Grocery Basket | The Loblaw/Provigo blunder

In a world where facts are often overshadowed by sensationalism, encouraging competition and implementing a fair code of conduct in the Canadian food industry should become our shared aspiration for 2024.

Ottawa recently received some somewhat restrictive witnesses. During the deliberations of the Parliamentary Agriculture Committee, some individuals chose to favor their own hidden interests rather than helping our elected officials understand the complexity of food prices and the necessary actions to take.

In particular, an economist seemingly more interested in sensationalized headlines and media attention made dramatic claims about “record and excess profits” in the grocery sector for 2023. These “excess profits” quickly became apparent. part of the favorite slogan of those seeking to arouse animosity towards corporations. His argument was based on Statistics Canada data, which includes convenience stores and specialty stores as a whole, and not just the large food distributors which include Loblaw/Provigo, Metro and Sobeys/IGA. The sensational amount of $6 billion quickly spread across the media, causing considerable harm.

The companies’ audited financial statements show that net margins, a valuable measure of whether a company is exaggerating, remain at 3 or 4 percent, consistent with the five-year average for the Big Three in food retailing.

Unfortunately, we should not expect an apology from this economist. He seems determined to deceive Canadians by insisting that profits should continue to rise due to inflation, while resorting to catchy headlines and scare tactics, which, unfortunately, are proving effective with of a population that is not always well informed. This was the reprehensible use of a platform to promote political and anti-corporate ideas – a complete and dishonest disappointment.

Loblaw/Provigo also made some dubious claims during its visit to Ottawa regarding the potential implications of a code of conduct for distributors. Pushed by columnist Marie-Eve Fournier from The Press, Galen Weston, CEO of Canada’s number one food retailer, admitted on December 23 that the Australian example used to justify its refusal to sign the code of conduct was inaccurate. Previously, the CEO of Loblaw/Provigo expressed concerns to federal officials that the current code of conduct could potentially increase food prices by $1 billion, arguing that in Australia, the third party responsible for enforcing the code favored suppliers demanding higher prices, which would harm consumers. None of these claims were true.

At least Loblaw/Provigo finally admitted its mistake, although it was December 23 when most of us were busy with holiday preparations.

Setting aside Loblaw/Provigo’s failed attempt to hinder industry efforts to implement a more disciplined and fair code of conduct, Ottawa’s main goal should be to promote competition.

The key is to provide consumers with more choice and make the Canadian food market more attractive to foreign investors. The code of conduct should be a mechanism run by independent, non-governmental third parties, allowing companies to resolve disputes related to contract terms rather than prices per se. Currently, when food distributors unilaterally increase listing and marketing fees charged to suppliers, manufacturers in turn increase prices to compensate for these higher fees set by distributors. This creates a cycle that ends up affecting consumers, often without them being aware of it.

Only the establishment of a code can ensure that food prices become more stable over time. In countries like Ireland, Australia and the United Kingdom, where such a code exists, the increase in food prices, adjusted for inflation between 2013 and 2023, has been negative, while the increase in Food prices in Canada, adjusted for inflation over a decade, reached 8.9%. While a code of conduct cannot completely stem food inflation, it will help coordinate the industry vertically and resolve market turbulence, often triggered by factors like climate change and geopolitics, leading to market volatility. prices passed on to consumers.

Ottawa should force all parties, including those opposed to the code like Loblaw/Provigo and Walmart, to respect the code of conduct. This should be the common goal of all Canadians for 2024.


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