Agriculture Committee on Feb. 6th, 2024

[Dr. Sylvain Charlebois]

In my personal opinion, I think we need to be in lockstep with our trading partners. We could actually really hurt.... I think we are hurting farmers. I think Bill C-234 was not welcome news for the farming community. Mr. Currie would speak to that for sure.

We need to think about processing. A lot of processors are suffering. The RCC mentioned that costs are going up in retail and distribution, which is absolutely true. Now we're seeing more investment in the middle mile. Metro and Loblaw are all investing in the middle mile, which is great, but it's happening really quickly.

[Leah Taylor Roy, Liberal, Aurora—Oak Ridges—Richmond Hill, ON]

The speed of the change is what you're referring to—very good.

Have you done any work on looking at the impact of climate events in Canada on food costs? I'm talking about anywhere in the chain, but particularly the farmers. The droughts we've had recently and the flooding, the forest fires....

Have you had any kinds of estimates done on what those are adding to food costs or to farmers?

[Dr. Sylvain Charlebois]

Every year, when we write “Canada's Food Price Report”, climate change is the number one factor. It's the wild card. For a few years, it was COVID and climate change. Climate change is really a big factor. It doesn't mean that it will drive prices higher; it makes things more unpredictable.

I think the focus of this committee in looking at food price stability is to look at price volatility, and not necessarily food inflation. We need inflation to grow the economy. Demonizing inflation, to me, is a waste of time. We need to focus more on price volatility, and climate change certainly does that.

[Leah Taylor Roy, Liberal, Aurora—Oak Ridges—Richmond Hill, ON]

It increases the volatility.

You said climate change would not necessarily drive prices higher.

[Dr. Sylvain Charlebois]

Not always, no.

[Leah Taylor Roy, Liberal, Aurora—Oak Ridges—Richmond Hill, ON]

But they—droughts, floods and things like that—are not going to lower prices, obviously, when we're....

[Dr. Sylvain Charlebois]

Sometimes environmental conditions are favourable to production. We see that.

[Leah Taylor Roy, Liberal, Aurora—Oak Ridges—Richmond Hill, ON]

Has there been an occurrence of that in the last five years in Canada?

[Dr. Sylvain Charlebois]

We can't forget that we're doing a lot of research to help farmers grow more. Yields are going up and all of that. We need that research to continue. In lockstep with what's been happening with climate change, we've actually been supportive of the industry to cope with climate change overall.

[Leah Taylor Roy, Liberal, Aurora—Oak Ridges—Richmond Hill, ON]

Okay. That's great. Thank you very much.

[The Chair, Liberal, Kody Blois]

You still have about a minute if you'd like to use it, or you can share your time.

[Leah Taylor Roy, Liberal, Aurora—Oak Ridges—Richmond Hill, ON]

That's great.

I would love to go to Stacey Taylor and ask about that question of volatility. I saw something about food prices being calmer next year. Perhaps you could comment on that and why you think that is the case.

[Stacey Taylor, Member, PhD Candidate, Agri-Food Analytics Lab, Dalhousie University, Agri-Food Analytics Lab]

Absolutely.

When we are doing our forecasts, what we're essentially using is all of the available information at the time. We run all sorts of different scenarios so that we can try to predict what is going to happen. Because we have a lot of unknown unknowns—to borrow from a well-known phrase—we try to estimate what could possibly happen, along with the data for what has actually already happened. That's how we're creating our food price predictions for next year, and how we always have.

Now, one thing that we have a challenge with is that we have limited Statistics Canada data. For example, when we're looking at the north, we have information for the Northwest Territories and the Yukon for food. We have nothing for Nunavut. It is also very limited. If it's going to be on a Canada-wide basis, it really needs to include all of Canada. The north is a very important part of our country. We need to have much more visibility of what challenges they are facing versus the rest of Canada.

[The Chair, Liberal, Kody Blois]

Okay. That does take us—

[Leah Taylor Roy, Liberal, Aurora—Oak Ridges—Richmond Hill, ON]

That's good to know.

Thank you.

[The Chair, Liberal, Kody Blois]

All right.

Mr. Perron, you have six minutes.

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

Thank you very much, Mr. Chair.

I’d like to thank the witnesses for taking the time to join us today.

Mr. Charlebois, my first question is for you and I’ll try to ask it quickly.

You mentioned that, according to your studies and analysis, saying that large grocers are profiteering is simply populism. Can you expand on your reasoning?

How do you explain the big numbers we’re seeing? Indeed, we’ve been shown huge figures. So it’s easy to hop on the bandwagon.

[Dr. Sylvain Charlebois]

It’s quite simple.

In fact, I agree with the Retail Council of Canada representatives that food inflation has been politicized. To politicize food inflation, you use big numbers to represent profits in dollars.

For our part, we’ve published three reports on greedflation and we’ve shown that gross profit margins have remained roughly the same over the past five years. We believe this is an important metric to look at, because it’s about calculating revenues minus product costs. So, when costs change upstream in the chain, we see it. It’s a fairly clear indicator.

The other thing to consider is food product sales. Food products need to be separated from pharmaceutical and cosmetic products. Increases in food sales rarely exceed food inflation. There have been two or three cases: at Metro, it’s happened a few times, as it has at Loblaws. But generally speaking, over the past three years, it’s been very rare. So, these companies make a lot of money selling something other than food.

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

That’s what they told us too.

The only problem for us parliamentarians trying to study the issue is that we can’t obtain figures and a breakdown of the data because those grocers are in competition.

[Dr. Sylvain Charlebois]

That is a separate problem.

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

We then asked them to provide the Competition Bureau with their figures, and they said they would. However, when we subsequently received the Bureau’s report, we discovered in the first few pages that the grocers had not provided their figures.

In a way, they’re courting trouble.

[Dr. Sylvain Charlebois]

Some are more transparent than others, incidentally.

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

That’s right. I’m editorializing a bit, but I think you and I agree on that. They’ve got work to do on that front. By the way, I’m glad you mentioned the Competition Bureau.

I’d also like you to comment on the latest media appearances by the Minister of Innovation, Science and Industry, in which he asks our committee to recall the CEOs of the major grocery stores even though we already met with them last spring.

Do you think that could lead to anything, ultimately? Have you seen any results from their appearances, as someone who monitors prices on an almost daily basis?

[Dr. Sylvain Charlebois]

In fact, I accompanied Minister Champagne to the meeting of the five major distribution stakeholders held in October in Ottawa. I was asked to give a presentation. I talked about important issues, such as the code of conduct and the well-publicized price freeze period. In my opinion, certain practices are obsolete. In particular, the industry’s pricing culture needs to be addressed. We saw that with bread, and there are suspicions about other products too. But I don’t hear the Minister addressing this in his message. The Minister talks about shrinkflation, deskilling and that sort of thing, but I think we need to go further. The issue of profits, in my opinion, distracts from the real problem that needs to be addressed, which is volatility.

I’ve produced a chart for you. I didn’t mention it earlier, but this table clearly shows that prices are much more volatile between November and February, and have been for 30 years. We’ve done the analysis over 5 years, 10 years, 15 years, 20 years and 30 years. Over the last 30 years, November, January and February have been the most volatile months. May is also volatile. Why is that? Because of the fees. In my report, I’ve provided a letter from Loblaws informing suppliers that, as of April 28, fees will increase. What do you think will happen?

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

Prices will rise.