Agriculture Committee on Feb. 6th, 2024

[Dr. Sylvain Charlebois]

Prices will rise, suppliers will increase their own prices to compensate for the additional costs, and the consumer will end up footing the bill.

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

I let you speak at length because you went straight to the point I wanted to make and that interested me. Now I’d like to come back to the code of conduct.

Even if there are no abuses related to profit margins, there can be abuses elsewhere. In that respect, the code of conduct is essential. As was mentioned earlier, everyone needs to be involved in it.

I’d like to hear your expert opinion on this.

Based on information people were willing to give us, our committee feels that Loblaws and Walmart don’t want to sign the code of conduct. Now, correct me if I’m wrong, but these two companies represent about 50% of the market.

What would happen if a code of conduct were introduced, but half the market didn’t adhere to it? How can that problem be resolved?

[Dr. Sylvain Charlebois]

In my opinion, the issue is not even up for debate: the code won’t work without the mandatory participation of all industry players. Personally, I don’t see how a code could work without Walmart and Loblaws. We need some leadership from Ottawa and the provinces. In my opinion, it’s better not to have a code at all if Loblaws and Walmart don’t participate.

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

So you don’t foresee the possibility that less willing players will come around to the code after a few months.

[Dr. Sylvain Charlebois]

No.

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

Thank you.

[The Chair, Liberal, Kody Blois]

Thank you very much.

Mr. MacGregor, you have six minutes.

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

Thank you very much, Mr. Chair.

Thanks to all of our witnesses for coming before us.

Mr. Littler, I'd like to start with you.

I understand we come to different conclusions on the nature of profits in the retail grocery sector, but in your opening statement, I think you used the words “demonization” of the industry and the fact that sometimes a cartoon caricature is used to describe grocery retailers.

You are the vice-president of public affairs, and the theme of my question is that I think those characterizations practically invite themselves. If you look at the industry, the big three in particular, if you look at the subcompanies that they hold, many of those are companies that used to be competitors and they swallowed them up. There's a definite lack of competition in the market.

Dr. Charlebois talked about the culture in the industry. We know about the bread price-fixing. We know about the recent deal between Loblaw and Manulife. They've had to climb back down from that. There's the fact that Loblaw also reduced the discounts that people were getting on same-day items and so on, and the fact that employees have had to go on strike because they can't afford to shop at the very places where they work.

I'm just wondering if you think the grocery retail industry needs to take on a little bit of responsibility for its public image out there, the perception that exists. This didn't just come about in a vacuum.

[Karl Littler]

I think there are a number of things that I would say. First, I would take issue with your characterization that it's not a highly competitive industry.

The second thing I would say is that we have had a situation in which politicians of a number of stripes, some of them very senior, and some of the punditry and particularly some of the media have made an attempt to tie in the public mind the profits of grocers with the food inflation that people are experiencing when they go to the stores. That is an entirely unfounded basis. There are those who have, through this piece, frankly, suppressed information with respect to the more general contribution. I would say that this committee in its report showed a significantly greater amount of balance, but when it comes to the Twitterverse or when it comes to some of the political statements at press conferences, there is a deliberate attempt repeatedly to try to tie food inflation to grocery operations, grocery profits and—

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

I understand that, but the basis of my question was whether you think grocers need to take a little bit of responsibility for well-documented public actions on their part. This perception didn't just occur in a vacuum.

[Karl Littler]

First, if you treat each issue discretely, I think it is reasonable that you can have a discussion about these issues.

What I'm taking issue with, and what I think those who work in the grocery industry take issue with, is the deliberate characterization of grocers by a number of political leaders as being responsible for food inflation when all of the evidence is that this is not the case. Expert bodies, including the Bank of Canada and Statistics Canada, have been very clear with commentators. Notwithstanding that, they have made repeated attempts to link grocery operations, grocery business decisions and grocery profits to food inflation, when that is a spurious connection.

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

Dr. Charlebois, on the same subject, you did make mention of the culture that exists.

Loblaw certainly had its feet raked over the coals publicly on the recent decision that they were going to reduce the discounts available on same-day sales from 50% to 30%. Can you expand a little more on the culture? To me, it appears that this company simply is unable to read the room and that there's a certain amount of tone deafness with respect to its public relations.

[Dr. Sylvain Charlebois]

I certainly share your concern.

