EDITORIAL: Out of touch politicians will never solve grocery prices

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This article was published 05/03/2024 (762 days ago), so information in it may no longer be current.

If you’re looking to our political leaders to figure out how to lower grocery prices, you’re probably not in luck.

But despite their lack of accomplishments on the subject to date, many are practicing their empathetic looks and assuring Canadians they know how to fix the problem.

Luckily none of them have tried to convince Canadians that they truly know what it feels like to walk the aisles of their local grocery store, wondering how they’ll afford the basic necessities, whether meat can even be on the menu, or how they’ll explain to their kids that they can’t have the same school snacks as their peers.

NDP leader Jagmeet Singh came the closest, telling reporters that at one time in his early 20s he took in a younger brother as his dad struggled with addiction. At that time he said grocery store aisles were stressful places.

Both Conservative leader Pierre Poilievre and Liberal Prime Minister Justin Trudeau grew up with no money concerns whatsoever.

MP salaries begin at about $190,000 with Prime Minister Justin Trudeau earning double that amount and Poilievre coming in at close to $280,000.

It’s doubtful they even have to take on their own shopping, let alone worry about how to pay for it.

But that hasn’t stopped them from coming up with theories about the cause of grocery inflation.

Costs have been increasing but so have profits.

Loblaw Companies Ltd., which includes the grocery retailer as well as Shoppers Drug Mart and PC Financial, reported annual profits last week of $2.1 billion, up from $1.9 billion the year before.

Poilievre has repeated many times that the cause of inflation is the carbon tax.

There’s no doubt that is a contributor, but it’s difficult to know how much.

Conservatives present a convincing argument that because carbon tax is charged at every stage of production, the end user pay a greatly inflated price.

Farmers pay carbon tax on their fuel which not only operates all their equipment but also brings inputs like seed and fertilizer to their farm. They pay again while heating their buildings and harvesting their crop and then when they take it to the elevator. That tax is paid for all transportation, including the diesel that operates trains, heating and processing at factories and the inevitable fleets of trucks that take the finished product to retailers.

Yet the Bank of Canada has estimated the carbon tax increases inflation by a mere 0.15 percent.

Turns out their assessment only considered three components of the Consumer Price Index – natural gas, heating oil and gasoline – which are retail taxed items. It did not take into account second round or pass-through effects across the entire supply chain, something pointed out by Sylvain Charlebois, senior director of the agri-food analytics lab and professor in food distribution and policy at Dalhousie University.

So indeed, elimination of the carbon tax would help, the question remains of course, of how much?

Singh has promised to take on big companies and has brought forward a private member’s bill which aims to bring down the cost of basic essentials.

This passed second reading with support of Conservatives and Bloc Quebecois MPs.

Liberals however have opposed the bill that proposes stiffer penalties for price and wage-fixing. It would also set rules to prevent mergers that Singh believes lead to abuse.

Again this is a great step forward and it’s to the Liberals shame that they refuse to support Canadians in this way.

The Liberal solution is bizarre to say the least.

Industry minister Francois-Philippe Champagne said he is reaching out to international grocers to urge them to come to Canada.

Would more competition help? No doubt it would. Canada’s grocery stores are mostly owned by large companies such as Loblaw Companies, Sobeys Inc., Metro Inc. and of course Walmart.

So far no attention has been brought to what’s actually best for consumers and communities.

Local grocers would be preferred, though very few exist anymore as they simply can’t compete with the large companies who control the entire chain from production to retail and purchase their products for less than an independent grocer could sell them for.

But we do have cooperatives who continue to survive and even thrive in many areas.

These cooperatives are owned by their customers who benefit from their success. If a Co-op earned a higher profit than they planned for, that money goes back into the pockets of their members.

They also have an outsized effect on their community when it comes to supporting local charities and events.

It is important to note that large grocers also make a big contribution to their community as well, supporting local foodbanks and Christmas cheer boards as two examples.

But nothing has more impact than a local cooperative.

What would happen if tax breaks were given to these stores and incentives offered to have them establish in food deserts in our communities?

There is no single solution to increasing grocery costs, and counting on those who make three and four times the average Canadian salary, (pegged at somewhere around $65,000 in 2023) to solve this, may be an exercise in futility.