Food inflation: are the chains really to blame?

Food inflation: are the chains really to blame?

during the show facts first broadcast at ICI Première, three invited experts recognized that high prices lead to difficult situations for households.

Pierre-Antoine Harvey, an economist at the Institute for Socioeconomic Research and Information (IRIS), defended the study published by his organization earlier this week, which claims that the profits of large supermarket chains have more than doubled in the last year. .

: in the current context, these are not [les bannières en alimentation] that seem to be suffering from inflation”,”text”:”One thing is certain: in the current context, these are not [les bannières en alimentation] they seem to be suffering from inflation”}}”>One thing is certain: in the current context, these are not [les chaînes de magasins d’alimentation] they seem to suffer from inflationdeclared.

Even according to Mr. Harvey, the beneficiary base of the big chains more than double in the first six months of 2022all with record win rates that we didn’t even see before the start of the COVID-19 pandemic.

The economist acknowledges, however, that it is impossible to distinguish the origin of the price increases that have led to food inflation higher than general inflation for more than a year.

For his part, Stéphane Lacasse, director of public affairs and government relations for the Quebec Food Retailers Association, responded that food store operators have seen revenue growth that% and 3%, but expenses also increase: maintenance costs, rent, salaries –there is a shortage of personnel, like everywhere… If my supplier sells me the product 10, 11% more expensive, I have to make my store profitable”,”text”:”varies between 1% and 3%, but expenses also increase: maintenance costs, rent, salaries, there is a shortage of staff, like everywhere. .. If my supplier sells me the product 10, 11% more expensive, I have to make my store profitable”}}”>varies between 1% and 3% but expenses also increase: maintenance costs, rents, salaries, and there is a shortage of personnel, as everywhere… If my supplier sells me the product 10 or 11% more expensive, I need make my store profitable.

Mr. Lacasse also said that he could not comment on chains in general, but recalled that they often own pharmacy chains, which would be great sources of revenue.

The Metro chain also owns the Jean Coutu pharmacy chain.

Photo: Radio-Canada / Ivanoh Demers

The big companies in the field of food, Mr. Lacasse also underlined, are publicly traded and accountable to their shareholders.

Stable profit margins?

For his part, Sylvain Charlebois, professor of distribution and agri-food policies at the Dalhousie University School of Management and Agriculture, recalled that although the food inflation rate actually fluctuates around 11% in the country, Canada is much better than several other G7 countries.% in the US”,”text”:”It’s 13% in the US.”}}”>It is 13% in the United States.he pointed.

Mr. Charlebois is also against the IRIS study on the profits of supermarket chains. Based on work done a few months ago, the professor argued that profit margins for Canadian grocers have been the same for five yearsThat’s it2 and 4%”,”text”:”between 2 and 4%”}}”>between 2 and 4%.

% in 2022 doesn’t look like a 2 at all% in 2017.”,”text”:”The amounts are increasing, but 2% in 2022 is nothing like 2% in 2017″.}}”>The amounts are increasing, but 2% in 2022 does not seem like 2% in 2017 at all.

Another fact worth noting, Professor Charlebois pointed out: Statistics Canada recently indicated that the amounts spent on food products in grocery stores fell by more than 4% over a one-year period, and therefore that the volume of sales of said products has decreased substantially.

It is not necessarily in retail where there are problems, but there is a problem within the chain. [d’approvisionnement]. »

a quote from Sylvain Charlebois, professor at Dalhousie University

To this, Pierre-Antoine Harvey offered an explanation: Food sales are actually going down because, during the pandemic, we hardly went to restaurants anymore, we went to grocery stores; but there, there is a return to life in restaurants. It is normal for sales to drophe has said.

What solutions?

Although they do not necessarily agree on the causes, the three experts believe that the Competition Bureau’s investigation into the practices and profits of large food chains called for this week by a unanimous resolution adopted in the House of Commons is one thing. good.

To these voices are added those of François-Philippe Champagne and André Lamontagne, Federal Minister of Innovation, Science and Industry and Minister of Agriculture, Fisheries and Food of Quebec, respectively.

François-Philippe Champagne is standing behind a lectern.

Federal Minister for Innovation, Science and Industry, François-Philippe Champagne

Photo: Canadian Press/Justin Tang

Both men welcome the celebration of this investigation; Mr. Champagne also indicated that he had just returned from Washington, where he rightly raised the issue of big international brands, such as Nestle and PepsiCo, having inflated his profit margins.

we met, [la vice-première ministre] Chrystia Freeland and I, the Retail Council of Canada to ask him what he could do, and I hope that other retailers will follow Loblaw’s example.declared.

In fact, this company recently announced a price freeze on its No Name products for several weeks. The Metro network responded by announcing a similar decision while noting that this practice was already commonplace, which Loblaw denied.

And even the impact of this measure seems uncertain; if he has the support of the Minister of Champagne, Stéphane Lacasse, of the Quebec Food Retailers Association, says he fears that in the event of a price war between the big brands, it will be the small retailers, even the small suppliers, who suffer

Could Ottawa intervene more directly to prevent excessive price increases? You will understand that there is no one who has the regulatory power to set prices, but I think we still have influence if we all denounce togethermentions François-Philippe Champagne.

In Quebec, Minister Lamontagne also acknowledges that the government does not have the power to intervene directly to freeze or fix prices.

Close-up of André Lamontagne in a hallway.

André Lamontagne, Minister of Agriculture, Fisheries and Food of Quebec

Photo: Canadian Press / Jacques Boissinot

What it proposes, however, is the creation of a “code of conduct” to which producers, suppliers and retailers adhere to in order to guarantee good relations between all these actors.

Always according to Mr. Lamontagne, representatives from all the provinces and from Ottawa would be members of the group in charge of designing this code of conduct, whose first draft would be outlined in November.

However, Minister Lamontagne did not want to specify whether this code of conduct would have a normative basis, which would therefore imply consequences if a partner deviates from it. The partners have to be willing and the partners have to want it to work betterjust said.

Meanwhile, both Quebec and Ottawa, as well as several experts, are awaiting the conclusions of the future investigation by the Competition Bureau.

However, this organization would not be perfect, Sylvain Charlebois argued, as it is the same regulatory body that allowed Loblaw to buy Provigo in 1998, Metro to buy A&P in 2005 and Sobeys to buy Safeway in 2013.years, that brought us to the current situation”,”text”:”the three main transactions, in 30 years, that brought us to the current situation”}}”>the top three transactions, in 30 years, that have gotten us to where we are todayhe said.

About 80% of the Canadian grocery market today is owned by five major brands, including Loblaw, Metro and Sobeys.

#Food #inflation #chains #blame

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