Agriculture Committee on Dec. 4th, 2023

[Michael Medline]

It's so hard for Canadians. I know that you know this. It's the cost of living, the cost of rent, the cost of mortgages, and then you go into the grocery store and you see these prices that are caused by global inflation. It's sad. It's hard.

We're trying to do everything we can, as you saw from our submission. I get a little impatient that we're jumbled up with the entire industry all the time. Every company is different.

I'll give you an example. I'm only talking about our company, Sobeys, here. Since inflation started, out-take on our net earnings has been a meagre 1.8%. Last year we made less than the year before, when inflation occurred. We made less money. Our net margin has fallen during inflation from 2.5% to 2.4%. It's lower than our competitors' and it's among the lowest in margin businesses in the country.

I see why people are frustrated. I know that some people want to fan the flames. It's tough. When you walk in, who cares what the reasons are? You're paying too much. That's what I think.

[The Vice-Chair, Conservative, John Barlow]

Thank you, Mr. Medline. Thanks, Ms. Taylor Roy.

Mr. Perron, you have six minutes.

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

Thank you, Mr. Chair.

Thank you, Mr. Medline, for making yourself available to us again today.

You had a lot to say about a code of conduct. You said there's opposition and that not everyone would voluntarily comply. In your case, your business does comply, and you'd like to see the code of conduct implemented quickly.

What will happen if retailers don't sign this code of conduct?

[Michael Medline]

Thank you for the question.

It would be a sad day. For me, it would be a sad day, and I think it would be a sad day for Canadians and the industry.

This code is not a huge ask. It asks this industry to act with respect. It asks for some very basic rules that apply and that retailers just do in retail areas other than grocery. It would be a missed opportunity of epic proportions. We have never been this close to a code.

You've seen that the code in other parts of the world has operated wonderfully. It's a Canadian code, but we looked across the world. We've put tons of work into it over the last three years.

I would say that the last year has been a waste of time. We could have implemented this code a year ago. We've been willing to sign it. You can also talk later to—

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

I'm sorry to interrupt you, Mr. Medline, but I'm short on time.

Along the same lines, some say that the best way to lower prices is to increase transparency and competition in the sector. I'll start with transparency.

During a previous meeting of this committee, I asked five corporate representatives if they would commit to giving their numbers to the Competition Bureau. I can understand people not wanting to share their numbers in public meetings. You said that your company's profit margin went down, but what we've see overall is that profits have gone up. We certainly want to believe you, but most people would have a hard time believing that.

When I asked those five reps that question, every CEO promised to give the Competition Bureau their numbers. I was deeply disappointed to learn, upon reading the Competition Bureau report, that not all of them did.

What happened? Can you help us understand?

Did you provide your numbers? If so, what are your thoughts on the level of co‑operation from others in the sector?

[Michael Medline]

I can't comment about others.

I remember your question. It was a good question. We gave to the Competition Bureau a level of transparency that we've never given before. I think they want more and more and more transparency. We gave them what we thought would give them all of the information they needed.

You can look. You don't have to believe me when I say 2.4%. You can see that in our public documents.

I can also tell you today that we gave them the food margins and split it off from the rest of our business, just as you and some of your colleagues in Parliament asked us that day. When we make a promise, we do it. Whether it was 100% to the bureau's liking, I don't know, but boy, did we put a lot of work into it. I personally got involved.

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

Thank you very much for your answer.

As I understand it, your company provided its numbers. Thank you for that. I'll ask the next witnesses the same question.

Our committee suggested another way to improve grocery prices. The idea would be to increase competition in the sector, given that only five players control 80% of the market.

As a company, what are your thoughts on that? We draft bills. We could maybe see to it that the government takes steps to make it easier for other players to enter the market. Would you be open to the idea of increasing competition in the sector?

[Michael Medline]

I'll answer that in two parts.

First, people say that this is not a competitive market. It is one of the most competitive markets in the world. Any place else.... You have Amazon, Walmart and Costco competing with grocers, and you have independents competing as well. It's competitive.

Having said that, competition is good. There's always going to be new competition, and we will face it when it comes. I don't think there have been huge barriers to competition in this country, but I'm sure that the government will put in place, in the Competition Act, even greater ways that we can compete. We welcome all that.

I would also point out that independents can thrive in this country. One way that we can make this more competitive for them and make sure that smaller start-ups can become big is to push the code—code, code, code.

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

Okay, thanks for your answer.

You talked about the steps you took after meeting with Minister Champagne. I assume you were acting in good faith, of course, but it was a bit of a photo op on the government's part, too.

What have you done differently this year compared to other years? What have you actually done?

You talked about the pre-holiday price freeze. Isn't that just standard practice?

[Michael Medline]

It has occurred before. We took it to another level this year after meeting with Minister Champagne.

As you also probably know, we gave a confidential memorandum to this committee, which shows exactly how serious we are about helping to stabilize and, hopefully at some point soon, lower prices for Canadians on food. It's novel and it's material. We gave timelines. We've had numerous conversations with the government. That will become public in late January as it rolls out across our entire system.

[The Vice-Chair, Conservative, John Barlow]

Thanks, Mr. Medline.

