March 20, 2023

Skyrocketing food prices and record profits raise questions about Canada’s ‘cosy oligopoly’ | CBC Radio

Current56:45Exploding food prices – and who or what is to blame

Read the transcribed audio

As food prices rise, Toronto resident Jason Gemmill meticulously plans his family’s meals a week in advance, using apps to sniff out food before heading to the grocery store.

“I’ll go through the local brochure for the store we’re going to and see what’s on sale and it’ll tell you the meal options,” Gemmill said. Current Matt Galloway.

“Sometimes something unusual comes up that we have to pay whatever price – but typically it’s a sale,” he said.

Gemmill and his wife both work and budget $110 a week on food to feed themselves and their two children, 11 and 15.

Although included Current on a recent shopping trip, he noticed the price add vegetable oil and meat. But even with a carefully planned shopping list, she had to return the pepperettes she bought in her children’s lunch boxes because the store’s price was higher than advertised.

“The app lied to me, we’re not going to buy them today. Like these are $11 … double digits is a little much for something like that, so we’re going to skip it this week,” he said.

SEE | Food prices continue to rise in Canada

There will be no relief in food prices, although general inflation is showing signs of slowing down

Food prices in Canada rose the fastest since 1981, even as the latest figures from Statistics Canada show headline inflation has slowed for a third straight month.

Food prices continued to rise in September at inflation is 11.4 percent, even as Canada’s headline inflation slowed for the third month in a row. According to figures from Statistics Canada, food inflation is double the rate of headline inflation and the fastest rate of increase since August 1981.

Economist Jim Stanford said several factors are contributing to the rise in prices: supply chain disruptions during the pandemic; the effects of climate change on agriculture; and the impact of the war in Ukraine on energy prices.

“Then on top of that there’s a big layer of cream that the supermarkets themselves collect. Food retail revenues have grown very, very strongly compared to the times of COVID,” said Stanford, an economist and director of the center. To the Work of the Future.

In the last quarter that ended, Canada’s three largest grocery chains have all done their post profits increase by tens of millionscompared to the same period before the pandemic in 2019.

While not all of these profits come from food sales, the numbers have bolstered allegations of profiteering against Loblaw Companies Ltd. (which operates Loblaws, Zehrs, No Frills and Real Canadian Superstore); Metro Inc. (which owns the Metro, Food Basics and other brands); and Empire Co., (owner of Sobeys, IGA, Safeway, Farm Boy, Foodland, FreshCo and other brands).

Current requested multiple interviews with executives from Loblaw, Metro and Empire. All requests were denied.

Stanford said grocery chains are seeing increased costs from manufacturers and suppliers, who are also making increased profits on average. But he argued that some large grocery chains are “passing the cost — and then some” on to consumers.

“I’m not saying their greed caused the whole problem … but their greed is certainly present in the increased profits they’re making through this inflationary period.”

“Nice Oligopoly”

Stanford described Canada’s supermarket industry as a “nice oligopoly,” or a market dominated by a small number of suppliers.

“The big three chains have a dominant market share and have the ability to exercise pricing power not only over consumers, but also over their own suppliers and employees,” he said.

SEE | Do the Grookaupa giants guarantee us?

Do the Grookaupa giants guarantee us?

Sylvain Charlebois, director of Dalhousie University’s Agri-Food Analysis Laboratory, says the costs of the big grocery chains have rightly risen, but the industry as a whole is taking a lot of heat from consumers due to higher food prices.

Such market concentration can often lead to higher prices, said Phoebe Stephens, an assistant professor of food security and sustainable agriculture at Dalhousie University.

“When you have few players, companies can respond to each other’s price increases rather than competing with them,” he said.

On October 17, the Federal Committee on Agriculture recently passed a motion calling for an investigation into grocery store profits — the CEOs of the three big chains could appear before the committee to answer questions.

Canada’s consumer watchdog, the Competition Bureau, also announced Monday that it will explore the fieldmeasures to improve competition in the sector.

Current requested an interview from the Competition Authority, but the request was rejected – as was Finance Minister Chrystia Freeland’s request for an interview.

Why do we have the necessary pricing of life in our economy based on what private business thinks they can sell it for?– Jim Stanford

Simon Somogyi, a University of Guelph food business professor and Arrell director, said “it’s hard to say definitively” whether the big chains have taken advantage of widespread inflation to charge customers more.

Understanding overall profitability would require looking at individual products, supplier costs and margins to understand the profit margins generated, he said.

“It’s not available in the public domain and studies should be done to see exactly what it is,” he said.

Somogyi is not convinced that the FCA can make a huge difference, but believes it is an opportunity to look at skyrocketing profits and the impact on consumers in many sectors.

“Will the competition agency be able to bring in more grocers? No. Will it be able to set prices for consumers? No,” he said.

“But it would be good if it looked at profitability in different types of companies because … this is not just an isolated case. It’s a trend.”

SEE | The Finnish Competition Authority is investigating the rise in the prices of daily goods

The Finnish Competition Authority is investigating the rise in the prices of daily goods

Canada’s consumer watchdog says it is investigating competition in the food industry and whether adding more retail competitors could slow price increases. But some industry experts say the problem goes deeper than how many grocery chains there are.

Powers to dissolve companies

Stanford said the spike in corporate profits, even as consumers struggle, also raises bigger questions.

“The reality is that we have an economic system where we allow private companies to charge what the market will bear. And some people think that’s natural and healthy. Some people think it’s greedy,” he said.

“I think we should ask a fundamental question: Why do we have the basics of life in our economy priced according to what private business thinks they can sell it for?”

He hopes the powers of competition regulators will be strengthened, including “penalties for collusive behaviour, but also for things like breaking up big companies that have too much power”.

He also wants people to be protected from inflation when it happens, by keeping wages in line with rising prices and by providing income support programs for low-income households.

And if necessary, through taxation, “take some of those profits and give them back to consumers whose higher-than-normal payments explain those profits,” he said.

“I think there are many different ways to do it. None of them are easy, none of them are magic bullets.”

With files from CBC Business. Voiced by Amanda Grant, Anne Penman, Kate Cornick and Brianna Gosse.

#Skyrocketing #food #prices #record #profits #raise #questions #Canadas #cosy #oligopoly #CBC #Radio

Leave a Reply

Your email address will not be published. Required fields are marked *