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Freezing grocery prices is not a solution

Recently Sylvain Charlebois, director of Dalhousie’s Agri-Food lab, called on Canada’s grocers to freeze prices, Canadians take drastic steps to save on groceries as experts say food price hikes will continue (Toronto Star, Sept. 9). This reminded me of the Gandhi quote, “An error does not become truth by reason of multiplied propagation.”

The call for a price freeze from Charlebois, the NDP and some other armchair observers, stems from the misconception that there is “greedflation” taking place within the Canadian grocery sector. Curiously, it was Charlebois’s own Agri-Food Lab study, released in August, that discounted “greedflation” in the food industry, pointing out that “If ‘greedflation’ exists, the available data suggests grocers are not responsible.”

Indeed, grocers are no more to blame for rising prices and inflation than businesses and institutions, including food suppliers, trucking and rail companies and yes, even universities such as Dalhousie. Indeed, Charlebois’s own university increased tuition costs by three per cent this year, which it has done annually for the last 10 years. But I have not read of anyone accusing Dalhousie of “greedtuition.”

There are approximately 6,900 Independent grocers in Canada, who operate on overall margins of 1.5 to two per cent. Cast those margins within the context of the issues driving up food costs for both retailers and suppliers and one realizes how absurd it is to issue a call for grocers to freeze prices.

The food industry has been reeling from skyrocketing fuel costs and surcharges; climate catastrophes such as flooding in B.C. and a drought in Western Canada; the ravages of COVID and its impact on labour; shortages in raw materials and packaging; port, rail and border disruptions; and of course, the Russian invasion of Ukraine.

Those realities are why Charlebois’s own aforementioned study pointed out that while “Indeed, revenues have increased dramatically, so have the costs of goods sold.”

Therefore, a corollary of grocers freezing prices has to mean that a widespread freeze would need to be imposed on just about every sector of the economy — including the oil sector, rail and transportation companies, food manufacturers — and somehow bring a stop to the impact of climate change and the war in Ukraine. Incidentally, since Charlebois also has expressed concerns about credit card purchases for groceries, he should be reminded that another cost invisible to consumers — that of high credit card interchange fees — are paid by the grocer on each and every customer transaction using a credit card. Juxtapose just those fees alone, which amount to an estimated $10 billion annually in Canada, within the margins of grocers.

Those slim margins by necessity govern what a grocer must do to remain in business. While Charlebois has been quoted saying he hopes “ … that one grocer will come out with a bold strategy like freezing prices on certain key staples” even in the supply-managed sectors of essential staples, this year egg prices have increased by close to 16 per cent and milk prices by 10.9 per cent. Those are the regulated increases and do not account for additional costs layered on by the processors.

In August, the same month the Dalhousie Agri-Food Lab released its report, grocers were being told by their suppliers that bread prices were going up this fall by another six per cent. By what business model could a grocer possibly entertain the thought of freezing prices?

For independent grocers, who have a symbiotic relationship with the communities they serve, higher prices are a shared concern with their customers. In many of those communities, where an independent may be the only accessible grocery store, the issue of food security is also very much predicated on the ability of that independent to supply their community at relatively affordable prices.

But neither grocers nor suppliers are responsible for rising food prices in Canada or other countries, such as the United States, U.K. and Germany, where food inflation is even higher.

Food industry stakeholders, from gate to plate, have a shared commitment to making the industry one that continues to look for ways to better serve Canadians. Those stakeholders know that our challenges can sometimes be complex in a very interdependent, interconnected and unique Canadian food industry. We need thoughtful and fact-based conversations on addressing those challenges, particularly those related to food prices.

A simplistic call to have grocers “freeze prices” should not be a substitute for thoughtful and informed discourse. That does not serve the best interests of the food industry or the Canadian consumer. The role of academic institutions such as Dalhousie should be to help inform understanding, not inflame misunderstanding.

Article original paru sous le titre : Lowering the soaring cost of food is not as simple as asking grocers to freeze prices

Par: Gary Sands - senior vice-president of the Canadian Federation of Independent Grocers.

Source: (Toronto Star)

Photo: Marcus Oleniuk | Toronto Star (tirée de l'article original)

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