Bold action needed to lower food prices

Opinion

Hey there, time traveller!
This article was published 01/02/2024 (584 days ago), so information in it may no longer be current.

For the first two weeks of January my company ran a sale, $3.99 for a pound of our extra lean ground beef and plant blend.

It was the same sale that we ran last January, but the response this year was notably different. I didn’t expect that our customers had the freezer space to order 20-plus pounds of meat at once, but the orders for multiple cases of product came over and over again.

I can’t help but attribute this change to the palpable frustration stemming from food price inflation. Customers made it clear, last year’s $3.99/lb offer might have seemed like a routine bargain, but in today’s landscape of escalating prices, it stood out as a steal.

I was personally very happy to fill people’s freezers, but it’s essential to address the underlying issue of food inflation. The factors driving food prices higher are complex and include high interest rates, labour costs, geopolitics, energy prices, and the volatility of crop and livestock commodity markets. Grocery retailers, too, play a role by passing on these costs to consumers without sacrificing their own margins or seeking out innovative ways to lower costs, exacerbating the financial strain on households.

Many Canadians are rightfully frustrated by the widening gap between their disappearing paycheques and the growing returns for the country’s grocery giants. Last June, Canada’s Competition Bureau released the report Canada Needs More Grocery Competition, which, as the report’s title suggests, underscored the need to encourage more competition in the grocery retail industry.

I was personally thrilled with one of the signature recommendations, that the federal and provincial governments to develop a “grocery innovation strategy aimed at supporting the emergence of new types of grocery businesses and expanding consumer choice.” This is the business I’m in, after all.

Unfortunately, my enthusiasm for the Competition Bureau’s work stops there.

I was disappointed with the report as it falls short in several areas, particularly in its misunderstanding of grocery store pricing dynamics. The confusion between markup-based methods and gross margin calculations reveals a lack of insight into how grocery businesses operate.

This might not mean much to the average consumer, but it leads me to believe that the report’s authors didn’t fully understand the most fundamental part of how grocery prices are set, or were intentionally misled during their research.

The political response to this issue has been mixed. While the federal government’s Affordable Housing and Groceries Act takes steps to prevent further retail consolidation, it falls short in truly encouraging new retailers to enter the market. My attempts to engage with Minister Dan Vandal on this matter remain unanswered for a month now.

Provincial initiatives, such as tying temporary fuel tax relief to lowering food prices, display good intentions but also reveal a lack of understanding of the grocery business. The six-month tax break is meaningless in light of the complex pricing contracts between retailers, producers and wholesalers.

To tackle food inflation and foster a healthier, more competitive grocery sector, Canada must take more meaningful action.

We need to stimulate competition and innovation if we want a more sustainable and affordable food supply. My customers and I are doing our part, it’s time for our elected officials to do theirs.

James Battershill is the founder of Winnipeg-based Juno Food Labs, makers of Bump Plant Enhanced Meat.