The NDP wants to investigate high food prices in Canada.

But their partisan approach will do nothing to make food more affordable for Canadians.

Food prices have gone up across the industrialized world.

In Canada, food inflation is trending at a whopping 11% on an annualized basis, as the most recent figures from Statistics Canada have shown.

Staples such as meat (+6.5%), dairy (+7%), fruit (+13.5%), condiments (+17.2%) and fish & seafood products (+8.7%) are forcing an estimated one quarter of all Canadian consumers to make hard choices about the food they buy.

The Federal Government has shown itself to be practically tone deaf on this subject, throwing down a paltry set of policies in June of this year designed to put a bit more cash into people’s pockets. The Quebec government is doing the same thing. Given the stubborn refusal of inflation to begin declining — despite the sustained efforts of the Central Bank — this extra cash, while welcome, won’t help people for long.

The Federal NDP have taken a different tack. Consistent with their ‘fighting for the little guy’ image, they are taking aim at the CEOs of the large grocery retailers in Canada, accusing them of taking advantage of current inflationary pressures to increase prices and pocketing windfall profits. They’ve even gone so far to demand an investigation into the matter in the Parliament, even after it’s been announced that the House Standing Committee for Agriculture will be doing just that.

Without going into any detail, they’re calling for three things: 1) an investigation into high food prices; 2) tackling tax loopholes and tax evasion by rich CEOs; and 3) launching a ‘food strategy’ to tackle corporate greed and lower food prices.

It all sounds great, but its a plan that will do nothing to remedy high food prices and will do even less to lower food prices over the long term.

First, those high food prices.

Most credible agencies reporting on the sources of high food prices are laying the blame in a number of factors, such as:

• extreme weather (drought, flooding, etc.) that affect crop yield, as well as distribution of primary ingredients;
• higher input costs, due to the aforementioned extreme weather, and global supply chain disruptions;
• the Russia-Ukraine war, which affects the global commodity pricing of such primary food products such as wheat, soy, barley as well as the price of fuel needed to process and transport those crops;
• supply chain disruptions, which haven’t really recovered since COVID, and continue to be affected by elements such as China’s response to the virus, which is characterized by complete and unpredictable shutdowns of major manufacturing regions.

No matter how many hours you put into investigating these factors, there’s very little that purely domestic Canadian policy-makers can do to influence any of them, short term.

Second, tax loopholes and tax evasion. I’m all for tackling these questions. But to suggest, as the NDP is doing, that somehow its the tax evasion strategies of our retail grocery chain CEOs that is at the root of high food pricing, is not only naïve, but just plain wrong. Whether food prices are high, medium or low, the margins those companies make are more or less the same (see below), and the proportion of profit they make remains relatively stable over time. If those CEOs are employing strategies to avoid paying taxes, there’s nothing to indicate that the returns of the companies they manage during the past (high inflationary year) has anything to do with that.

In fact, research by the Agri-Food Analytics Lab at Dalhousie has demonstrated that retail grocery chain financial margins have been relatively constant over the past five years — less than 10% and in many years, less than 5%. In terms of profit, those are slim margins indeed because, even though revenues have gone up because of higher prices, their input costs have also gone up, leaving their profit margin more or less the same. And those margins have no connection whatsoever to any strategy that might be employed by the CEOs to either evade, or avoid, paying their fair share of income tax.

Third, the development of a ‘food strategy’ designed to tackle something as amorphous as ‘corporate greed’, and linking this to lower food prices overall, is frankly trying to mix the proverbial apples and oranges. There certainly may be cases of companies that are taking advantage of high inflation by raising prices over and above what is necessary for them to recovery their higher input costs. However, when looking at the profit margins of the major grocery chains in Canada, the evidence doesn’t support this accusation. As a result, while solving corporate greed is a good societal objective, linking it to the current issues around food prices is, to put it mildly, gratuitous and false.

Do you see ‘corporate greed’ on the list of issues that are the source of inflation in Canada today?

Nope. Neither do I.

Frankly, the NDP is blowing it. Big time.

The NDP have signed an agreement with the minority Liberals to keep the government humming along, and ostensibly as a result, is holding considerable political power far beyond its actual seat count in the House of Commons. They have the ability to literally ‘drive the bus’ on many policy questions. The issue of food prices in Canada is one very hot item that is begging for good ideas.

And what does the NDP do?

They devolve into slogans they think will fire up their base of supporters. Slogans that will do nothing to lower food prices, either now or in the longer term.

If the NDP wanted to really influence food prices in Canada, there are so many other — and better — ways to do it:

• Tackle Food waste. Fully one-third of all food produced in North America is wasted, all along the entire food chain. Putting in incentives for food chain stakeholders to divert as much of that food to secondary markets would go a long way in providing more affordable alternatives to cash-strapped consumers. Applications like Foodhero and Flashfood are private sector responses that do that. But so much more could be done to force grocery retailers to divert more food to groups like Second Harvest, to get food into the hands of those who need it most.

• Subsidize purchases of real food. As food inflation bites, consumers look for bargains. Most of those bargain food items will be highly processed, lacking in basic nutrients and high in sugars and salts. Targeted subsidy programs that allow lower income, or income-challenged, consumers to purchase fresh fruit, vegetables, basic proteins and dairy would go a long way in not only making ends meet, but meeting basic nutrition challenges. And don’t make this a one-time thing; make it on-going, as long as this high inflationary period lasts, so it has a real effect on food security.
• Invest in Local food production. Want to address supply chain woes that seem to be unending? Re-orient food production and distribution to more local producers, and encourage more farmers to enter the sector. It’s worked to some degree in Quebec and British Columbia, but other provinces might need some help to develop their local food sectors more. After all, if you don’t have to transport your food from Chili or Peru, supply chain issues suddenly become a lot easier to solve if producer is just down the road.

These are just three ideas. There are plenty more, if the NDP would just look around and ask. And they’re all part of a more comprehensive food policy that the current government has been diddling with for years, and not delivered or even made any significant headway.

Over to you, NDP. You have so much political capital and opportunity right now. Don’t blow it by focussing on phantom issues that will do nothing for ordinary Canadians. Start being bold, and put the Liberal’s feet to the fire with policy options that actually help consumers, now and longer term.