The federal government will convene executives of Canada’s major grocery chains in Ottawa this fall to begin discussions on a plan to reduce the cost of food for Canadians, as inflation continues to impact bills groceries.
Businesses are tasked with developing a plan to stabilize prices by Thanksgiving, Prime Minister Justin Trudeau said as he marked the end of the Liberal cabinet retreat in London, Ont., on Thursday before the start of school parliamentarian next week.
Trudeau said if grocers fail to come up with a plan that provides “real relief” to middle- and lower-cla*s Canadians, the government will take further action to force businesses to do so.
This could include tax measures, he warned.
“It doesn’t make sense in a country like Canada that our largest grocery chains are making record profits while Canadians are struggling to put food on the table and we’re seeing record recourse to food banks,” Trudeau said.
The premier said executives from the country’s five largest grocers — Loblaw, Empire Co., Metro, Walmart and Costco — will have the best overview of their industry and what can be done to reduce costs. These five companies represent approximately 80 percent of the Canadian food market.
For months, food price inflation has outpaced overall inflation, which was 3.3 percent in July. Food inflation, on the other hand, was 8.5 percent in the same month, a slight slowdown in price growth compared to previous months this year.
Meanwhile, Loblaw, Empire and Metro reported continued profit growth in their most recent quarters. Trudeau’s announcement came hours after Empire reported that its profits were up nearly 40 percent from last year, an increase of $73.5 million. Walmart and Costco, two American companies with Canadian subsidiaries, also saw their profits increase.
“What we tell them is that enough is enough,” said Industry Minister François-Philippe Champagne. He said he expects the CEOs to be in Ottawa for discussions next week.
The minister added that the government would also take a close look at large food processors and examine how G7 allies and other international partners have addressed rising food costs to inform its discussions with Canadian grocers.
Major grocers have been accused of profiteering due to rising food prices, although executives from Loblaw, Metro and Empire denied the allegations before a parliamentary committee studying food inflation earlier this year.
Canadian companies — which also own drugstore chains and other businesses besides grocery stores — pointed to other factors within their operations to explain the profit increase, including strong sales of non-food products. Empire attributed its latest profit growth Thursday to the sale of its 56 gas stations in Western Canada to Shell Canada.
The Retail Council of Canada further argues that rising supplier costs, driven by supply chain issues and other external factors like climate change and the war in Ukraine, are behind the rising prices in grocery stores.
These suppliers should also be included in this month’s discussions, it says.
“Grocers are always willing to have good faith discussions with the government about our industry, food supply chain challenges or affordability for Canadians,” said spokesperson Michelle Wasylyshen in a press release.
“But we will get nowhere with discussions that, again and again, fail to dig beneath the surface for the real cause of rising food prices. »
An industry committee is working on a grocery code of conduct that aims to level the playing field throughout Canada’s grocery supply chain.
Last month, the Competition Bureau released a study finding that Canada’s food industry needs more competition to keep food prices low.
The largest grocers have increased revenue on food sales in recent years, the bureau said, with the three largest grocers collectively reporting about $3.6 billion in profits last year.
Grocery gross margins have increased by a “modest but significant” amount of one to two percentage points over the past five years, the study found.
Loblaw and Metro referred questions from PKBNEWS to the Retail Council of Canada. Empire did not immediately respond to a request for comment on the government’s announcement.
“We understand that Canadians continue to struggle with the rising cost of living,” a Loblaw spokesperson said in an email.
“Beyond the steps we have already taken to help, we are always open to discussions about what more can be done across the industry. »
Liberals face cost pressure
The food price plan was one of several announcements by Trudeau at the end of a ministerial retreat largely focused on addressing Canadians’ concerns about the cost of living.
Ottawa will remove the GST on the construction of new rental apartment buildings and also tells municipalities they must end exclusionary zoning and encourage the construction of apartments near public transit in order to obtain federal funding through the Housing Acceleration Fund.
Trudeau also announced that his government would extend by one year, until the end of 2026, the deadline for businesses to repay loans granted under the Canada Emergency Business Account during the COVID-19 pandemic. .
But the Canadian Federation of Independent Business said the extension it had long called for was “not enough,” noting the initial deadline for repayments that would forgive up to $20,000 of their loans was only extended by 18 days, until January 18, 2024. .
“Extending the remittance deadline by a few weeks will have very little value for the thousands of small business owners who simply don’t have the money to repay now,” said the president and CEO of the CFIB, Dan Kelly, in a press release.
Kelly said CFIB data suggests that 69 percent of small businesses in Canada that obtained loans through CEBA have not yet been able to repay any portion, and only 18 percent have fully repaid this. this month.
The Liberals have seen a drop in polling numbers that suggest to Canadians the Conservatives would do a better job of solving affordability and housing issues.
Conservative Leader Pierre Poilievre spent the summer traveling the country hammering the government on economic issues and presenting his own plan to cut costs and build more housing.
In a press release, the federal government also said it would take steps to “enhance competition throughout the Canadian economy,” giving the Competition Bureau the power to take action against companies that are working together to stifle consumer choice – specifically citing large grocery stores that have prevented competitors from setting up shop nearby.
— with files from the Canadian Press