An oligopoly is driving up grocery prices. What can we do?

Ryan Labatiuk, a resident of Prince George, BC, is on disability benefits. Recently, it has been getting harder for him to stretch payments to cover his daily needs. As he told CKPG Today, he has seen some frozen meals jump by $4 in a year and smaller portions for the same amount of money (or more). He also goes to the food bank more often.

Labatiuk is not alone. Recent data shows there are millions of people with similar experiences. In 2023, a shocking one out of every five people in Canada were food insecure — defined as having a lack of access to food, or concern over lack of food access. Severe food insecurity — when people miss meals and sometimes go days without food — rose by 50 per cent.

These are tough times.

Well, not for everyone. The Globe and Mail reported that Per Bank, the new CEO of Loblaw Companies Ltd., made $22 million from two months of work in 2023 — including an $18 million signing bonus. That’s 500 times more than the yearly median income in Canada.

With inequality like this, it’s understandable that people are getting frustrated. On May 1st 2024, a Reddit group called “Loblaws is out of control” called for a month-long boycott of the company and its many stores, including Shoppers Drug Mart, No Frills, Provigo and Maxi.

Responding to the boycott, Per Bank dryly remarked to The Globe and Mail that “they can choose to shop elsewhere tomorrow, if they don’t like the offer that we’re giving.”

Not only does this come across as out of touch, it’s a classic example of deflection from the real issue: life in Canada is increasingly unaffordable.

Why is this happening?

Galen Weston Jr., Loblaw’s president, blamed suppliers, who forced “unjustified” price increases on the company. Others, like the Conservatives, blame the carbon tax for raising prices. In a report, the Centre for Future Work found that there is an infinitesimally small correlation between carbon pricing and inflation — just 0.15 per cent.

Climate change, however, does play a significant role. For instance, ‘just-in-time’ multinational supply chains are particularly vulnerable to shocks such as extreme weather and other disruptions, as was seen during the pandemic. Droughts, floods and other crises linked to climate change destroy crops the world over. Then, because food — a human right — is considered a commodity, supply disruptions lead to speculation by investors and prices spike even higher. These costs are passed on to consumers, but they have nothing to do with carbon pricing.

Blaming the carbon tax is a useful talking point to distract people in Canada from the role of corporate-dominated global supply chains in climate change and the real causes of food price inflation.

When prices spike, corporations take advantage. According to Statistics Canada, food prices were twice as high as the overall inflation rate — which was at its highest level in almost 40 years. Meanwhile, since 2020, Canadian food retailers have nearly tripled profit margins and doubled profits — making $6 billion per year.

It’s not difficult to do the math.

This is called “greedflation” — companies taking advantage of inflation to raise prices even higher.

Food retailers also use sneaky tricks like shrinkflation (shrinking the amount of product sold while keeping the price the same) and skimpflation (replacing ingredients with cheaper options) while hoping that the consumer won’t notice. But, often, they’re doing it right out in the open, by charging extravagantly more for basic goods.

Meanwhile, Canada’s top three food retailers (Loblaw, Sobey’s and Metro) control 57 per cent of food sales. Loblaw alone takes home 27 per cent. Costco and Walmart are next in line at 11 per cent and 7.5 per cent respectively, according to 2022 statistics.

And with 90 per cent of people in Canada living within 10 km of a Loblaw-affiliated store, many simply don’t have an alternative. No, Per Bank, we can’t just “choose to shop elsewhere tomorrow.”

Even the federal government acknowledges Canada has a food retail oligopoly. No one should be able to profit exorbitantly from basic needs such as food, let alone when many people have nowhere else to shop.

We need real action

Where's the leadership? Instead of a voluntary code of conduct and courting more multinationals into the Canadian grocery sector, the government should consider strengthening laws against cartels and monopolies and outlawing shrinkflation and skimpflation.

It could also put maximum prices on basic foods. This is not as extreme as it sounds: it's a common practice in countries such as India and was recommended by some of the most well-respected economists following the Second World War. The government could also impose “windfall taxation” to limit greedflation.

Critically, we need to see serious action to address food insecurity. Income has to match the cost of living. People such as Ryan Labatiuk desperately need adequate income that could be provided through policies that include strengthened disability & child supports, increased minimum wages and a minimum income floor. The evidence is abundantly clear that these are the most efficient and cheapest ways to eradicate food insecurity.

Why stop there?

The problem with our grocery sector isn’t just that we have a few bad apples — it’s that the whole basket is mealy and past expiry date.

Many people in Canada want a different food system. In a 2023 survey, Statistics Canada found that 86 per cent of Canadian consumers want locally produced food. A 2020 McGill University study found that 89 per cent of respondents think "substantially developed" local and regional food systems would be more reliable. To respond to this overwhelming enthusiasm for building genuinely resilient food systems, the government needs to support holistic approaches, such as food coops, public markets, Indigenous foodways and publicly-run non-profit grocery stores.

What’s being done?

The federal government hasn’t been entirely inactive. Last year, MPs grilled the CEOs of big retailers, including Galen Weston Jr., during a House of Commons committee studying food prices. The retailers drafted the previously mentioned voluntary and unenforceable grocery store code of conduct, a response which is totally inadequate. A voluntary code of conduct lacks teeth because it’s not binding, and while handing out subsidies to multinational supermarkets may put a small dent in prices, it will also reinforce a corporate food system that is already rigged against shoppers and farmers.

Meanwhile, Loblaw boycott organizers’ demands include reducing prices by 15 per cent, freezing them for 2024 and putting a price cap on essential goods. Though they might not be making a significant dent in Loblaw’s profits, they are certainly tarnishing its public image — evidenced by a recent poll that found that 70 per cent of respondents were aware of the boycott and 60 per cent supported it. Organizers of the boycott have also set up a website, altgrocery.ca, that provides information on small grocers you can shop at as an alternative to the Big Three.

The boycott has focused the country on the affordability crisis and the role of corporate profiteering. However, the responsibility for change does not fall on the consumer, but rather those in government, who are ultimately the ones with the tools to curtail corporate greed.

Reigning in corporate profiteering, curtailing oligopolies, building holistic approaches to food provisioning and supporting incomes to match the cost of living are the real changes we need.

On May 30 at 1 p.m. EST, Food Secure Canada is hosting a webinar titled "Greedflation: The role of large corporations in food price inflation and what can be done about it." You can register here.

Marissa Alexander and Wade Thorhaug are co-Executive Directors of Food Secure Canada. Marissa has spent most of her career exploring the intersections of food security, equity, and social justice. Wade Thorhaug has extensive experience advocating for affordability in northern Canadian communities, local Indigenous food systems, and a rehaul of Nutrition North Canada.