Agriculture Committee on Dec. 11th, 2023

[John Barlow, Conservative, Foothills, AB]

Why would you think Metro isn't paying carbon tax? You have stores in Ontario, which would be paying carbon tax on energy. When you're getting deliveries on products—

[Eric La Flèche]

We pay our energy bills, we pay fuel. I don't have a specific carbon tax component. We pay taxes—

[John Barlow, Conservative, Foothills, AB]

I'd encourage you, Mr. La Flèche, as CEO of Metro, to take a look at those bills. They will have an element specifically telling you what your carbon tax is on every single delivery and on your heating bills in your stores. I think it would be important for Metro to understand the costs you are being burdened with. I'm assuming those additional costs you're having to pass on to consumers; this isn't something Metro would be "eating", I would think.

[Eric La Flèche]

Energy bills in Ontario have declined a little bit over the last year, so that's why I'm not seeing the carbon tax specifically, but I'll make a note of it and we'll get back to you.

[John Barlow, Conservative, Foothills, AB]

Thank you.

What would be the impact, as my colleague had asked you earlier, of the plastics ban? This isn't a matter of increased costs. One other consequence of this from what we understand is that a number of items would no longer be available. United States' produce companies, for example, would refuse to meet these new regulations and would just no longer export to Canada. I'm thinking of bagged salads, peppers, cucumbers, those types of things.

Have you done an assessment of that and what the consequences of it would be in terms of your not being able to bring in produce from the United States as a result of the new plastics ban? Again, this isn't the single-use plastics; this is plastics for fresh produce.

[Eric La Flèche]

I don't have a specific answer or analysis on that specific category. As I said earlier, it could add to costs and it could increase food waste, so through the RCC we made our concerns known to the government and we'll leave it to the policy-makers to make the decisions.

[John Barlow, Conservative, Foothills, AB]

When the Prime Minister initiated this and brought in the CEOs—which this committee in fact did six months earlier, so this was not anything abnormal—he said:

If their plan doesn’t provide real relief for the middle class and people working hard to join it

—so I would say this isn't just about freezing prices, but price reduction, ensuring there's relief in that respect—

then we will take further action, and we are not ruling anything out including tax measures.

If the government were to increase taxes on you—a windfall tax or something along that line—as a way to try to force you...is that something that a grocery retailer such as Metro would just absorb, or would tax increases have to be passed on to consumers?

[Eric La Flèche]

We think this is a bad idea and it will do nothing for food price inflation, so we're against any specific tax like that.

[The Chair, Liberal, Kody Blois]

Thank you very much, Mr. La Flèche and Mr. Barlow.

We'll now turn to the pride of Malpeque, Mr. MacDonald

It's over to you.

[Heath MacDonald, Liberal, Malpeque, PE]

Thanks, Kody.

Mr. La Flèche, I want to start where my colleague ended. We've had over the past two or three years some extreme climate changes and we're starting to see the general public being affected in many different ways, including our farmers, producers and manufacturers, whether it be by supply chain issues or weather, what have you.

If initiatives are put in place to help reduce climate change and our GHG emissions and so on, and if an organization as big as Metro didn't apply or at least try, would that have any effect on your business?

[Eric La Flèche]

Climate change is a big factor and has an impact on the cost of many food products. That's a fact. The severe weather events that you referred to have contributed to food price inflation, no doubt about it, over the past few years.

Again, climate change and the rules to fight climate change are a bigger issue than ourselves. We will conform to all the laws that are adopted by Parliament.

[Heath MacDonald, Liberal, Malpeque, PE]

You currently have a supplier code of conduct. Are there any similarities between the development of the grocery code of conduct with your supplier code of conduct? If you're doing this partially for suppliers, I'm just wondering if there are any similarities in what you've seen.

[Eric La Flèche]

Our supplier code of conduct deals with the norms that our suppliers must follow on workplace safety and security. It's just to make sure that we're dealing with the right companies. The code of conduct is how they treat their employees and how they deal with us. There are some similarities, but the grocery code of conduct that's before us is more on the terms between a vendor and a retailer.

[Heath MacDonald, Liberal, Malpeque, PE]

We recently heard from one of your competitors that the code of conduct would actually increase food costs and would not have the desired effect. What's your opinion regarding the grocery store code of conduct in that regard? Is there an effect there, or is it too early to determine?

[Eric La Flèche]

Like I said to an earlier question, we don't think the prices or the costs that we will negotiate with our vendors will change with or without the code. We don't have the same reading as one of our competitors has on the inflation risk caused by the code itself. That's our position.

[Heath MacDonald, Liberal, Malpeque, PE]

Getting back to suppliers, has there been any communication with your suppliers relevant to the grocery code of conduct?

[Eric La Flèche]

I have not communicated with them myself, but they are part of the working group that we belong to with others. Their association representatives are members of that working group, and so are, I think, a few representatives of large CPGs. They participate in the development of that code.

[Heath MacDonald, Liberal, Malpeque, PE]

So this is something that you're endorsing and that you're willing to sign on to.

[Eric La Flèche]

Yes.

[Heath MacDonald, Liberal, Malpeque, PE]

I know that you are speaking on behalf of your board of directors. Has it been ratified at your board of directors' level?

[Eric La Flèche]

Our board is informed of these matters on a regular basis. They're fully aware that we're willing to sign this code. Yes, they have endorsed it.

[Heath MacDonald, Liberal, Malpeque, PE]

I want to go back a little bit to climate change because I think its effects are going to be an integral part—maybe not of the grocery store code of conduct, or maybe it will be—of price increases from drought in California, for example, and the rising price of romaine lettuce. We all saw that go to $8 or $9 dollars a head last year. How seriously are the grocery stores seeking information or input on these outcomes?

Where are you with that? Do you have a research team, basically, that's looking at how this is going to roll out in the future when we continuously see climate change issues around the world? Canada's not alone in this. Can you tell this committee what you guys are doing to ensure that you're very aware of what's going to take place so that your consumers won't be paying $8 or $9 dollars for a head of lettuce from California.

[Eric La Flèche]

We don't grow the lettuce; we are a distributor and a retailer. We will source products at the most effective cost possible. We're always looking for alternative sources of products, because there can be issues. There can be crop issues in certain parts of the world, so we have to seek alternative sources. Those are market prices, and it's just a fact of the business marketplace affecting commodities like that.

Our responsibility is to try to source the products at the best cost possible. That's what we try to do.

[The Chair, Liberal, Kody Blois]

We'll have to leave it at that, gentleman. Thank you so much.

It's now over to Mr. Perron for two and a half minutes.

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

Thank you very much, Mr. Chair.

Mr. La Flèche, I'd like to return to the code.

Loblaws is not at the negotiating table for the quote. When the Loblaws representatives came and testified before the committee, they told us that they felt represented by a retail organization, and by you, who were at the negotiating table.

Did you feel that you are representing Loblaws at the negotiating table?