Ladies and gentlemen, thank you for having us here today.
Any attempt to improve food price predictability is considered a risky business at the best of times. However, the extraordinary geopolitical, economic and climatic circumstances we're experiencing these days—including the wars in Ukraine and Israel, sustained interest rate increases and climate events that undermine farm production—significantly undermine reasonable predictability in a context of global supply-demand equilibrium.
However, we believe that there are initiatives that can be introduced to support price stabilization efforts, and I will now describe them.
Consolidation has sharply restricted wholesale channels in the past 30 years or so. Since the number of independent grocery stores, affiliated owners, regional brands and co‑operatives has fallen precipitously, this consolidation has forced the industry to reinvent itself by establishing supplier relations strategies based on billing miscellaneous costs and imposing fines and penalties. This approach has inflated the revenues of retail chains in the food industry. It has also substantially increased suppliers' overheads, obviously at consumers' expense. It would have been very difficult to do that if the food trade industry hadn't become a monopoly over the years.
Now that the damage has been done, it's time to apply some remedies to mitigate the effects of that consolidation.
However, let's make one thing clear: consolidation doesn't necessarily mean competitiveness. Even if the sector is extremely competitive, consolidation has an impact on the sector as a whole. It's very important to point that out.
The code of conduct is a good first step toward resolving the power balance between big, publicly traded companies and SMEs, most of which are family operations. We must not allow the two retail chains whose representatives appeared last Thursday to scuttle this promising initiative. What those representatives said was appalling. We can't support those kinds of assumptions.
Access to a stable local market for fresh fruit and vegetable production is essential to ensuring food price stabilization, since it reduces the number of stakeholders and supply chain costs.
The ability of Quebec's fruit and vegetable producers to compete has been undermined to a troubling degree. While the business environment in Canada and Quebec should be comparable to that of our competitors in order to ensure that local businesses are competitive, that's unfortunately not the case. A study that we commissioned last year, and that was funded by Quebec's Ministère de l'Agriculture, des Pêcheries et de l'Alimentation, yielded a shocking finding: the regulatory environment is undermining the ability of Quebec fruit and vegetable producers to compete against their competitors, particularly those in the United States and Mexico.
A favourable regulatory environment for our sector is a decisive factor in businesses' ability to compete. Local products compete directly with imported fruits and vegetables, as Mr. La Flèche said a few moments ago.
The federal and provincial governments must get involved in the reassessment of risk management approaches for fruit and vegetable producers in a climate change context. All stakeholders clearly need to understand their risk management responsibilities. Wholesalers and retailers also face an increasing amount of risk. Governments need to create an environment conducive to investments that increase risk resilience and the ability to adapt and transform in response to climate shocks.
In conclusion, prices in the fruit and vegetable sector can be stabilized through fairer relationships among producers: family SMEs, the major retail chains and the wholesale industry giants. Greater fairness among producer countries engaged in international marketing, in accordance with their respective regulatory burdens, is becoming essential to ensuring our country's food security. It is unacceptable that fruit and vegetable producers are required to manage a disproportionate amount of risk in the current climate change context.
We would now like to offer a few observations.
First, if the five major food chains fail to comply with the code of conduct, we suggest that an initiative be introduced in the next few weeks leading to legislation that would provide a better framework for commercial relations. Lawyers have been in talks on the code of conduct from the get‑go. Once again, we can address the issues together with the legal experts, but we want to emphasize that they've been involved since the discussions began.
Second, we suggest that the government implement the recommendation your committee made in its grocery affordability report, that the reciprocity of standards be respected for imported products. On that point, Mr. La Flèche said that he looks for the best possible price, wherever in the world it may be. We contend that the Canadian government also has a responsibility to ensure food security for consumers by ensuring that Canadian standards are met for both local and imported products.
We would also like to see the government launch an incentive and support program for technological innovation and automation, as stated in one of the recommendations in that report.
Lastly, we recommend that the government review agricultural risk management programs in partnership with the industry and the Government of Quebec.