For over two years, the soaring cost of food has been making headlines – and giving Canadians headaches. Many reasons have been given for the increase, including COVID-related supply chain disruptions and labour shortages, changes in consumer purchasing patterns, poor weather in some growing regions, tariffs, higher input costs, higher wages, the falling Canadian dollar, higher interest rates, climate change, high oil and gas prices and the war in Ukraine. And the stories have named those people who Canadians hold most responsible for actually raising their prices: Canada’s big grocery chains.
Major Canadian grocers have faced accusations of profiteering as food prices have climbed. In Sept. 2023, Global News reported that, for months on end, food price inflation had outpaced overall inflation while, at the same time, Loblaw, Metro and Empire – which operates chains including Sobeys, Safeway and FreshCo – had reported continued profit growth in their most recent quarters.
The leaders of Canada’s major grocery chains appeared in March 2023 before a parliamentary committee studying rising grocery prices. At that hearing, the CEOs and presidents of Loblaw, Metro and Empire insisted that increased food prices weren’t caused by profit-mongering and that their profit margins on food-related profits have remained low. The companies — which also own pharmacy chains and other businesses in addition to grocery stores — cited other factors to account for increased profits, including strong sales of non-food items. The federal government summoned the grocery chiefs back in fall 2023 to begin discussions on a plan to lower food costs.
Let’s start by examining some of the stated reasons for the increase.
COVID-related supply chain disruptions and labour shortages – The COVID-19 pandemic disrupted food supply chains when it shut down huge chunks of the economy. This reduced the supply of food which led to price increases as per basic supply and demand economics. One way labour shortages affected prices also has to do with supply and demand but also something else: the war in Ukraine.
When the war in Ukraine interrupted global supplies of grain, that increased prices due to less supply. That gave Canada, a major grain producer itself, a chance to step up and fill the gap, with an April 2023 Global News story quoting a National Bank report citing “unprecedented” demand for the country’s agricultural products. The Global story also cited a report released by RBC’s Climate Action Institute warning “a looming wave of retirements among Canada’s farm operators and shortages of skilled workers who could replace them is set to crash down on the country’s agricultural sector”. The RBC report said two of every five farm operators in Canada will retire over the next decade – and two thirds of producers also don’t have succession plans in place. Mohamad Yaghi, RBC’s agriculture and climate policy lead, said disruptions like those caused by the Ukraine war “show the need for Canada to build out and reinforce its agricultural production in the decade to come as the world needs a reliable source of crops to keep food affordable as the global population grows.”
Changes in consumer purchasing patterns – According to the November 2022 Statistics Canada report Behind the Numbers: What’s Causing Growth in Food Prices, “when goods rise in price, consumers tend to alter their purchasing behaviors in response to relative price movements. Consumers may purchase less of a given food item, omit the purchase entirely, or purchase a cheaper food product.” So when one food item increases in price it can cause other items to also increase in price as more consumers buy them as lower priced alternatives.
Higher input costs – The same StatsCan report also said, “Commercial farming requires the usage of machinery, labour, and energy to produce food products and transport them to retailers. Energy prices surged in early 2022, due partly to the Russian invasion of Ukraine, and reduced oil output from oil-producing nations. In August 2022, [ammonia and chemical fertilizer] prices remained elevated 42.8% year over year, and up 95.8% compared with January 2020. Volatility in the fertilizer market is linked to the price of natural gas, which is a central component for nitrogen-based fertilizers. Temporary closures of fertilizer plants in Europe, alongside reduced output due to sanctions against Belarus and Russia (the two nations produce 40% of the global potash market, a component in some fertilizers) led to reduced supply, contributing to higher prices.”
The Retail Council of Canada which “advocates for retailers in Canada through effective advocacy, communications and education” argues rising supplier costs such as these are what’s driving increased prices at the grocery store.
Canada’s Food Price Report 2023 published by Dalhousie University and the universities of Guelph, Saskatchewan and British Columbia says, “Although there is not currently any evidence to suggest that there is abuse by grocers, almost 80% of Canadians claim there is abuse in the system.” This may be because Canadians remember when Canada’s Competition Bureau caught grocery retailers apparently fixing bread prices in 2016. In 2018, the Competition Bureau alleged at least $1.50 was artificially added to the price of a bread loaf during the 16-year conspiracy involving Canada’s largest bakery wholesalers and grocery retailers. Or maybe it’s because Canadians are asking why the big grocers didn’t use some of their profits from non-food items to reduce food prices…
Canadians could also be wondering why major grocery stores have responded to increased shoplifting with more security instead of lowering their prices in recognition that people steal food because they don’t have enough money to buy it.
And one reason people may not have enough money takes us back to businesses’ claims of a worker shortage. This idea has been challenged suggesting that the issue may not simply be that there aren’t enough available workers – but that there aren’t enough available workers willing to work for the low wages many businesses are offering.
In the May 2023 CTV article StatsCan report casts clouds on claims of a widespread labour shortage in Canada, Jim Stanford, an economist and the director of the Centre for Future Work, says the report busts “long-standing myths” about labour shortages in the country. “If you were really short of labour, and you couldn’t find someone to do that minimum wage job at a McDonald’s restaurant, then why aren’t they either increasing the wage or trying to replace the work with machinery?” Stanford asked. He said neither are happening, which suggests employers in general are quite happy with the current state of affairs.
So what explains the high number of job vacancies? The article quotes StatsCan’s Rene Morissette saying that, for low-skilled industries, businesses may be choosing to keep wages low and accept higher vacancy rates. “For employers that have negligible training costs, a human resource strategy that combines relatively low wages with high worker turnover and some vacancies might actually … maximize profits.”
Which begs the question: have you been seeing lots of new faces at your local grocery store?
Another question is, if more and more low wage, non-unionized workers are saying no to low wages we must wonder whether they have been inspired by the many striking unionized workers – from government employees to Hollywood writers – who have made headlines over the last two years.
In June 2023, Canada’s Competition Bureau released its report on competition in the grocery industry with one of the recommendations being a voluntary grocery code of conduct. But the idea that the people caught supposedly fixing bread prices will voluntarily do anything that could reduce their profits seems unlikely.
I haven’t seen any studies about the impact of high food prices on Black Canadians but considering Black folks are over represented among low income and poor people we can safely assume it’s not good. What I have seen is police cars outside my local grocery store more frequently and always wonder if they’re there to arrest someone who has been reduced to shoplifting to feed themselves and their families.
So what can people do? Well, one thing they can do is to complain to their grocery store about them implementing anti-shoplifting measures instead of using their non-food items profits to lower prices. They can also complain if the stores are implementing their new security measures inconsistently – like my local Loblaws. Sometimes they check receipts. Sometimes they don’t – and that creates fertile ground for the kind of anti-Black discrimination which would violate Ontario’s Human Rights Code.
It’s time for a food fight!