Canadians want more food price freezes … and competition

Sylvain Charlebois

Many surveys suggest that Canadians firmly believe grocery chains are profiteering from food inflation and pushing prices higher unnecessarily. Meanwhile, many experts believe some profiteering is a reality in parts of the industry, and not just in food retail.

The reality is that food inflation is a worldwide phenomenon: Canada has the third-lowest food inflation rate within the G7+EU (9.7 per cent for February 2023), after Japan (7.5 per cent) and the United States (9.5 per cent).

However, consumer trust is critical for governments and the food industry. How much has that trust been eroded in recent months?

While the Competition Bureau is currently studying the food industry and will table its report in June, the Standing Committee in Agriculture and Agri-Food in the House of Commons (in which many experts have participated so far, including the top CEOs of major grocery chains in Canada) is investigating food inflation.

Working with Caddle, our Lab at Dalhousie University conducted a cross-national survey at the end of March 2023, which included 9,884 respondents, a massive sample. With this investigation, we looked at how Canadians saw CEOs’ performances when they testified before the Standing Committee in Ottawa. We also looked at which factors Canadians believe contribute the most to food inflation, and what can be done about it.

We first asked if respondents have been following the recent parliamentary committee hearing on agriculture, where the leaders of Canadian grocery chains were defending themselves regarding food inflation. Only 35 per cent said that they have been following the proceedings.

Of those Canadians who did follow the proceedings, only 32.9 per cent felt grocers were either very convincing or convincing during testimonies. The majority remained unconvinced. Only 24.7 per cent felt grocers were transparent and forthcoming enough about the data they shared. So, in general, Canadians were not overly convinced by grocers.

While grocers are heavily criticized, answers are slightly more varied when asked to choose one factor contributing to higher food prices. A total of 30.3 per cent of Canadians think grocery chain price gouging is the main reason food prices have been rising in Canada recently. A total of 29.9 per cent believe inflation (or monetary/fiscal policies) is the main factor for higher food prices. In fact, both Quebec and Saskatchewan are the only provinces where the highest percentage wasn’t grocer price gouging but rather inflation/monetary/fiscal policies. A total of 36.1 per cent of Quebecers believe monetary policies are the main factor for higher food inflation, and 32.1 per cent of people in Saskatchewan think the same.

We asked questions about what grocers can do to help consumers. While 46.6 per cent would appreciate more price freezes, 44.2 per cent expect more transparency related to food sales specifically. While 36.4 per cent of respondents wish loyalty programs would be more generous, a total of 33.4 per cent of respondents would like more competition in Canada.

We asked questions about what governments can do. A total of 44.0 per cent of respondents believe that governments should intervene and regulate the price of some staples at the grocery store. Only 19.1 per cent believe government should implement a windfall tax. A windfall tax would be levied by the government on unexpected profits or gains that are not part of a company’s normal business operations.

A total of 4.5 per cent of Canadians believe the government should create a crown corporation and start its own grocery chain. Can you imagine seeing the government run its own grocery chain? The government already runs a crown corporation which competes with banks in the agri-food sector. It’s called Farm Credit Canada. So, it’s not impossible.

The survey asked specifically about the proposed “Grocery Code of Conduct,” for which we should get an update from Minister of Agriculture Marie-Claude Bibeau in April. We asked if Canadians were supportive of the “Grocery Code of Conduct,” which would lessen the influence of some major grocers and help independent grocers and processors. Of Canadians aware of a “Grocery Code” (n=3366), 68.1 per cent support such a code. The province with the highest percentage of support is Nova Scotia, where 76.5 per cent of respondents support the Code, followed by British Columbia with 74.5 per cent. The lowest levels of support are in Prince Edward Island (53.2 per cent) and Manitoba (64.2 per cent). These are surprising results, higher than expected.

The Grocery Code of Conduct is not just a set of rules; it’s a lifeline for Canadian shoppers. It ensures fair pricing, transparency, consistency, and accountability from retailers, giving consumers the peace of mind they deserve when purchasing groceries.

In a nutshell, this survey showed that a good number of Canadians understand the real issues in our Canadian food economy, and we shouldn’t rely on social media to judge how Canadians understand how food prices are set. We simply need more competition and more protection for consumers. While we need a practical Grocery Code of Conduct, we also need to make Canada a more attractive place to invest.

Dr. Sylvain Charlebois is senior director of the agri-food analytics lab and a professor in food distribution and policy at Dalhousie University.

OPINION TEASER: Canadians want food price freezes … and competition

Many surveys suggest that Canadians firmly believe grocery chains are profiteering from food inflation. The reality is that food inflation is a worldwide phenomenon