Agriculture Committee on Dec. 11th, 2023

[Eric La Flèche]

To my knowledge, two food retailers are on the working committee: a representative from Metro and a representative from Sobeys.

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

But you are not representing Loblaws on this committee.

[Eric La Flèche]

No, but it's a working committee that is trying to find an acceptable solution for everyone. Basically, it represents the retailers.

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

Okay.

According to you, the code won't have any impact on prices. And yet, when the United Kingdom and Australia introduced one, it had a medium-term impact on prices. So we can at least hope that inflation might moderate somewhat from where we are right now.

If you think the code won't have an impact on prices, why did you tell the minister, Mr. Champagne, that you would treat that as a commitment for controlling prices? I just want to understand what you said.

[Eric La Flèche]

Allow me to repeat: the code was not developed to deal with price matters. It's more a matter of negotiations between a supplier and a retailer.

We told the minister, Mr. Champagne, that we were making a commitment to adhere to the code because he asked us to do so. The minister said that it would be important for the confidence of consumers for us to comply with the code, and we said that we would. That's what we did.

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

If I have understood then, you are continuing with your usual practices and are adhering to the code, meaning that there won't really be any changes with respect to prices.

What would happen if some of the companies were not to adopt the code? You said earlier that in that case, it wouldn't work. But it must work.

Do you think the government should force businesses to adhere to a code? Do you think that would be possible?

[Eric La Flèche]

I'm still convinced that the industry stakeholders will be able to find a solution. We’re almost there. Some companies have reservations, but I'm going to let their lawyers do their work so that a solution can be found. That said, I think that we’re very close to getting there. I'm hoping that we can find common ground in order to implement a strong code developed and administered by the industry.

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

Over the coming weeks, what can consumers expect in terms of price variations? How are things going at the moment? Do you think inflation will continue to abate?

[Eric La Flèche]

We've seen that inflation has continued to subside compared to last year. As I mentioned, prices have been stabilizing. They are fairly stable now. I would even say they're dropping slightly. Compared to last year, there is less inflation. For three quarters now, inflation we've seen a fairly rapid decline in each one. A rate of 5.5% was reported for the quarter that concluded at the end of September. For the next quarter, it will be the end of December. The rate will carry over to the end of January and I believe that it will be less than it was in the last quarter. The trend is therefore downward, but a certain level of inflation will continue.

[The Chair, Liberal, Kody Blois]

Thank you very much.

Mr. Boulerice, you have the floor for two and a half minutes.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

Thank you, Mr. Chair.

Mr. La Flèche, the situation is very difficult in some neighbourhoods, including La Petite-Patrie, which I represent. The other day I attended a spaghetti dinner organized by people in the neighbourhood to raise funds on behalf of the local food bank. Every month this year, 870,000 Quebeckers went to food banks, which means one out of every 10 people. That's an increase of 30% over 2022. It's terrible.

Today, we are telling you that your practices haven't changed since the meeting with the minister, Mr. Champagne, that the code of conduct will not lead to transparency and although it might perhaps boost consumer confidence, it won't have any impact on prices.

From that standpoint, how are people who are struggling going to be able to keep hoping that they'll be able to feed themselves properly?

[Eric La Flèche]

I have a lot of empathy for these people. We do in fact work closely with food banks, in both Quebec and Ontario. Metro has been a major food bank partner for a very long time. Demand has been stronger for the past two years, which we find highly regrettable, and this has led us to make some much larger donations.

The food bank clientele has been changing. Food insecurity is a major societal issue. There are many reasons for this and they go well beyond grocery prices. There is the cost of housing, interest rates, and so on; you know them better than I do. The government may have a role to play in countering food insecurity.

From where we stand as an industry stakeholder, we are striving to keep prices as low as possible across all our banners. We are opening discount stores. We're doing everything we can to meet continually changing customer needs.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

Unfortunately, many of those who use food banks have part-time or full-time jobs. That too is something new.

Over the past 23 months, the rising cost of food has systematically been higher than the average inflation rate. How can you explain that? I know that it's a complicated question and that there is only a minute left in my speaking time. In any event, the impression we get is that general inflation can take a lot of the blame, because food prices are increasing even faster.

