Agriculture Committee on April 19th, 2023

[John Lawford]

Yes. That would put some pricing pressure on the majors and also give more variety to consumers and support local businesses, keeping dollars in the community.

Amy, I don't know whether you have anything to add.

[Amy Hill]

I would add one thing. It sounds like transportation costs have been a really big challenge for the industry throughout this inflationary period. Obviously, the more local the food is, the lower the transportation cost is. Hopefully, that will help.

[Leah Taylor Roy, Liberal, Aurora—Oak Ridges—Richmond Hill, ON]

Great, thank you.

Regarding the transportation costs, fuel costs, we've heard a lot about food inflation being caused by the price on pollution. The price on pollution did not increase between April 2022 and April 2023, yet I believe that was the period of highest inflation in food prices.

Do you feel that there were other factors contributing to food inflation in that period?

[John Lawford]

That's a bit of a fraught question. My instinct is to think that there is some profit-taking by the grocery retailers rather than its being increased fuel costs.

Amy, do you want to add anything?

[Amy Hill]

The only thing I would add is that we are supportive of the carbon tax, despite acknowledging that fuel costs have potentially increased for the industry.

[Leah Taylor Roy, Liberal, Aurora—Oak Ridges—Richmond Hill, ON]

Thank you very much. I think I'm out of time.

[The Chair, Liberal, Kody Blois]

Yes, you are.

Thank you, Ms. Taylor Roy, Ms. Hill and Mr. Lawford.

Mr. Savard-Tremblay, you have the floor for six minutes.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

I acknowledge all the witnesses and thank them once again.

My Maskoutain chauvinism leads me to put questions first to the representative of Nutri Group, which is right in the heart of my riding. It is a pleasure to see you. We feel a bit at home here.

You buy eggs and you distribute them to grocery stores. We know there are price increases, but what are the types of increases and where do they fit, relative to you, in your reality?

[Sébastien Léveillé]

Thank you for your question.

These increases affect a number of aspects. I have heard previously about transportation costs, for example.

I'm going to talk about the reality of the workforce. Labour shortages are often related to the fact that our plants need to have a very high efficiency rate, so they need to run at full capacity. When there is a labour shortage, of course, the plants are literally slowed down. So they have to use the temporary foreign worker program or at least specific recruitment programs. So that's been another very important factor in the price increase.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Since we're talking about plants, are the facilities up to date in terms of automation? Could they use a little extra help from the government?

[Sébastien Léveillé]

We are always very happy to receive a boost from the government, of course.

The plants did receive automation support programs across Canada. That was part of the programs to compensate for the labour shortage. There is certainly a limit to what we can do in terms of the cost of capital, but that was actually part of the solution. Any help is welcome and used by the industry, as you can see.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

So there is something to be done on that front, in other words. An update would be in order, in context. It would impact what we're talking about today.

[Sébastien Léveillé]

It is certain that improvements to the automation plan mitigate the impact of the labour shortage.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

That's great.

Earlier, when you were talking about costs, you mentioned the avian flu. We know that's an issue, but what about packaging?

[Sébastien Léveillé]

In the case of avian flu, the difficulty was more on the farm biosecurity side. The required measures were implemented very effectively, by the way. Canada, it must be said, is well equipped for this.

With respect to inflation, yes, we have been impacted by the increased cost of packaging, cardboard, the film that covers our packaging, as well as the pulp that makes up our packaging. That's definitely part of the inflation.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Can anything be done about packaging?

[Sébastien Léveillé]

That's a good question.

It should be put to those who produce it. We try to establish as much competition as possible among our suppliers, but we are not experts in packaging production.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Of course.

Despite everything, egg prices remain relatively stable. We talked a little bit about supply management, which is a good system for that. Are you absorbing costs so that consumers can buy eggs at a low price?

[Sébastien Léveillé]

I am tempted to say that, as in many industries, given the rapid inflation of the last 12 months, it's obvious that companies like Nutri Group have absorbed costs. That's for sure. It's been so fast that it was impossible to react and raise prices that quickly.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Great.

Thank you.

I will now put my question to the Public Interest Advocacy Centre's representatives, Mr. Lawford and Ms. Hill.

We are quite pleased that you supported, in your testimony, the idea of my colleague Yves Perron, whom I am replacing today.

I want to repeat a question that I also asked in the first hour of this meeting. We know that more competition and fewer monopolies lead to better prices. That is a universal rule.

In their testimony before the committee, representatives of the Competition Bureau talked about a lack of powers for the bureau to access certain data from retail companies. Would you recommend that the bureau be given more powers?

In the first hour, I put this question to the Consumers Council of Canada, which was basically proposing the creation of another bureau, a consumer protection bureau. We have one in Quebec, and I must admit I was surprised to learn that one doesn't exist at the federal level. Would you advocate that, as well?

Ms. Hill and Mr. Lawford, either of you can answer my question.

[John Lawford]

Thank you for your question.

I will answer.

In terms of giving powers to the Competition Bureau, we already made recommendations to that effect during the study in March. The bureau does not have the power to directly access supplier data, which could help it in its work.

With respect to the creation of a consumer protection bureau, this is not something we were considering because it would cause difficulties and there are already a few agencies representing consumers in certain areas. However, if the creation of a bureau is necessary, groups like ours should be consulted before that is done.

That's my answer.

[The Chair, Liberal, Kody Blois]

Thank you very much, Mr. Lawford and Mr. Savard‑Tremblay.

Colleagues, the bells have rung, but we've talked about this. I just need to extend for another 10 minutes. Everyone will still be able to get to the House.

Mr. Davies, we're going to go to you, assuming we have unanimous consent. This committee works pretty well with that.

[Some hon. members]

Agreed.

[The Chair, Liberal, Kody Blois]

I'm not seeing any issues.

Mr. Davies, we'll go over to you.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you, Mr. Chair.

Thank you to all of the witnesses for being here.

Mr. Lawford and Ms. Hill, I'll start with you. In a recent submission to the Competition Bureau's retail grocery market study, the Public Interest Advocacy Centre highlighted the negative effects that so-called “restrictive covenants” may have on competition in the sector. I think you touched on that in your remarks.

As Mr. Anthony Durocher, deputy commissioner of the competition promotion branch of the bureau, explained, supermarkets sometimes place these covenants in real estate lease agreements to prevent other food retailers from using the same store location in the future.

Can you explain to us what effect these restrictive covenants have on competition in the food retail sector and maybe what you think we should do about them?