(Ottawa) The Loblaw grocery chain denies that it takes advantage of inflation to reap profits. Its president and CEO, Galen Weston, did not testify as part of the parliamentary inquiry into rising food prices on Monday, contrary to the request of the New Democratic Party (NDP). The company instead sent its vice president of finance for retail, Jodat Hussain, to answer questions from elected officials.
“In our company, I’m in the best position to talk about inflation and how it affects our financials,” Hussain replied when NDP MP Alistair McGregor asked him why the Loblaw big boss didn’t stop. no space.
He testified before the House of Commons Standing Committee on Agriculture and Agri-Food.
“Basically, the price of groceries has gone up because the cost of products that grocers are buying from vendors is going up,” he explained. He added that the profit margin on “every product sold” is less than 4 cents. He did not, however, indicate what the profit margin was for food only.
He explained rising food prices by the rising cost of basic ingredients like flour, sugar and oil on world markets, as well as rising labor costs.
Mr. Hussain said Loblaw had objected to about half a billion additional costs in 2022 by negotiating with its suppliers. “Some negotiations are more difficult,” he said, citing the dispute with Frito-Lay, which deprived the grocery chain of several brands of potato chips for three months.
Large retailers “abuse”
Professor Sylvain Charlebois, who directs the Laboratory of Analytical Sciences in Agrifood at Dalhousie University, in Nova Scotia, pleaded for a code of conduct in the food industry, which must unveil one within a month.
“Many Canadians are unaware of the fact that in the food industry, suppliers have to pay grocers to do business,” said Charlebois.
These fees are usually justified by merchandising costs and shelf space, but that has changed in recent years.
“Companies like Loblaw, Walmart and Metro abuse and some levies were imposed quickly in a casual and unilateral way,” said the professor. It is now more difficult in Canada for processors and independent grocers to compete. »
According to him, the Competition Bureau is failing in its duty by accepting certain large acquisitions which have reduced the number of chains in competition, hence the need for a code of conduct for grocers. He believes it could “change the culture” of the industry where “vertical coordination and collaboration barely exist”.
“A code can neutralize power relations within the chain, stabilize retail prices, emphasize consumer value and innovation, improve the security of the country’s food supply and encourage investment in the agribusiness sector,” he explained.
The parliamentary inquiry into food prices was set up at the request of the NDP. The left-wing party argues that the big brands have made “enormous profits” over the past year while the wages of their workers and the prices paid to agricultural producers are not increasing at the same rate.
A report from the universities of Guelph, Dalhousie, Saskatchewan and British Columbia on food prices predicts that the cost could rise another 5-7% in 2023, which would equate to an annual increase of more than $1,000 for a family of four people.