CHARLEBOIS: Ottawa wants answers on food prices. It may not like what it finds
Sylvain Charlebois writes, "For years, Canadians were told many times grocers alone were responsible for rising food prices. The reality is far more complicated and far more uncomfortable."
By: Sylvain Charlebois
Sylvain Charlebois is director of the Agri-Food Analytics Lab at Dalhousie University, co-host of The Food Professor Podcast.
Ottawa is once again examining whether a lack of competition across Canada’s food supply chain is contributing to persistently high food prices. The Competition Bureau has launched a comprehensive review stretching from farm inputs to grocery store shelves, with a report expected in 2027. The review is long overdue, but Canadians should temper their expectations. Competition matters, but it is only one piece of a much larger affordability puzzle.
The Bureau intends to investigate whether dominant players in production, processing, distribution, and retail are limiting competition; whether restrictive property controls and exclusive agreements are blocking new entrants; whether interprovincial trade barriers and municipal regulations are increasing costs; and whether large retailers possess excessive bargaining power over suppliers. It is also looking at practices such as loyalty programs, shrinkflation, and skimpflation that may make it more difficult for consumers to compare prices. These are all worthwhile lines of inquiry, but the mandate overlooks one important part of the food economy: restaurants. Foodservice accounts for roughly one-third of food spending in Canada, and many processors and distributors serve both retail and restaurant customers. Any meaningful examination of competition in food must recognize how interconnected these sectors have become.
The Bureau’s biggest challenge, however, may not be identifying issues but uncovering the truth. Canada’s food industry remains remarkably secretive. Many suppliers, processors, distributors, and even retailers are reluctant to speak openly about market practices for fear of damaging commercial relationships. Some of the most important information will never emerge through public consultations or hearings. If regulators want a complete understanding of how the system operates, they will need to earn the trust of industry participants willing to speak confidentially. Otherwise, the review risks capturing only part of the story.
There is little doubt that competition problems exist. Restrictive property controls have prevented new grocery stores from opening in many communities. Interprovincial trade barriers continue to raise costs unnecessarily. Municipal regulations often slow investment and discourage new entrants. At the same time, large retailers have been accused of exerting excessive pressure on suppliers, while annual pricing blackout periods imposed by major chains between November and February can contribute to volatility and inflationary pressures later in the year. These practices deserve scrutiny and reform.
Yet it would be a mistake to conclude that competition alone explains Canada’s food affordability crisis. Over the last several years, Canada has consistently recorded some of the highest food inflation rates among G7 countries. Market concentration may play a role, but government policy has also contributed. Repeated fiscal transfers during inflationary periods, regulatory burdens, rising labour costs, expensive energy, transportation inefficiencies, and policies such as the GST holiday all distorted markets to varying degrees. The temporary tax holiday, in particular, created operational challenges while opening the door to opportunistic pricing behaviour. Affordability is influenced by far more than competition; it is also shaped by productivity, investment, infrastructure, and policy choices.
Is Ottawa really going to ask a question it does not really want the answer to because it knows, in large part, who is to blame?
... OR ...
As the Lieberals are so good at...
Is Ottawa going to stack the deck with Lieberal faithful trained seals to give them the answer they want?
Bets anybody???
Who supplies the $50,000 worth of groceries for each flight our Prime Minister takes to foreign nations. Remember the Liberal outrage over an $18 dollar glass of orange juice a Conservative M.P. had for breakfast in London? Where is the outrage over Canadian seniors and working poor (formerly known as the "middle class") not being able to afford orange juice at the grocery store?