The Liberal government is threatening sanctions against grocers and producers if they don’t stabilize prices, and such sanctions may include taxation. According to Concordia University economist Moshe Lander, the government’s threats are merely a political ploy to appease voters and boost their slipping poll numbers. Lander believes that the government is aware there’s little they can actually do, but they want to give the appearance of taking action. Industry Minister François-Philippe Champagne has already met with executives from major grocers like Loblaws, Metro, Empire, Walmart, and Costco to discuss the issue and has called on food producers to do the same.
Lander disagrees with the idea of imposing a grocers’ tax, stating that it would be a mistake to dictate how businesses should operate. He and food and public policy professor Matias Margulis emphasize that there are complex factors behind food prices and caution against unintended consequences from imposing sanctions on the low-margin grocery industry. They argue that a grocers’ tax could lead to reduced variety, innovation, and options on store shelves. Margulis also points out that Canada’s grocery industry already faces challenges due to a lack of competition and other obstacles.
In terms of controlling food prices, Lander suggests giving the federal Competition Bureau more power, as its funding has been cut and its recommendations have been ignored in recent years. Both Lander and Margulis highlight the control of certain food commodities in Canada’s supply-managed system as a factor that limits competition and drives up prices. Margulis adds that while food price inflation in Canada has been significant, it is even higher in other countries like the UK.
As for the outcome of talks between grocers and the government, Margulis hopes for greater clarity and transparency regarding pricing. Lander believes that grocers will likely promise to hold prices stable for a few months, as they have already established contracts with suppliers and know they can fulfill their promises. He suggests that both the government and grocers have a vested interest in portraying themselves positively during this situation.