Yahoo Finance NDP to call for grocery profit probe amid allegations of 'corporate greed'
The federal New Democrats want the government to look into Canada’s major grocery chains to find out whether corporations have been taking advantage of inflation to turn a profit amid rising food prices.
New Democratic Party agriculture critic, Alistair MacGregor, plans to table a motion during a Wednesday agri-food committee meeting to propose a parliamentary committee investigation of “profit-driven inflation” in the grocery sector.
“We are seeing pretty substantial corporate profits in the sector and we are also seeing major food price increases on stuff that Canadian families rely on each and every week,” MacGregor said in an interview.
Meat prices are up 6.5 per cent from last year, dairy up seven per cent, baked goods up 15.4 per cent and fresh fruit up 13.2 per cent, according to the latest consumer price index.
“Corporate grocery chain profits hit $3.5 billion while nearly a quarter of Canadians report going hungry,” the NDP said in a press release Tuesday.
NDP members have been trying to pin rising food costs on grocery chain CEOs, blaming “corporate greed” for driving inflation as prices increase at the fastest pace in decades.
Party leader Jagmeet Singh has taken to Twitter recently to call out the grocers. In response to a Financial Post report in which Empire Co. Ltd. boss Michael Medline said concern about grocery profits amid inflation was misguided, Singh took aim at Medline.
“The CEO of Sobeys, Michael Medline made $8.6 million last year — 15 per cent more than the year before,” Singh wrote on Sept. 16, accusing the chief executive of taking away workers’ hero pay during the pandemic.
Medline, who heads Canada’s second-largest grocery chain, had said during the company’s annual general meeting on Sept. 15 that assertions that big grocers exploit inflation for profit is “absolutely not true” and come from lazy “armchair quarterbacks” who know little about the food business.
“These reckless and incendiary attacks are meant to divide us, and sit in stark contrast to the collaboration and problem solving that we experienced in the darkest moments of the pandemic,” the chief executive said.
Empire, which runs 1,600 stores under the Sobeys, Safeway, FreshCo, IGA and Farm Boy banners, reported net income of $187.5 million in its most recent quarter, a slight change from the $188.5 million reported a year earlier.
Loblaw Companies Ltd., Canada’s largest food retailer, reported on July 27, that its profit margins got better in the second quarter, but stressed that the improvement wasn’t coming from food sales. Its net earnings were $428 million in the recent quarter, down $6 million from last year.
While corporate profits have not changed significantly since the recent bout of inflation took hold, MacGregor said there has still been an increase and CEOs have made some record bonuses as well.
“Corporate greed is cruel and it must be confronted with a windfalls tax forcing CEOs to pay what they owe,” Singh wrote in another Twitter post on Monday in which he outlined price increases for items such as bakery goods, fresh fruit and pasta.
MacGregor said a windfall tax would aim to level the playing field for sectors that have been posting significant profits over the past few years. He mentioned that some European countries have also explored the use of an excess-profits tax and that Canada employed one during the Second World War.
“It’s really just a way of trying to level the burden and try to plug some of that revenue back into areas where we need it because of the fact that so many Canadian families are struggling right now,” he said.
Last week, the Bank of Canada acknowledged that while trends in Canada’s headline inflation were heading in the right direction, the pace of price increases was still too high.
The inflation rate cooled for the second month in a row in August, running at an annualized pace of 7.0 per cent, which is down from July’s reading of 7.6 per cent. This deceleration in the consumer price index was the largest since early in the COVID-19 pandemic, Statistics Canada said last week.
The price of groceries surged 10.8 per cent from the year before, the fastest pace since 1981, which the agency said was driven by extreme weather, higher input costs and the disruption of supply chains caused by Russia’s invasion of Ukraine.
“The price of food is sky-high and the wealthy CEOs of huge grocery chains are seeing record profits and millions of dollars in bonuses,” MacGregor said.
The recent inflationary environment is not the first time the grocery industry has been put in a spotlight during the pandemic.
Canada’s top three grocers — Loblaw Companies Ltd., Metro Inc. and Empire — had come under fire after simultaneously cancelling their $2-per-hour “hero pay” bonuses for front-line workers on June 13, 2020.
The extra pay was rolled out by all major grocery brands in March 2020 for store clerks and warehouse staff who continued showing up to keep supermarkets running in the first few months of the pandemic.
Wednesday’s agriculture committee meeting is expected to focus on global food insecurity, with executives from Cereals Canada, the Canola Council of Canada and the Canadian Federation of Agriculture among those set to testify.
• Email: dpaglinawan@postmedia.com | Twitter: denisepglnwn
