AGRI Committee Report

Grocery Affordability: Examining Rising Food Costs in Canada

Supplementary Report of the New Democratic Party of Canada

Right to food:

New Democrats fully support the recommendations contained in this report and reiterate that the Government of Canada must implement measures to tackle food price inflation, with an emphasis on corporate greed as a major driver of inflation, and we call on the Government of Canada to act in recognition of Canada’s own domestic food policy, in addition to its international obligations to a right to food.

We offer the following additional comments and recommendations to supplement the report, to further the goal of easing the burden of rising food costs.

Canadians are being asked to pay more and more to feed themselves and their families, while massive corporations are being allowed to profiteer from their suffering.

MP Alistair MacGregor, NDP Critic for Agriculture and Agri-Food, and Food Price Inflation, proposed a recommendation to the Government of Canada as part of the committee’s final report, calling for the right to food to be enshrined in Canadian law. Unfortunately, it was not the will of the majority on the committee to accept this recommendation.

In its Food Policy for Canada, the Government of Canada has already outlined sustainable food policy is an important hallmark of a healthy society. In its guiding principles, the policy identifies “A food system that supports social, cultural, environmental, and economic sustainability,” further specifying that decision-making with respect to food systems should include consideration toward “…the protection of basic rights, and the availability of opportunities that support equitable outcomes.”[1]

In addition to its own domestic policy, Canada also has international obligations under the International Covenant on Economic, Social and Cultural Rights (ICESCR). Article 11 of ICESCR recognizes the right of everyone to an adequate standard of living “…including adequate food, clothing and housing, and to the continuous improvement of living conditions. The States Parties will take appropriate steps to ensure the realization of this right, recognizing to this effect the essential importance of international cooperation based on free consent.”[2] The ICESCR obliges Canada to respect, protect, and fulfil the right to food. This means that Canada must not interfere with access to food, must ensure that third parties do not inhibit access, and must take positive steps to facilitate its availability.[3]

On March 20, 2023, in his testimony before the committee, Mr. Neil Heatherington, CEO of Daily Bread Food Bank, the largest food bank in Toronto, said in his opening statement regarding the right to food and the duty of policymakers: “We recognize that with rampant inflation the government will be cautious on spending and stimulating the economy, but we are proposing a measure to support those in deepest poverty.

The Daily Bread Food Bank and food banks across the country are already at a breaking point. We are bracing for another rise in food bank visits. In fact, this past April, Statistics Canada indicated that one in five Canadians said that they are going to have to rely on community, on food charities, on family and on friends to be able to get by.

Charities can't meet this need. We need all levels of government to come together to act to ensure that Canadians can afford to put food on their tables… I'm in the business of begging; I'm a charity. Thank you for indulging me on that.

Finally, I want to leave you with a quote from Bryan Stevenson, the civil rights lawyer, who said that the opposite of poverty is not wealth, but justice.

You, as duty bearers in positions of power, have the opportunity to spread justice through making sure that every single Canadian has their right to food realized.”[4]

Therefore, the New Democratic Party recommends:

That the Government of Canada acknowledge its obligation as a party to the International Covenant on Economic, Social, and Cultural Rights to respect, protect, and fulfill the human right to food by adopting a framework law that would enshrine this right in Canadian law and require the federal government to legislate binding, specific, and measurable targets towards realizing the policy outcomes it set out in 2019 in “The Food Policy for Canada”.

Corporate greed:

The New Democratic Party also wishes to emphasize the role that corporate greed plays in increasing food price inflation.

