Grocers' gargantuan profits

Since 2022, the three major chains Loblaw, Metro and Sobeys IGA have posted record profits, much higher than in the previous five years. The former stands out in particular with profits of $180 million more for this period, or an additional $1 million per day! Are grocers taking advantage of inflation to charge more?

Canada's Competition Bureau has launched an investigation into competition in the grocery industry; unfortunately, it does not have the power to demand information from companies…

In a parliamentary committee in Ottawa, the executives assured that they were not to blame, and that their profit margins had not changed. They also rejected the possibility of an anti-competitive agreement between them… The price increase would therefore not be undue.

On the one hand, it would reflect the diversity of services offered in grocery stores (clothing, pharmacy, financial services subsidiary). On the other, it would be intrinsically linked to the many global factors upstream of the supply chain: transport costs and blocked ports, lack of manpower, the fall of the Canadian dollar against the American currency, etc. Retail prices would not have increased faster than costs.

The pandemic, the war and the macroeconomic disruption they have generated, are still broad. Pointing the finger at those responsible is indeed becoming unclear. The data is not very detailed. In Quebec, a parliamentary commission is also being called for.

The cartels of bread, milk, maple syrup…

We could also talk about manufacturers in certain key food sectors in Quebec who have been accused of inflating prices and maintaining them at an exaggerated level for several years.

Grocers and bakery wholesalers actually participated in a price-fixing agreement for bread between 2001 and 2015, which resulted in $25 gift cards in 2017. All in all, a meager compensation...

Let's also talk about the milk production system capped by quotas in order to increase prices, set "in complete transparency" by the Canadian Dairy Commission. We also understand why dairy farmers, who must pay a considerable amount to obtain said quotas, cannot compete with foreign producers.

And what about the shortage of maple syrup artificially caused to drive up prices? All maple producers are subject to the rules of the Fédération des producteurs acéricoles du Québec which, in order to better control prices on the market, has created a global reserve of maple syrup to set prices and avoid discount sales following a good seasonal production.

A strange one-stop system for managing the supply of these Quebec products which increases the prices of essential foods in our famous blue basket...

Small local producers out of breath

Today, the three major grocers occupy 60% of the market. Adding Costco and Walmart, 80% of the market is held by five major players. What about the small independents and in particular, local producers?

There is undoubtedly a renewed love for our farmers and market gardeners who promote the jewels of our land. We love small markets, we want to consume local and organic, preferably. But the consumer is still far from the producer and is unaware of their realities: competition, seasonal production dependent on weather conditions, scarcity of local labor, physical, psychological and financial exhaustion, low price policy, deficient profitability... The problems of our farmers often go unnoticed behind their pretty logos and Instagrammable stands.

Raise prices? Unless they better understand the issues, consumers are already reluctant. Seek subsidies? They do not all meet real needs and prioritize technology, competitiveness and expansion rather than the preservation of agricultural land or responsible production methods.

In any case, individual and collective reflection about our mode of food consumption is essential.

The current crisis is an opportunity to question the current oligopoly, to support local producers, to embark on the path to a certain self-sufficiency and to realign our choices... for the planet, for our conscience and even for our wallet!