect some normalization of profit margins in retail back towards something at least in the direction of normalcy. It's hard to say.

You'll see in the last quarter covered by the data that there's been a moderation of profit margins, not to anywhere near where they were before the pandemic, but not at the same peaks we experienced during the panic buying of the lockdowns and so on.

There may be some normalization ahead, but that being said, I think it is important for Canadians to understand that the food prices they are paying reflect in part the cumulative impact over the whole supply chain of profit taking by companies that had the power to charge Canadians much more than they needed just to cover their own costs.

[Tim Louis, Liberal, Kitchener—Conestoga, ON]

Thank you for that.

With the 30 seconds I have left, I don't think I can get a full question in.

[The Chair, Liberal, Kody Blois]

That's very kind of you, Mr. Louis.

Mr. Perron, you have the floor for two minutes.

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

Thank you, Mr. Chair.

Mr. Caron, at the end of your opening remarks, you talked about a code of good practice.

We've heard a lot about how prices are set. Produce growers told us about the horrendous gaps between what they are paid for their products and the price of those products in grocery stores.

What can we do to see profits more fairly distributed among the various links in the food supply chain?

[Martin Caron]

Thank you for the question.

I mentioned the code of good practice earlier. That's one of the first tools we can and should have. One of the things it needs to be is enforceable and mandatory.

There are other tools, however, that other countries use. That's actually one of the things we talked about at the Competition Bureau recently.

For example, France created the Observatoire de la formation des prix et des marges des produits alimentaires, a French food sector price and margin surveillance program that keeps an eye on food processing, distribution and production. The government set up and supports the program. The Observatoire collects data about prices and reports annually to Parliament and all delegates. I feel that's another tool we could have in Canada.

All sectors work together. We must remember that when we talk about the agriculture and agri‑food supply chain, we need all the links to succeed. An advisory committee can be set up, but a report is also produced, which allows elected officials and the government to show people how prices and margins are set. A legislative aspect to all of this is also needed to make sure that if something has to be changed about certain rules, the government can make those changes.

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

Thank you very much.

[The Chair, Liberal, Kody Blois]

Mr. MacGregor, we'll go over to you for two minutes.

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

Thanks, Chair.

I'm going to take my time to formally move that motion. The clerk submitted it to everyone's email, so hopefully everyone has had a chance to read and contemplate it. I won't bother to read it out for the record again. I will just move it and open it to discussion.

Hopefully, colleagues will agree to it.

[The Chair, Liberal, Kody Blois]

Thank you, Mr. MacGregor.

We have around eight minutes left. We'll have this discussion, and if it can't...then it will have to get moved to the next meeting.

Mr. Drouin, I see your hand.

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

Mr. Chair, I thank my colleague for that motion.

On our side, we're fully supportive of the introduction of that motion and of that motion passing. Thank you.

[The Chair, Liberal, Kody Blois]

Monsieur Perron.

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

Mr. Chair, since I received the text in French, and I commend my colleague Mr. MacGregor for that, I have no objection.

[The Chair, Liberal, Kody Blois]

Is there any further discussion?

Seeing none, certainly it looks as though there is a majority.

As your chair, I will highlight that I certainly appreciate the fact that we're extending.... I have some concerns with regard to the CEOs who will ultimately be summoned to come—which is important for accountability—and whether we're going to get any further information. However, I take the point that this is the prerogative of the committee.

Do we need to call it to a vote? I think it simply will pass, but would you like a recorded vote?

Mr. MacGregor, I guess that's your question. Would we like to have a recorded vote?

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

Sure. Let's get it on the record. We'll have a recorded vote, please.

[The Chair, Liberal, Kody Blois]

Madam Clerk, I'll ask you to help out.

(Motion agreed to: yeas 11; nays 0)

That is obviously unanimous.

Okay, colleagues, I will work with the clerk and we'll go from there.

I see your hand, Mr. MacGregor, and then I have Mr. Lehoux.

I want to be mindful of time here, particularly for our translators.

We'll go over to you, Mr. MacGregor.