Agriculture Committee on Dec. 7th, 2023

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

Thank you, Mr. Chair.

Thank you for being here, Mr. Weston.

I've been listening to you this whole time, and I have to tell you I'm struggling to follow your logic. You said that the code can't work. You have doubts about the code. However, your company doesn't have a representative on the steering committee or in the working group.

How can you come here and tell us that you are participating in the process when you aren't even part of the committee or the working group? If you were part of them, you could recommend the changes you want to see.

I want to hear what you have to say about that.

[Galen G. Weston]

The key focus here is to figure out ways to reduce the impact of inflation on Canadians. As I've said before, the way the code is currently drafted, it certainly doesn't do that.

With the way it was set up, we were prohibited from being participants in the steering committee. I'm not exactly sure—

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

Sorry to cut you off, Mr. Weston, but I have a limited amount of time.

With all due respect, I asked you how you could justify calling into question the negotiations over the code of conduct when you aren't at the table and the vast majority of industry players are in the process of negotiating in good faith. You said that we need to bring down prices for consumers, and we all agree on that. Why aren't you at the table? Why haven't you been involved in the negotiations or discussions since the beginning?

[Galen G. Weston]

We've been providing our feedback, but we were excluded from the working group. We did not participate in the working group. We did have the opportunity for consultation. We provided our perspective over and over again through these consultations.

By the way, we're the first people to actually publish the language of the code for this committee to look at and for others to look at. Previously I don't know what evidence was provided by the advocates for the code on how it was going to lower food prices. I don't think they presented any. We tried very hard to present very simple, very clear evidence that there is substantial risk here, but this feedback was not listened to in this process.

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

Mr. Weston, you said that Loblaw was excluded from the working group, but my information indicates that you weren't there. Who excluded Loblaw? It wasn't the Retail Council of Canada, since Sobeys, Metro and the Canadian Federation of Independent Grocers all participated.

What I take from this is that you are trying to undermine a process that you haven't been fully involved in since the beginning. As Mr. Drouin pointed out, your position will end up contributing to a more complex regulatory environment.

Who excluded Loblaw from the working group, Mr. Weston?

[Galen G. Weston]

The way the process was set up was that Sobeys and Metro would be the representatives of the industry in the working group. That's fine. All the way through, we've been trying to provide feedback about our concerns, and we're continuing to provide that feedback.

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

Mr. Weston, you're saying that Sobeys and Metro represent you in the working group, and yet Sobeys and Metro support a code of conduct. If they represent you, why do they support the code, but you don't? What you're saying doesn't add up. I don't understand. Something doesn't make sense.

You said that you need to keep your ability to charge suppliers fees. That's one of the reasons why negotiations are under way to bring in a code of conduct. I'm not trying to be disrespectful, Mr. Weston, but what I'm hearing makes me wonder whether your company is acting in good faith or whether it intends to keep following the same practices it has been following for years.

[Galen G. Weston]

Throughout this process we have been engaged and we have acted in good faith, and we continue to do so. We were not on the working committee, but, as I said, we have been providing our feedback and our perspective all along. We have senior executives who have been participating in this process. The point I'm making is simply that our feedback is not being heard, and that is troubling for us. Maybe Sobeys and Metro operate their businesses in a different way. I know they have fewer discount stores, so they may not be as focused on the lowest possible prices for Canadians as we are.

Let me give you, if I may, just a brief sort of explanation of how these compliance charges work. They way they work is that we set an expectation that we're going to receive a certain amount of product at a certain time and a certain way, and there is a charge for that—

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

I understand, but—

[Galen G. Weston]

Hold on. Sixty per cent of the time we make exceptions to those charges based on good-faith conversations with our manufacturers.

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

Mr. Weston, I understand all that, but at the end of the day, that is what we are trying to regulate with the code.

Mr. Weston, you said a code of conduct hasn't led to lower food inflation in Australia or the U.K. in recent months. While they may have seen significant inflation in recent months, after those countries brought in their respective codes, they saw a very positive impact on grocery prices. You can't deny that. The vast majority of us believe that implementing a code of conduct in Canada would be a good thing for consumers.

What do you say to that?

[Galen G. Weston]

As I said before, the most important thing here is that we not do the opposite of the intention of this committee and put in place conditions that lead to higher prices from the largest multinational manufacturers in the world. It's important to separate that risk from how we effectively support Canadian growers and manufacturers.

This is one of the elements that haven't been effectively addressed in the code today. We have put very constructive solutions forward at each point in this. We're not saying no. We're saying, look, there are some important adjustments and tweaks that could be made to this code, which we believe could offer the best of both worlds. I would be happy to give you examples of those at some other point. We have heard nothing from our counterparts in this conversation about any accommodation for these risks. They just say, “No, they're not real”, but they are real.