During his appearance before the committee on February 13, 2023, Dr. Jim Stanford, Economist and Director of the Centre for Future Work, testified that:

“Greed is not new. Greed long predates the pandemic, but greed has had a good run in Canada since the pandemic. After-tax profits in Canada during the pandemic or since the pandemic have increased to their highest share of GDP in history. Amidst a social, economic and public health emergency, companies have done better than they ever have.”[5]

In response to a question from MP MacGregor regarding the oil and gas sector’s net profit margin having increased by 1,011% since 2019, and its possible impact on food prices, Dr. Stanford went on to say:

“At the top of the list, there's no doubt about it, is the oil and gas sector. The excess profits earned there since the pandemic account for about one-quarter of the total mass of profits across the 15 sectors I identified in that work. The increased prices that embody those huge profit margins then trickle through the rest of the supply chain. Food processors have to pay that, so they have higher costs, nominally, but then they add their own higher profit margin on top of that. The same goes for the food retail sector. By the time the consumer gets it, there's been excess profits added at several steps of the whole supply chain. That magnifies the final impact on consumer price inflation.”[6]

Also, during the committee meeting of February 13, 2023, Dr. D.T. Cochrane, Economist and Policy Researcher with Canadians for Tax Fairness, testified in the conclusion to his opening statement regarding excess profits:

“I will finish by advocating two tax measures to address this situation.

The first is a minimum tax on reported profits. If we had a 15% minimum tax on the profits that corporations report to their shareholders, the 10 largest oil and gas companies would have paid a combined $3.6 billion instead of nothing.

The second is an excess profit tax, which reduces the incentive to hike margins at every opportunity. The revenue from an excess profit tax could be redistributed to Canadians to help cover their increased costs of living.”[7]

In response to a question from MP MacGregor about how Parliamentarians can tackle affordability issues for working families, Dr. Cochrane added:

“You need to start intervening in this redistributive struggle, with the winners being those who have always been the winners. The pandemic has just amplified the amount they're winning. We are going to see a massive worsening of inequality after a short-lived improvement in it, in part because we almost had something close to a guaranteed annual income that was supporting a huge swath of Canadians, and now that money is trickling upwards into the accounts of the already ultra-wealthy, in part because of huge increases in corporate profit margins that we ultimately all pay for.”[8]

On October 24, 2022, 19 days after the committee adopted the motion introduced by MP MacGregor to study the issue of food price inflation, the Competition Bureau of Canada announced plans to undertake its own study to “examine how governments may combat grocery price increases through greater competition,”[9] entitled: Competition in Canada’s Grocery Sector.

On its website page dedicated to this Market Study Notice, the Competition Bureau outlined the Purpose of the Study, which includes:

“Grocery prices in Canada are currently increasing at their fastest rate in the past 40 years. While the Canadian economy is generally in an inflationary period, grocery prices are increasing at an above-average rate. Through this study, the Bureau hopes to examine how governments could act to combat grocery price increases by way of greater competition in this industry.”[10]

On June 7, 2023, the Bank of Canada announced it would raise interest rates by a quarter of a percentage point, to 4.75%, listing corporate profits as one of four key areas it will be assessing, including corporate pricing behaviour, stating: “Governing Council will continue to assess the dynamics of core inflation and the outlook for CPI inflation. In particular, we will be evaluating whether the evolution of excess demand, inflation expectations, wage growth and corporate pricing behaviour are consistent with achieving the inflation target.”[11]

It is important to note, as has been acknowledged within the committee’s report, that the phenomenon of food price inflation is not limited to Canada. Other jurisdictions have undertaken their own steps to examine grocery price increases amid excess profits by large corporations.

The United States Federal Trade Commission launched an investigation into nine large retail corporations on November 29, 2021, to “shed light on the causes behind ongoing supply chain disruptions and how these disruptions are causing serious and ongoing hardships for consumers and harming competition in the U.S. economy.”[12] That investigation remains ongoing.

In November 2020, the New Zealand government asked the New Zealand Commerce Commission to conduct a study into “whether competition in the grocery sector is working well, and if not, what can be done to improve it.” On March 8, 2022, the Commission published its findings, including that “competition is not working well for consumers in the retail grocery sector and recommended a suite of changes to increase competition and help improve the price, quality and range of groceries and services available to New Zealanders.”[13]

Therefore, and without prejudice for any findings or recommendations the Competition Bureau of Canada may recommend to the Government of Canada, and without pre-supposing any actions the Bureau may take of its own volition in the event evidence of wrongdoing is uncovered with respect to the Competition Act, the New Democratic Party recommends:

That the Government of Canada consider introducing a windfall profits tax on large, price-setting corporations to disincentivize excess hikes in profit margins.