Anthony Winson is a professor emeritus of sociology and anthropology at the University of Guelph.
Canadian consumers have become increasingly alarmed by dramatic price increases in a variety of products they purchase for their weekly food basket. Economic analysts and professional economists have explained away this food inflation as a consequence of supply chain issues and surging consumer demand. But the recent application by a Quebec consumer group to pursue a class action lawsuit for alleged price fixing against the foreign beef processors that dominate the Canadian industry points to a more powerful explanation of food price inflation: market power derived from food industry concentration.
And it’s not just the beef industry, where Cargill, Tyson, JBS and the National Beef Packing Company control an estimated 85 per cent of the packing capacity. In 2019 a class action lawsuit against the largest bread makers and grocery retailers was launched, with George Weston Ltd., parent of Loblaw and the bakery Weston Foods (which has since been sold), admitting a price-fixing scheme was in place. The Canada Bread Company, Metro, Walmart, Sobeys and Giant Tiger were also mentioned in the suit that claimed consumers were overbilled $5-billion over 16 years. Those companies have denied participating in the alleged scheme.
Most other major Canadian food sectors are also dominated by a very few industry giants with global operations and considerable ability to influence food prices, including dairy (Kraft, Agropur, Lactalis and Saputo), chicken (Maple Leaf, Maple Lodge, Olymel, Lilydale and Exceldor) and pork processing (Maple Leaf, Olymel and Charoen Pokphand Foods). Where farmers have not managed to gain supply management that can counter processor market power, they have very limited ability to influence the prices they receive from processors. In the United States, a September, 2021, report on the meat packing industry consolidation in recent decades released by the Biden administration states that “record profits, income, and margins underscore the role that meat-processors’ dominant market position and power play in increasing meat prices.” And this is in a country with less industry concentration in the food sector than in Canada.
Add to this the fact that the food retail sector, overwhelmingly dominated by supermarket chain-store corporations, is among the most highly concentrated in the Western world with only five companies (Loblaw, Sobeys, Metro, Costco and Walmart) controlling over 60 percent of retail food sales. Recent moves by the big three supermarket chains to cut their employees’ pandemic-related pay bonuses all within a day of each other prompted the House of Commons industry committee to hold hearings on the issue. Its subsequent 2021 report called for a change in Canada’s competition laws to prohibit cartel-like practices that could result in wage-fixing deals in the supermarket sector. Notably, the Government’s Commissioner of Competition, Matthew Boswell, told the committee that the Competition Bureau lacked the powers to convict corporations around wage-fixing practices, and that the Bureau is “one of the least-funded competition enforcement agencies” in the developed world. and has had its budget and personnel reduced in recent years.
Supply chain issues and spikes in consumer demand may play a temporary, if limited, role in food inflation, but the fundamental cause that is never addressed is the remarkable degree to which the Canadian food industry has failed into a few corporate hands. And while in 2021 south of the border the Biden White House proclaimed it was “taking bold action to enforce the antitrust laws, increase competition in meat-processing, and push back on pandemic profiteering that is hurting consumers, farmers, and ranchers across the country ,” in Canada the federal government lacks the will and the Competition Bureau lacks the teeth to pursue similar objectives.
Canada’s failure to deal with food industry concentration is nothing new, and can be dated back at least as far as the Great Depression. At that time, the historically significant 1937 Royal Commission on Price Spreads argued that, with respect to the meat-packing industry’s ability to protect its profits in the context of the economic depression, “the manner in which these results have been achieved has a direct relation to the monopolistic character of the structure of the industry.” Too much concentration of the food supply by processors and retailers to the detriment of consumers and producers is hardly anything new, then. Until competition laws and government priorities are changed, consumers may only have recourse to class-action lawsuits to address this pressing issue.
Keep your Opinions sharp and informed. Get the Opinion newsletter. sign up today.