Canadian food watchers hope federal MPs will pressure the heads of the country’s major grocery chains to better explain why they’re pocketing so much money. For the residents of Park-Extension hammered by inflation this is an important announcement.
CEOs of Loblaw, Metro and Empire are set to testify before the House of Commons Standing Committee on Agriculture and Agri-Food, which will examine the phenomenon of food inflation.
Other corporate executives have already testified before MPs, but New Democratic Party (NDP) representatives have signaled their dissatisfaction with the absence of CEOs themselves. “Those running these companies should at least have to answer the questions about why their profits are so high and why their prices are so high,” NDP Leader Jagmeet Singh said last month.
The proposal to hear from industry leaders came from NDP agriculture critic Alistair MacGregor. He received the unanimous support of Liberal, Conservative and Bloc MPs on the committee.
As grocers make record profits amid high inflation, Sylvain Charlebois, director of the agri-food analysis lab at Dalhousie University in Nova Scotia, says MPs have an opportunity to seek more information that could shed light on what generated such profits. A report co-authored by Professor Charlebois in the fall found that the big three grocers all posted higher profits in the first half of 2022 compared to their average performance over the past five years.
Loblaw was particularly notable, according to the report, because it exceeded not only its five-year average performance, but also that of each of those years individually. The grocery chain’s gross profit in the first half of 2022 topped its previous best by $180 million, which equates to about a million more a day, according to the research. And although Loblaw said its profits were driven by non-food items such as its pharmaceuticals, its financial statements do not break out margins for different categories of goods.
“I think it would be useful for the committee to dig deeper into this data for the three companies”, according to Sylvain Charlebois. But the committee will not be able to compel companies to disclose more information about their financial results.
David Macdonald, senior economist at the Canadian Center for Policy Alternatives, points out that grocers could indeed make their profits from non-food items. But “we have no way to assess this because we cannot see any of this segmented information,” he lamented. And even if profits are driven by sales of lipstick or soap, that shouldn’t necessarily shield companies from scrutiny, the economist argues.
Corporate profits have increased significantly in 2021 and 2022, coinciding with rising global inflation and fueling accusations of “greed”. Grocery prices rose 11.4% in January from a year earlier.