The 50% discount became news because we actually emailed Loblaw ourselves in January because we were hearing rumours. We basically emailed Loblaw and asked if it was true that the 50% discount policy was ending at Loblaw. They confirmed that it was actually being rolled out as of January 14 of something. I asked them for permission to post the email on X. I asked them what the reason was. They basically said that they wanted to align their policy with competitors.

To me, it raised many red flags for two reasons. One, they disclosed openly what they were doing. Two, Loblaw allowed me to post the email on social media without even thinking how people would actually perceive the message itself.

I've been following the industry for 25 years. Time and time again I've been reminded of some of the issues. The blackout period shouldn't exist. There is no reason to have a blackout period. Eric La Flèche himself agreed that prices do go up in February. Our data actually shows that too.

Every time there are some shenanigans going on up the food chain, consumers end up paying for it.

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

That takes me close. Thanks.

[The Chair, Liberal, Kody Blois]

Thank you, Mr. MacGregor, for giving that 15 seconds back to the committee.

I'll go to Mr. Barlow for five minutes.

[John Barlow, Conservative, Foothills, AB]

Thanks, Mr. Chair.

Dr. Charlebois, I just want you to clarify one of your comments. On Bill C-234, you said that farmers weren't happy about that, but I think you meant the amendments that were added to Bill C-234.

Do you mind just clarifying that really quickly for the committee?

[Dr. Sylvain Charlebois]

That's right, yes. I meant the amendments, absolutely. The spirit of the bill, of course, was important, but the amendments were not good news.

[John Barlow, Conservative, Foothills, AB]

Thank you. I just wanted to make sure that was clear on the record.

[Dr. Sylvain Charlebois]

Yes.

[John Barlow, Conservative, Foothills, AB]

I just saw Mr. Currie's eyes get all red.

[Dr. Sylvain Charlebois]

It gets complicated.

[John Barlow, Conservative, Foothills, AB]

I get it.

Today at a media conference regarding food prices, the innovation minister said that we are taking some lessons from the European Union. That comment concerns me.

I just want to direct you to a column you wrote called “Farming's breaking point”. You commented about what's going on in Europe, with the demonstrations from farmers in France, Germany and other countries. You specifically talked about taxes, regulations, non-science-based decisions on pesticides and inputs.

Can you maybe comment? If Canada continues to go down this road, what could be the impact on the economic viability of farming in Canada, as related to fewer farmers and to food prices and food security?

[Dr. Sylvain Charlebois]

I wrote that piece because Europe, I think, is sending us a message. This could actually happen eventually in Canada if we continue to not listen to price-takers. Farmers do not control anything. They're very vulnerable. They need to be heard. Most importantly, they need to be understood.

I think a lot of policies out there are driven by urban centralism, if you will. In the column, I actually do mention quite a few examples of some of the things we've seen in recent years. Right now farmers are seen as part of a problem. If you don't have farmers, you don't have food and you don't have cities. I think we've forgotten about that a little bit.

It's really more about understanding farming. People love farmers, but they question farming.

[John Barlow, Conservative, Foothills, AB]

Thanks for that.

I wanted to shift to Mr. Currie. You mentioned that number. Some of your members are saying how important Bill C-234 is, that 40% of their energy bills are from carbon taxes. We've certainly had bills from across Canada showing that, in some cases, the carbon tax is actually more than the natural gas they're paying for. By increasing the carbon tax again on April 1, and quadrupling this tax over the next few years, what impact is this having on the financial health of farming in Canada?

Why is Bill C-234 so important?

[Keith Currie]

As you mentioned, the single biggest cost we have around, in particular, our heating fuels is the carbon tax. One of our board members, who resides just outside Ottawa here—and I think many of you have probably heard from him—operates Carleton Mushroom. He's going to be paying $450,000 just in carbon tax alone next year. How do you make a business case when you're paying that kind of money?

Where the impact is going to hit is that farmers are going to have to make a decision, and that decision is going to be that they're going to have to cut back on their production or maybe quit altogether. That's when you're going to start to see the impact on the food supply, which, inevitably, will have an impact on the price. We may be able to replace that supply, but it's going to be at a much greater cost, because it's not produced here in Canada. It's going to come from elsewhere.

As Dr. Charlebois mentioned, we are price-takers. We don't get to set that price for our product. For the most part, it's based on international markets, so we have to absorb all those costs. We can only absorb so much until there's a breaking point.