The rapidly rising cost of food is taking bigger and bigger bites out of the household budgets for many families across Canada. Many lower income families are pushing their shopping carts to the local food banks more frequently than to their neighbourhood grocery stores.
Yet in spite of the household budgetary shortfall, the five leading supermarket chains are earning record levels of profits. Meanwhile, many families are struggling to decide which they can afford this month — groceries or the mortgage. Possibly their wages cannot afford both.
Is there not something systemically wrong with this picture?
According to some business analysts, one of the issues is that there may be too few competitors in the grocery industry in Canada. This condition is referred to as oligopolistic, which is a state of limited competition where there are a small number of producers or sellers.
There are five grocery chains that dominate the Canadian food market— Loblaws, Empire, Walmart, Costco, and Metro. Three of these have recently reported record levels of profits.
The largest, Loblaws, reported that its recent quarterly profits rose to almost $441 million. That number is 26 percent higher than for the same period a year ago.
Metro Inc. recently reported their quarterly profits also rose by 26 percent over the same period last year to $350 million. During that same period, Empire Inc, which owns Sobeys, reported profits of $261 million. That was an increase of $70 million over the same quarter last year.
All in all, those three grocery chains earned a total of more than $1.1 billion dollars in profits in the last quarter. This level of profit could be seen as a generous windfall while so many households are struggling to afford this part of their budgets.
The federal government recently convened a meeting with the top executives from Canada’s major grocery chains. At that meeting, the industry minister frankly advised the grocery CEOs that the current 8.5 percent rise in prices of groceries this year is totally unacceptable. That profit percentage number appears to be especially newsworthy in light of the headline inflation rate of 4 percent. These food industry executives were told that unless these rapidly rising prices are not curtailed, then the government will take some type of, as yet unspecified, action. Likely, some sort of tax levy would be part of the government’s retaliatory action.
It is too early yet to determine what changes may be in the making. The CEOs claimed that food retailers should not be singled out and that food manufacturers and producers should also be subject to whatever the government’s measures might be introduced in the effort to reduce the cost of foodstuff.
In the meantime, grocery shoppers will continue to be shocked at the checkout counter as they attempt to feed their families nutritionally sound meals at affordable prices.
As a final note, the high cost of groceries has reduced the contributions to the area food banks. They are an integral part of the service community and serve as a much needed resource for many of your neighbours. The food banks would be so relieved with your contributions.
