Agriculture committee  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.

Agriculture committee  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.

Agriculture committee  Thank you, Mr. Chair, and thank you, members, for the invitation to appear once again at this committee. With your permission, RCC will split our time. I will speak to food inflation and its causes and current trajectory. Diane Brisebois, our CEO, will speak briefly to the code of conduct, which we know to be of interest.

Agriculture committee  Pharmacies, of course, are a mixed business, because while you have pharmaceuticals—the products sold by prescription and over the counter—you also have a lot of front-of-store business, and that's an increasingly important part of a number of grocers' businesses. The other thing is that in the wake of the pandemic, you had a lot more travel.

Agriculture committee  What merchants are doing to address consumer prices is a composite picture. It's important to understand that even before the price freezes, there was a very significant discount grocery piece in the Canadian market. Obviously, we've seen a consumer shift toward that business.

Agriculture committee  Yes.

Agriculture committee  As I understand it, looking back five years, Loblaw's numbers were at 3.4%. As I look at the others, I see they're all in a range of between 2% and 4%. That's a picture across the industry on a five-year basis.

Agriculture committee  Thank you, Mr. Chair. I want to first thank the committee for this opportunity today and to express our hope that this study will properly examine the root causes of inflation, its global context and its many contributing factors. One problem with Canada's lack of modern experience with inflation is that some commentators are rushing to judgment when we would be best served by looking at the problem in all its complexities.

Finance committee  I wouldn't posit that income supports are the major driver here. I mean, there's a lot going on in the world that's driving this. It is climatic. It is, obviously, geopolitical. There are clearly some demand issues and supply problems with respect to agricultural capacity in the face of all these challenges, but I would not attribute it to the fact that there are income support programs.

Finance committee  Yes, I think if you look at—

Finance committee  You need to look back to 2017. Actually, the numbers were comparable then. If anything, there was a dip in profits in the run-in period and into the pandemic, so you'll see that actually they're quite comparable to what they've been in the past, and of course now driven by non-food items, primarily.

Finance committee  I would certainly refute those claims, based partly on the profit figures that we've just discussed. I think more responsible observers have said that recently. That's certainly true of Professor Mohanram at U of T. Perhaps I can quote directly from Sylvain Charlebois, whom you'll see shortly so you can ask him about it.

Finance committee  That's a lot to chew on. Obviously, on the Russia side, the Russian invasion of Ukraine, it's huge. Ukraine—and I'm going by memory here—is the fourth-largest exporter of wheat and the second-largest exporter of corn, but I might be off on that. Russia is definitely the world's largest exporter of wheat and fertilizer, and of course they've been playing tit-for-tat games around sanctions.

Finance committee  It's important first to put grocery profits in context. Grocers make less than 5%, typically, on their operations and 3% on average. That's a lower rate than just about any other industry. It's certainly lower than the big food manufacturers and big agriculture. Taking on the notion that this in any way represents an excess profit is a bit hard for me to absorb.

Finance committee  I don't think they are changing it in a market way. They're all looking very closely at food costs and affordability. That does factor into their mix. Again, you have to put it in perspective. You had $17.1 billion of sales in the two major grocers that have reported for the second quarter.