Before a federal parliamentary committee looking into food inflation, representatives of Loblaw and Empire Company (IGA) said Monday they were doing everything in their power to keep prices as low as possible.
“Grocery prices have increased because the costs of products purchased from our suppliers have increased. We are negotiating for the best possible costs, and through those negotiations, we’ve saved nearly half a billion dollars in incremental costs this year,” said Jodat Hussain, vice president of finance for Loblaw, which notably owns the Provigo and Maxi banners.
Mr. Hussain touted his company’s price freeze on No Name products, as well as the record number of loyalty points awarded to customers. To justify the price increases, the vice-president cited fuel prices and labor shortages, while the Retail Council of Canada added the war in Ukraine and the weather to the list of guilty.
The committee, made up of federal MPs, was sitting the same day an annual report concocted by researchers from several universities was released that found the price of food is expected to rise an additional 5-7% in Canada in 2022. A recent study by Statistics Canada also found that average grocery store profit margins fell from 2.2% in 2020 to 3.5% for the first three quarters of 2022.
A strong code of conduct for the grocery sector would be a step in the right direction.
When the MPs present pointed to Loblaw’s record profits, which were, for example, 30% higher in the third quarter of 2022 compared to the same period in 2021, the company representative stated that the increase in its margin profit in recent years was due to the sale of non-food products, such as cosmetics, particularly in Pharmaprix. Mr. Hussain says the profit margin for food is “stable”, but he would not divulge that figure.
MP Ryan Turnbull asked if Loblaw couldn’t do more to help Canadians. Couldn’t the company, for example, take advantage of the higher margins on the side of pharmacies to reduce those of grocery stores? Mr. Hussain rather expressed a desire to continue the actions already undertaken.
Empire’s chief operating officer, Pierre St-Laurent, said retail price increases were necessary to maintain profitability. He said Empire’s profit margin remained almost the same at 2.6%, which is low within its industry and compared to the majority of other industries.
He said, “2.6% profit, I don’t call that exaggerated. »
Losses on the producer side
Farmers, for their part, are going through difficult times. According to a survey conducted by the Fruit and Vegetable Growers of Canada among its members, the majority of respondents have not been able to pass on to their selling prices all the increased costs, in particular those of fertilizers, transport, fuel and labor.
The director general of the organization, Rebecca Lee, also denounced the overlapping of audits on labor and food safety, as well as the lack of government support for the carbon tax.
“You have to ensure that risks, costs and gains are spread throughout the supply chain. A strong code of conduct for the grocery sector would be a step in the right direction,” said Ms.me Lee.
Discussions are underway within the industry to establish a code of conduct aimed in particular at making relations between suppliers and grocers more transparent, stable and fair, said Michael Graydon, chief executive of the association food, health and consumer products in Canada. Mr. Graydon also asked the federal government to support the digitalization of supply chains and to process more quickly the files of new immigrants who wish to come to work in his sector.