Agriculture Committee on March 8th, 2023

[Warren Steinley, Conservative, Regina—Lewvan, SK]

Thank you. The price of business is going up.

I'm going to read from “Canada's Food Price Report 2023”, and I'd like all of you to comment on this. It reads:

By 2030, a typical 5,000-acre farm could see taxes of over $150,000 which could compromise the owner’s ability to make a profit. The added cost of a carbon tax will increase production and transportation costs associated with food and may be passed on to the consumer as producers try to remain profitable.

My question is this. You've talked about the global phenomenon of food price inflation, but how much have government policies like the carbon tax and possibly the fertilizer reduction led to the increase in food prices?

[Galen G. Weston]

Okay, I'd be happy to start. It's a great question.

I can't comment with any real precision on what the government policies have been and the impact that they've had on manufacturers' or growers' costs of doing business. I know in our case, for example, with milk, our most popular dairy SKU we sell below cost every single day. Wherever those costs are, they're coming up, they're being pushed up, and they are certainly not being captured inside our grocery margin.

Thank you.

[Warren Steinley, Conservative, Regina—Lewvan, SK]

Are there any other comments?

Mr. La Flèche.

[Eric La Flèche]

Well, there's no question that input costs for producers have gone way up over the last several months, and their costs to us have gone up, and that's the whole supply chain and why food inflation is up, like we've been saying since the beginning. I don't think it's for us to comment on which government policies have had an impact on those input costs for those producers—

[Warren Steinley, Conservative, Regina—Lewvan, SK]

Are you telling me a government policy that increases the cost of fuel like a carbon tax isn't adding to the cost of your doing business and adding to the increased price of food?

[Eric La Flèche]

I'm not saying that. I'm saying it's not for us to comment on which government policies are having which impact on their producer costs. Clearly, their costs are up. What the exact root causes of those input costs are, I'll leave to other experts.

[Warren Steinley, Conservative, Regina—Lewvan, SK]

Mr. Medline, do you have any comment?

[Michael Medline]

Yes, I'm just going agree with Eric. I'm not a politician. There are so many actions that increase the costs of goods, so anything that happens that puts a cost on will increase the cost to consumers and will hurt farms, obviously. It's up to the government to decide and balance, just like we have to do in our businesses. We have to balance which of those costs are worth it, and which are not.

[Warren Steinley, Conservative, Regina—Lewvan, SK]

Thank you.

I have one last question and a minute left. I wonder if each of you could take a swipe at this one. If you guys are doing business fairly, openly and transparently, why would you need a grocery code of conduct?

[Galen G. Weston]

We do try our best to do business in a fair and transparent way. We believe that we do business in a fair and transparent way 99% of the time.

If you think about what we do, we buy products and we sell them, and we negotiate with the people who sell us the product for the lowest possible prices. That can lead to tension. Those tensions, despite the best will in the world, can perhaps lead to bad judgment—bad judgments on both sides.

As an example, I think we've commented on this. We've seen a number of what we would consider to be unjustified cost increases that have been put through or requested by vendors over the last number of months, so it's really important that any code or any set of practices that we engage in is properly balanced.

From our perspective, we are implementing changes today based on feedback we get from vendors to improve that transparency regardless of whether we have a code of conduct. If we have one, and that one works effectively for all sides, that's terrific, but it won't stop us from changing our policies and programs to minimize those incidents where poor judgment is used.

[The Chair, Liberal, Kody Blois]

Thank you, Mr. Steinley. We're at time.

I don't know if Mr. Medline or Mr. La Flèche wanted to weigh in at all. If not, we can leave it at that.

Be very quick, if you could.

[Michael Medline]

Yes, I think that obviously transparency is really important. But what I did when I came into the industry was I spent a lot of time talking to supplier partners, what some people say, as I always say, are vendors. Some of the stories I heard I didn't like. I thought that the transparency wasn't working well enough, and I think that a code could help us all.

[Warren Steinley, Conservative, Regina—Lewvan, SK]

Thank you.

[The Chair, Liberal, Kody Blois]

We'll now turn to Mr. Drouin for up to five minutes.

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

Thank you, Mr. Chair.

I'm going to give my last minute to Mr. Turnbull.

First, it is International Women's Day. I want to thank all the women who work for your businesses. I know they work hard. I get to meet them almost every day in your stores.

I think the issue we're talking about, here, is public trust, or how we provide public trust to consumers, overall. When we deal with food, we deal with it on the agricultural level.

I want to start by saying that everybody deserves to make a reasonable profit, from the farm level to the retailers.

Where we face some issues—it's been mentioned by some of my colleagues—is here: A few years back, I know, some of you worked with the Competition Bureau. There was the whole issue of bread price-fixing between 2001 and 2015. That caused a breach in public trust. I think this is part of the reason why we're here today. My goal here is not to point the finger at anyone. I just want to find solutions. I don't think our committee is equipped to determine whether you're making an okay profit on a certain product. I think the Competition Bureau is the right place for this to happen.

That being said, some of you stated you provided financial statements. It's been said publicly by all of you, I believe, that most of the profit has been on non-food products. Some of you testified today that financial statements were provided to the Competition Bureau on a voluntary basis. I believe the Minister of Innovation, Science and Economic Development, back in May 2022, wrote a letter to some of you to ask the Competition Bureau to look at this.

In terms of the statements you provided, is the Competition Bureau going to be able to determine the difference between profits on food items versus profits on non-food items?

I'm going to start with Mr. Weston, Mr. Medline

and Mr. La Flèche, one after the other.

[Galen G. Weston]

Yes, it certainly can, based on the submissions we provided.

If I can comment very briefly, though, we're focusing on.... I know I keep saying it over and over again. It's probably frustrating you. However, this $1 is what we're focused on, of the $25. All of this time, effort and exposition is focused on that amount. No matter what is there—and there isn't anything of significance there—it won't change the cost of food. It's not going to solve the challenge for Canadians.

I would urge this committee, as long as it continues to operate, to expand its inquiry into the full value chain, because it's simply not mathematically possible for all of this to sit in that $1. That's something we should collectively try to address.

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

That's fair enough.

Go ahead, Mr. Medline.

[Michael Medline]

First, I'm going to set the record straight: The Competition Bureau investigation into bread price-fixing has been going on for about eight years now. Empire Company did not fix bread prices. I want to be clear on that.

I think for us, at Empire Company, the financial statements.... It's sort of a red herring. You can pretty well get what they are from our financial statements. We provided all sorts of information to the Competition Bureau that, I think, is far more interesting. We like to do that.

I worry—

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

I'm sorry, but I'm going to run out of time.

Will they be able to determine the profit margin? I don't need to know it, but will they be able to determine the profit margin on food products versus non-food products? I think that's the main, key question.

[Michael Medline]

I hope they can. I've read the submission. If they can't, they should contact me.

I want to say, though, that I worry we've lost trust.

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

Thank you, but I'm going to run out of time.

You have 15 seconds to answer the question, Mr. La Flèche. Will the Competition Bureau be able to tell the difference between food items and non-food items from the financial statements you provided to the bureau?

[Eric La Flèche]

Thank you for your question.

I'd like to say something about the bread scandal, if I may. Metro was never found to have violated any provision of the Competition Act.

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

With all due respect, that doesn't matter. I'm asking a question.

[Eric La Flèche]

I take offence to the implication that Metro was involved in the bread scandal.

To your question about the Competition Bureau, I can tell you that we are participating in the study. We will provide whatever documents the bureau requests, and we will co‑operate.

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

Go ahead, Ryan.