I don't know where, with all due respect—

[The Chair, Liberal, Kody Blois]

Mr. Weston, I apologize. I wanted to give you a little more time, but I have to make sure I'm managing the time for my colleagues. I gave you a few extra seconds, but I have to go to Mr. MacGregor now.

Thank you.

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

Thank you very much, Mr. Chair.

Welcome to the committee, Mr. Weston.

Deputy Prime Minister Freeland and Minister of Industry Champagne have said that all of the CEOs agreed to stabilize food prices after the meeting in September, but following that, Metro's CEO Eric La Flèche said that did absolutely nothing to change prices. We have conflicting accounts, and I want to know from you who is telling the truth. Is it Metro or the Liberal government?

[Galen G. Weston]

I can't speak to Metro's perspective.

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

He made the statement that they did absolutely nothing. Are you in agreement with that or with the Liberal government's contention?

[Galen G. Weston]

In our case, that meeting resulted in materially lower prices on the 35 items and in the categories that we communicated here to this committee. It's also important to note—and this is, I think, the message that Eric was perhaps trying to communicate—that we as an industry have been making collective efforts for months and months. We don't want this to turn into, “Well, the only reason food prices are lower is because—

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

I don't want to dwell too much on it. I just wanted to get an initial answer to that first question.

Now, you are the former CEO responsible for Loblaw. You've changed positions. We live in a country where we have seven million Canadians, a record number, having to access food banks due to high grocery prices.

What do you say about that astounding figure, and do you know how many of those Canadians might be Loblaw employees?

[Galen G. Weston]

Any way you look at it, with the affordability challenges faced in this country, whether for food, gas, electricity bills or mortgage payments, there is enormous pressure on Canadians. Whether it's seven million, two million or four million, it's too many people.

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

Do you know how many of your employees are having to access food banks?

[Galen G. Weston]

I don't know specifically how many employees access food banks, but I'm sure it is a material number.

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

I think the reason this is such an emotional issue is that your stores sell the necessities of life—whether those are food, drink or medicines. You talked about the fact that you expect food prices to stabilize over the next year, but we just got a report saying that in 2024 they expect the annual cost for a family of four to go up to over $16,000, which is a $700 increase.

I think a lot of families in my region would look at that and say, that's not really stabilization. They look at that, and that's the reality for their life. In your last quarter, Q3, you posted a $621-million profit. In the same quarter the year before, it was $556 million.

Now you've come to this committee and you've explained your position on food price inflation, but when people in my riding are going through these incredible challenges—food prices are expected to go up again next year—it seems as though ordinary Canadians are shouldering all of the hurt and all of the struggle while corporations like yours, in the midst of all this pain and struggle, are still posting record profits.

You may argue that it's not coming from food, but you're still taking money from Canadians in other areas, and that's leaving them with probably less to spend on food elsewhere.

[Galen G. Weston]

This is an important point, because for a grocery store business, for any private enterprise, the goal is to grow the business. It's to increase the number of customers. It's to invest in communities, to build more stores and to increase the amount in sales. If we can increase the amount in sales, then the profit of the enterprise will go up. There should be record profits, in a way, for a successful company every year, year after year. That is not an indication of bad practices. It's not an indication of some sort of profiteering. It's just an indication of a business operating in exactly the way that it should. Three per cent of the total value of a grocery basket is profit. That's the smallest number for the large industries across Canada.

There's no evidence at all of profiteering or excess, but I do understand that Canadians are feeling this pressure and they are looking at these big numbers and thinking to themselves, gosh, if that company would not make so much profit, our food prices would go down. However, that's not the way it would actually work.

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

Thank you, Mr. Weston. I have limited time, and I want to ask one more question.

I think it's fair in these times when so many are struggling, including many employees in your stores, to talk about executive compensation, because the gulf between what top executives earn and what employees earn has turned into a chasm frankly.

Your total compensation in 2022 was $11.7 million, which was an almost $1.1-million increase from the previous years. I was wondering if you could explain to Canadians and probably to your employees why you make 431 times more than your average employee. I have a quote from Unifor, the local at one of your stores, which said:

Loblaw workers are fed up with the out-of-control disparity between their wages, the company's enormous profits, and high cost of living.... You know it's bad when workers at Canada's largest grocery store chain are struggling to afford their own food, even at discount stores like No Frills.”

How do you respond to that, Mr. Weston?

[Galen G. Weston]

First of all, I am extremely empathetic to the circumstances that Canadians who are struggling to put food on their tables face and to how all of the cost pressures they're experiencing are contributing to that. That's why we as an enterprise are focused on finding ways to lower prices. In the last 12 weeks alone, we've invested $438 million in lower prices. As I mentioned, many of those prices are lower than they were four years ago.

I get that my compensation is a big number. Certainly, it's a big number and I understand that completely. It's reasonable in the context of other executive pay—