What we're going to do before we go to Mr. MacGregor is.... We have a few minutes left before the vote starts. If everyone is amicable, we'll do Alistair's round of six minutes, and that should still leave us six or seven minutes to vote. We're all going to vote on the app, I'm assuming. Is that okay with everyone?

[Some hon. members]

Agreed.

[The Vice-Chair, Conservative, John Barlow]

Go ahead, Mr. MacGregor.

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

Thank you very much, Mr. Chair.

Thank you, Mr. Medline, for joining us today.

I think one of the hard things about the food inflation crisis over the last 23 months has been just how many people with solid full-time jobs have been struggling to put food on the table and have been using food banks. I think that's a very detrimental record for our country.

Some of those workers also include workers who work at your stores. I think that if we are to talk about food price inflation and efforts that are being made to combat it, we also need to talk about the workers who work at Sobeys.

I've been in contact with some of the striking workers at Pete's Frootique—which is owned by your company—in Atlantic Canada. They've been on strike since mid-November. Many of those employees have stated that they themselves are unable to afford the food prices at the store where they work.

I guess I'd like to hear from you—and I think, indeed, many Canadians and the workers who are at your stores would like to hear from you—on this: How is it that many Canadian families can afford to shop at Sobeys when your own employees cannot?

[Michael Medline]

Thank you for that question, Mr. MacGregor.

As always, thank you for your passion on agriculture and food. I follow some of this closely and I know how passionate you are.

First of all, on the labour stoppage, the strike at a store in Nova Scotia, I'm not going to negotiate a collective agreement publicly here. I don't know if that's legal or not, but I'm not going to do it either way.

That's unfortunate. I think that these food price increases, which are horrific, are impacting everyone. They impact our teammates as well. I looked at our full-time teammates across the country. We have 130,000 teammates. They had, on average, 5% increases last year. For part time, it was an almost 8% increase in the last 12 months as well.

The problem with food banks is they vary. What's going on is a sad state of affairs. People are hurting more than ever due to prolonged inflation and high interest rates. We have to end this.

One of the most impactful ways we at Sobeys help is by donating food. Since May 2021, we've donated over 21 million kilograms of food, which is the equivalent of over 46 million meals, in our partnership with Second Harvest. We've supported more than 1,100 local non-profits. We offer fruit at significantly discounted prices through FoodHero. As part of The Grocery Foundation, we support the breakfast program known as Toonies for Tummies. We have partnered with Breakfast Club of Canada and Student Nutrition Ontario—

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

Thank you, Mr. Medline—

[Michael Medline]

I have a whole list here. We have to help more, and I hope the government can also help more. That was one of the asks.

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

Thank you.

I'm just noticing the clock.

Now, I understand you don't want to negotiate in public. I totally understand that, but the latest offer your employees were talking about was that your company offered them a 5¢ increase in their wages above minimum wage. I'm holding in my hand a nickel; it's not worth what it once was.

With respect to your executive compensation last year, it was worth 172 million nickels.

Again, you don't need to negotiate here online, but realistically, how do you think a 5¢ increase or, in other cases, a 5% increase, is going to realistically help those people afford items at your store? What could they afford?

[Michael Medline]

As you can appreciate, Mr. MacGregor, that's an oversimplification of this collective bargaining that goes on in this country.

Since I joined seven years ago, we've had 350 collective agreements come up. Until this strike at one store, which is an important store to us, we've had two strikes. We settled the mass of them. You heard what I just said in terms of the salaries going up 5% for full time and 8% for part time. We're negotiating these all of the time.

Strikes are horrible. They're especially horrible for our teammates. We try to settle them under fair terms. They're bad for customers, too. That's why we have so few and that's why there's collective bargaining in this country.

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

Thank you, Mr. Medline. Again, I'm just reporting back what I'm hearing from your workers.

Just in the final minute, much has been made about your meeting with Minister Champagne, along with the other grocery CEOs. What do you make of it when your competitor, Eric La Flèche from Metro, goes onto Quebec media and publicly states that the meeting had zero impact on food prices?

I think what the Canadian public ultimately wants to know about is what exactly was discussed in the closed-door conversation with the minister. One of your main competitors is now coming out and saying that it had zero impact.

What do you make of Mr. La Flèche's comments in that regard?

[Michael Medline]

I didn't hear that Mr. La Flèche said that. I don't know what he said. I can only speak for myself.

Look, this is a global issue. It's global inflation exacerbated by all sorts of things that are going on. We have respected that meeting with Minister Champagne. We have done everything we were asked to do in that meeting. If it can take down food prices and help speed that up, then we're all for it.

I can only speak for Sobeys.

[The Vice-Chair, Conservative, John Barlow]

Thank you, Mr. Medline. I appreciate that.

We're going to suspend for a couple of minutes just to let everybody here vote, if they haven't already done so.

We'll be right back to Mr. Medline in a couple of minutes.

[The Vice-Chair, Conservative, John Barlow]

Colleagues, we're going to come back to order.

Now we'll go to the Conservatives.

Mr. Medline, are you okay to continue?

[Michael Medline]

I certainly am.

[The Vice-Chair, Conservative, John Barlow]

Thank you.

We have Mr. Epp for five minutes, please.