David Afriat Le Devoir A report by Professor Sylvain Charlebois in the fall revealed that the three big grocers have all recorded higher earnings in the first half of 2022 compared to their average performance over the past five years.
Canadian food watchers hope elected officials will apply pressure on the executives of Canada's largest grocery chains for more transparency on why they are pocketing so much money.
The CEOs and presidents of Loblaw, Metro and Empire are set to testify this Wednesday before the House of Commons Standing Committee on Agriculture and Agri-Food, which will examine the phenomenon of food inflation.
Other corporate executives have already testified before MPs, but New Democratic Party (NDP) representatives have signaled their dissatisfaction with the absence of the CEOs themselves. “Those running these companies should at least have to answer the questions about why their profits are so high and why their prices are so high,” NDP Leader Jagmeet Singh said last month.
The proposal to hear from industry leaders came from NDP agriculture critic Alistair MacGregor of British Columbia and received unanimous support from Liberal, Conservative and Bloc members of the committee.
As grocers make record profits amid high inflation, Sylvain Charlebois, director of the agri-food analysis lab at Dalhousie University in Nova Scotia, says MPs have an opportunity to demand more financial information that could shed light on what generated such profits.
A report co-authored by Professor Charlebois in the fall found that the big three grocers all recorded higher profits. high in the first half of 2022 compared to their average performance over the past five years.
Loblaw was particularly notable, according to the report, for outperforming not only its five-year average performance, but also that of each of those years individually. The grocery chain's gross profit in the first half of 2022 beat its previous best results of $180 million, which equates to about $1 million more per day, according to the research.
And although Loblaw said its earnings were driven by non-food items such as its pharmaceuticals, its financial statements do not break down margins for different categories of goods.
“I think it would be useful for the committee to dig deeper into this data for the three companies”, according to Sylvain Charlebois. But the committee will not be able to compel companies to disclose more information about their financial results.
David Macdonald, senior economist at the Canadian Center for Policy Alternatives, points out that grocers could indeed make their profits from non-food items. But “we have no way to gauge that because we can't see any of that segmented information,” he complains.
And even if profits are driven by sales of red to lips or soap, David Macdonald argues this shouldn't necessarily shield companies from scrutiny. fueling accusations of “greed”. Grocery prices rose 11.4% in January from a year earlier.
In October, the Competition Bureau announced that it was undertaking a study specifically aimed at determining whether competition in the grocery sector plays a role in driving up prices.
David Macdonald is proposing that MPs ask grocery store CEOs if they would commit to providing full access to their financial records to the Competition Bureau as he begins his study. Without such commitments, the powers of the office are very limited. “They cannot demand additional information.
A final report is expected in June, with recommendations for the Government of Canada. According to Sylvain Charlebois, the Competition Bureau could seek changes to the law that would give it more power to fight competition in the industry.
“I actually think that grocers are afraid of changes to the Competition Act,” added Professor Charlebois. He notes that it is difficult to do well in the food retail industry in Canada and that inter-provincial trade barriers are a major challenge. Such barriers can reduce competition, noting that grocery store margins in the United States are lower than in Canada.
“If there is one thing the committee should focus on, it's how we can increase competition in Canada to help consumers. »