Grocery chain CEOs fielded tough questions from MPs at a parliamentary committee meeting attempting to get to the root of why Canadians are facing such high food prices.
Across the food and beverage industry, net income has more than doubled, and this is reflected in the balance sheets of all three companies under scrutiny at the committee, said Liberal MP Ryan Turnbull.
Loblaws’ net earnings went from just over $1 billion in 2019 to $2.2 billion in 2022, and Empire Co.’s net earnings went from $387 million in 2019 to $746 million in 2022, Turnbull said.
“I think it's fair to say Canadians feel like the doubling of your profits has been literally at their expense.”
The CEOs and presidents of Loblaw Cos. Ltd., Metro Inc. and Empire Co. Ltd. — the latter of which operates supermarket chains including Sobeys, Safeway and FreshCo — testified at the Standing Committee on Agriculture and Agri-Food on Wednesday evening. Grocery prices were up 11.4 per cent this January compared to a year ago, Statistics Canada recently reported.
NDP Leader Jagmeet Singh came armed with a massive stack of papers containing questions from “more than 2,000 Canadians” struggling with food prices for the three CEOs of Canada’s main grocery chains, in particular, Loblaw CEO and chairman Galen Weston Jr.
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“Your company is making $1 million in profit a day in excess profits,” Singh said to Weston, who appeared as a witness before the committee. “No one feels sorry for your profit margin… How can you look a family in the eyes and tell them that that's OK? What you’re doing is OK?”
Singh attended the meeting in place of the party’s agriculture critic, Alistair MacGregor.
Michael Medline, CEO and president of Empire, sat beside Weston while Metro CEO Eric La Flèche appeared virtually.
All three witnesses told the committee it is incorrect to suggest grocers are responsible for high food prices. In his opening remarks, Medline said Empire is operating on “paper-thin profit margins of 2.5 per cent” and pointed to inflationary pressures like geopolitics, extreme weather events, labour shortages and rising costs for fuel, energy and construction.
In one exchange, Singh repeatedly asked Weston: “How much profit is too much?”
The CEO responded: “Reasonable profitability is an important part of operating a successful business,” arguing $1 of profit on a $25 basket of groceries is reasonable.
“It's not just about profit; it doesn't go to me,” said Weston, pointing to reinvestment in the supermarket and creation of new stores and jobs.
In 2021, Weston’s pay package included a $730,546 salary, a $2.17-million bonus and share and stock option awards valued at $2.47 million, the Globe and Mail reported in April 2022. Earlier in the meeting, Turnbull said Loblaw increased its quarterly dividend payments to shareholders.
“To claim that supermarkets and other firms are innocent conduits merely passing on higher costs is empirically false,” said Turnbull, quoting Canadian economist Jim Stanford.
Turnbull said a “cloud of doubt” has lingered over food retailers and their claims to be good corporate citizens since the Competition Bureau announced an investigation into years-long bread price fixing involving the Canada Bread Company, George Weston, Loblaws, Sobeys, Walmart, Metro and Giant Tiger stores. The investigation is ongoing, and La Flèche told the committee he is offended by the allegation Metro was involved in that scandal.
Canada’s Competition Bureau launched a study on grocery store competition and food prices in October. Weston, Medline and La Flèche said they have provided the necessary financial information to the bureau.
Weston Jr. told the committee in his opening statement that “it's the efficiency of our business and the strength of categories like cosmetics, even cough and cold, that have been driving our growth, not food.”
Bloc Québécois MP Yves Perron wants the committee to see a more comprehensive breakdown of the companies’ profits by food and pharmacy products to understand why profits are up.
Perron made the case that greater transparency of grocers’ profit margins would help Canadians better understand the situation, instead of only being able to look at overall profit.
The MP for Berthier-Maskinongé repeatedly asked the three CEOs if they would consider providing the committee with more detailed financial data so members can determine how much of the companies’ profit is coming from grocery products versus pharmaceuticals, apparel and other categories. He acknowledged the need for the companies to keep certain information confidential for competition purposes, but implored the CEOs to try to find a way to shed some light on this question for parliamentarians.
Medline and La Flèche both questioned why the committee wasn’t scrutinizing any large American companies. In response, committee members unanimously agreed to invite Horacio Barbeito, president and CEO of Walmart Canada, and Pierre Riel, executive vice-president and COO of Costco Wholesale International, to testify.
Conservative MP Lianne Rood grilled the grocery chain CEOs about the “fees and penalties” Canadian farmers are subjected to and how this affects them, citing a survey by the Fruit and Vegetable Growers of Canada that found 44 per cent of producers are selling at a loss.
—With files from The Canadian Press
Natasha Bulowski / Local Journalism Initiative / Canada’s National Observer
"He acknowledged the need for
"He acknowledged the need for the companies to keep certain information confidential for competition purposes"
Uh, what competition? They're an oligopoly who get together with each other to fix prices--we know for sure about the bread prices, but why would it stop there?
Unless the testimony is under
Unless the testimony is under oath, nothing the companies say can be relied upon.