2023-12-15 05:00:14
The sequence of events is emblematic of the bad times we are going through. Monday, in the House of Commons, the first director of Metro, Eric La Flèche, testified for the second time before the Standing Committee on Agriculture and Agri-Food (AGRI), where we were still looking at the evolution of food prices in Canada.
The crazy price of groceries continues, from coast to coast. And while people are slowing down, the big grocers continue to see their profits increase. A recent report you Center for Future Work tells us that, for 2023, large grocers will share net profits of $6 billion. This represents an increase of 8% compared to last year, and approximately double the profits we made before the pandemic.
Meanwhile, food insecurity figures depict an increasingly dire situation. In Quebec, according to the 2023 Hunger Report, one in ten people have used the services of a food bank in the last year, a proportion never seen before. In addition, the portrait of people who use emergency food aid is changing. More and more workers, people who, in principle, belong to the middle class, are forced to turn to these services.
To the point where, according to a survey by the Léger firm conducted at the beginning of December, one in three Quebecers experienced at least one episode of food insecurity in the last year. In 2020, it was one in five people. It was already too much, but we must still stop for a moment to assess the significance of such data and recognize the alarming nature of such a meteoric rise in hunger in the province.
Thus, before parliamentarians in Ottawa, Eric La Flèche showed himself to be very concerned regarding the impact of the increase in food prices. He assured that Metro was doing everything in its power to offer the best prices to its customers — while maintaining that the increase in prices is entirely attributable to the increase in supply costs. We do everything we can, said La Flèche.
The MPs sitting on the committee were not fooled. The CEO of Metro was questioned as much regarding the transparency of price-setting mechanisms in stores as regarding the oligopolistic tendencies of the market and the apparent contradiction between the “efforts” to control prices and the record profits generated by the big grocers.
La Flèche defended itself with the consistency of a metronome: our profit margins are not increasing, our market is fiercely competitive, companies have all the incentives to compete on prices, we are open to collaborating with decision-makers and we understand that more and more people are counting their pennies to fill their grocery carts.
NDP MP Alexandre Boulerice, visibly annoyed by this rhetoric of impotence, bluntly asked the Metro manager if he found it normal that his total annual remuneration – a little more than $5 million before bonuses – represents approximately 155 times the salary of a cashier at Metro.
Slight uneasiness, deviated question and obvious answer: you know, it’s competitive remuneration on the market for business leaders, I can’t do anything regarding it, Eric La Flèche roughly summed up. His entire intervention might basically be summed up as this: it is the market which sets the rules, we are only neutral agents who deal with external and immutable constraints. Move along, nothing to see. Our hearts go out to consumers during these difficult times.
Then, the economist and director of the Center for Future Work, Jim Stanford, came to bring some order to this speech by presenting the conclusions of his report on the profits of large grocers. He first explained that the current slowdown in inflation had not been enough to slow down the rise in food prices, which is continuing. He then pointed out that increased profits at the food sales stage had contributed and still contributed measurably to inflation in food prices in particular, while intensifying general inflation.
As for the profits made by the big grocers, his conclusion was clear: “Elementary mathematics refutes the assertion of the CEOs of the supermarkets according to which they have only passed on the increase in the cost of inputs to consumers”, he decided.
A sector simply cannot double its profits by doing only that, he explained, adding that the argument of low profit margins – which La Flèche had just mentioned – was often misunderstood by the general public. Low margins on items sold, he specified, do not tell the whole story of a company’s profitability. This does not represent its ability to otherwise generate spectacular profits, profits which might be used, we deduce, to moderate the rise in prices despite the low margins, if we really wanted to.
This fall, in a somewhat theatrical gesture, the federal Minister of Industry, François-Philippe Champagne, formally summoned the major grocers to a meeting to discuss the measures to be taken to counter the rise in food prices. At the end of this meeting, everyone committed to doing their best to offer the best prices to the consumer. Wishful thinking is not enough. Without stronger political intervention, food insecurity will continue to grow in the country.
Columnist specializing in environmental justice issues, Aurélie Lanctôt is a doctoral student in law at McGill University.
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