[Eric La Flèche]

I'll start by saying that this gap is shrinking. Food inflation is now much closer to the overall inflation rate.

There was certainly a gap. But then inflation is a world-wide phenomenon. It's attributable to global factors like the war in Ukraine, the price of wheat, the price of basic products, energy costs, labour shortages and so on. They are known factors that have created food inflation around the world.

Canada is not doing as badly as all that. It's too expensive and it hurts, as we know. Canada nevertheless has the second-lowest inflation rate among the G‑7 countries, after the United States. It's doing much better than many European countries.

We are doing everything we can to give our customers the best possible value, but our input costs have increased significantly over the past two years and our profit margins haven't increased at all. I think it's important to point that out. Our sales and our profits did in fact increase as inflation was growing, but our profit margin percentage did not increase.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

Thank you very much.

[The Chair, Liberal, Kody Blois]

Thank you very much.

Mr. Lehoux, you have the floor for five minutes.

[Richard Lehoux, Conservative, Beauce, QC]

Thank you, Mr. Chair.

Mr. La Flèche,thank you very much for coming today.

My first question is about the ban on certain plastics. A few of my colleagues raised that issue earlier. It's important to know that it will have a considerable impact on fruit and vegetable imports. The concrete example given was plastic-wrapped cucumbers imported into Quebec and Ontario out of season. Their shelf life decreases by at least six days if they're not wrapped.

I'd like your opinion on what impact the plastic packaging ban will have on the shelf life of vegetables. If it decreases by six days, there will be a lot of food wastage. I would also expect that prices would rise.

[Eric La Flèche]

I can't tell you how many millions or hundreds of millions of dollars it would cost Metro. However, during some consultations, we expressed our concerns through our association, the Retail Council of Canada.

If the plastic ban you're talking about is going to increase our costs, it will certainly cause a rise in inflation. And if it reduces the shelf life of products and increases food wastage, that's not good news. We work hard to reduce food waste. It's important to think it through before taking action.

[Richard Lehoux, Conservative, Beauce, QC]

According to a newspaper article, after you met the minister, you said that the meeting wasn't necessary, because you were already making the everyday efforts the minister had asked you to. I would take that to mean that the meeting didn't amount to much.

How do you react to the current desire to introduce a policy that would place pressure on the entire food system, including your company?

It bothers me when I hear that there was a meeting with the CEOs of major food sector companies and that they're going to be rapped on the knuckles if they don't do things properly.

[Eric La Flèche]

I'm sorry to repeat myself, but we are maintaining our commitment to give our customers the lowest possible prices for their money. We have always done that and are doing it even more so during this inflationary period. We do our absolute best to give our customers the best possible value. Allow me to repeat that we have followed through on our promise to the minister.

[Richard Lehoux, Conservative, Beauce, QC]

Last week, I asked the grocery chain heads who preceded us here at the committee to talk about the repercussions of the agreements grocers have with their suppliers, and to give us a standard template to look at so that we could see what they request of their suppliers. At the outset, you said that from your standpoint, there have been very few penalties, but that there probably are some. Grocers are being pressured to lower their prices, but I'm afraid that pressure might go too far and affect people who, according to the testimony they gave here, are already having trouble getting through this state of affairs.

Could you provide us with this kind of information, Mr. La Flèche?

[Eric La Flèche]

The penalties we might levy or fees that we might charge our suppliers when they don't deliver an order or deliver it late are known. They are specified in the contract clauses. If suppliers are experiencing problems, we sit down with them and try to find a solution. Sometimes we have to charge them fees, but I can tell you that's not the case for most of our agreements.

[Richard Lehoux, Conservative, Beauce, QC]

Would it be possible for us to see these agreement templates?

[Eric La Flèche]

We don't disclose our agreements, but I'll note your request and ask my colleagues to follow up.

[Richard Lehoux, Conservative, Beauce, QC]

Earlier, in response to a question from my colleague about the impact of the carbon tax, you said that you hadn't done the calculations. I would nevertheless like you to provide figures to the committee on the potential impact it might have on the prices of all food products. You might think that this tax doesn't apply to Quebec, but it does, indirectly, because transportation is a key factor. When Quebec imports products from elsewhere, the carriers have to pay the tax, so I would imagine they would pass it on.

Would you agree on that, Mr. La Flèche?