Evidence of meeting #86 for Agriculture and Agri-Food in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was grocery.
A recording is available from Parliament.
Conservative
Dave Epp Conservative Chatham-Kent—Leamington, ON
Thank you, Mr. Chair, and thank you, Mr. Medline, for joining us today.
The Prime Minister promised lower grocery prices by Thanksgiving, whether American or Canadian, they've both passed. We're now looking at Christmas.
Thank you for making the statement that no one is benefiting from inflation. I'm assuming you were speaking on behalf of Empire and not on behalf of all retailers. I just want to get that on the record, Mr. Medline.
President and Chief Executive Officer, Empire Company Limited
Yes, I'm only speaking about us today. I don't know about the others. You'll have to ask them.
Conservative
Dave Epp Conservative Chatham-Kent—Leamington, ON
Suppliers to you and other suppliers have said that Sobeys had taken, prior to the freeze, significant price increases—up to 8¢ to 10¢ per unit from a particular supplier—and then, however, also increased their prices by 15¢ to 30¢ per unit on their products. Can you tell me about how that relates to the rate of inflation?
President and Chief Executive Officer, Empire Company Limited
With that kind of detail, I really have trouble answering, because I don't know what it is, when....
We put in the price freeze. We also started our price freeze on packaged goods prior to that date, so there would be no question on what we had done. If that supplier in any way thinks we put a price increase through after we should have or in an unfair way, they should come to us, because that's what we would do under a code of conduct.
President and Chief Executive Officer, Empire Company Limited
Thank you.
I think people fear there's retribution or something. We just want to get this right. I'd say, “Come talk to us.”
Conservative
Dave Epp Conservative Chatham-Kent—Leamington, ON
We appreciate your support for the code of conduct.
President and Chief Executive Officer, Empire Company Limited
Also for that, yes.... Go ahead.
Conservative
Dave Epp Conservative Chatham-Kent—Leamington, ON
I'll go there right now.
Who is holding up the code of conduct? Is it the federal government? Is it some of the individual provinces? Is it the other retailers?
President and Chief Executive Officer, Empire Company Limited
I know for sure that the independent grocers are in. I know there are large retailers that are behind it, not only Sobeys. I know that the supplier partners were the ones who first came to me three years ago and asked me why I didn't support the code. We looked into it, and we supported it.
I think there are one or two large grocers that do not support the code in its current form, or maybe any code. That's slowing things down, obviously.
Conservative
Dave Epp Conservative Chatham-Kent—Leamington, ON
You made a statement that coming into this period of a price freeze, you went from 90% price frozen to 100%, so you cancelled price increases. What happened to those margins that were cancelled to the suppliers?
President and Chief Executive Officer, Empire Company Limited
Sobeys ate them.
Conservative
Dave Epp Conservative Chatham-Kent—Leamington, ON
Then you accepted the price increases and you reduced your margin. Am I understanding you correctly?
President and Chief Executive Officer, Empire Company Limited
Yes, that's exactly right. Even on ones that we would otherwise have had to pass through, we decided in that period of time, because of inflation and because of our meeting with the minister and because of the concern of the ag committee, to do 100% rather than 90%.
Conservative
Dave Epp Conservative Chatham-Kent—Leamington, ON
I'm going to ask a couple more specific questions, but I'm asking them as to whether they would fall under the code of conduct.
Can you explain to the committee what “fill rates” are? Why does Sobeys fine suppliers and demand fill rates of 98.5%? The costs are imposed on suppliers, which obviously end up in food costs later, which I believe is self-evident.
Also, on vendor data, I understand you charge suppliers for internal data that would help both you and the vendor to be more appropriate in their product mix. That's a charge.
Would those two areas be covered by a product mix, and can you explain to the committee exactly what they mean?
President and Chief Executive Officer, Empire Company Limited
In the industry, you need to have rules among the parties, and you have to have transparency, and you have to have fair negotiations. That's what [Technical difficulty—Editor].
Yes, we expect certain things from our suppliers. If they promise to....
I'm having trouble with the headphone here.
Conservative
The Vice-Chair Conservative John Barlow
Just hang on. We'll stop the clock there. We'll test your mic, Mr. Medline. Just start speaking again
President and Chief Executive Officer, Empire Company Limited
Can you hear me now, Mr. Chair?
Conservative
President and Chief Executive Officer, Empire Company Limited
If it's working, I'm now going to answer the question.
Conservative
The Vice-Chair Conservative John Barlow
I think you're okay. Just make sure the microphone doesn't touch your face. I think you're good now. Carry on. Thank you.
President and Chief Executive Officer, Empire Company Limited
At the same time, if we order products, we have to take delivery of them. Without a code in this industry, what's going on in some cases is that there's no negotiation and there's no discussion and there are no notice periods. Sometimes it is even retroactive. I believe you're going to have Mr. Graydon from FHCP later. You can ask him about it.
What we're trying to do in the code is to make it so that there's predictable business available and that we're not taking advantage because of size or power. We're trying to make it so that it's fair.
There is always going to be negotiation. There are always going to be disagreements, but some of the things that were going on were not fair business, and they should not be going on.
Conservative
The Vice-Chair Conservative John Barlow
Thank you, Mr. Medline.
Now we go to Mr. MacDonald for five minutes. Go ahead, please.