House committee recommends windfall tax for grocers if Competition Bureau finds evidence of profiteering

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The Canadian government should introduce a windfall tax on large grocery chains if the Competition Bureau finds evidence that they’re generating excess profits on food items.

That is one of 13 recommendations that the parliamentary agriculture committee has put forward to the federal government in a new report.

The report comes amid accusations from some critics, including NDP MPs, that Canada’s five largest grocery chains — who control 80 per cent of the grocery market — are engaged in “price gouging,” or using their market power to raise prices faster than the growth in their production costs.

If the Competition Bureau finds in its upcoming marketing study, slated to be released in June, that large grocery chains are generating excess profits on food items, the committee recommended that the government consider introducing a windfall tax on these large corporations to “disincentivize excess hikes in their profit margins.”

In March, the CEOs of major grocery chains appeared before a parliamentary committee that is studying inflated grocery prices and insisted that food price inflation is not caused by profit-mongering and that their profit margins on food items have remained low.

The government should also collect and make public data on costs throughout the Canadian agri-food supply chain—including disaggregated data on costs in the primary agriculture, food and beverage processing and food retail sectors, the committee said.

This could follow a similar model made available by the United States Department of Agriculture’s Economic Research Service as part of its Food Dollar Series research program, the report notes.

The committee further recommended that the federal government provide additional funding to Indigenous-led initiatives in remote and northern areas to “improve infrastructure that supports the food security of their communities.”

It said that a number of stakeholders it consulted for the report, including Chief Byron Louis of the Okanagan Indian Band, testified that food insecurity was on the rise across the country and is of particular concern for low-income households and Indigenous peoples.

Addressing food waste is another recommendation that the committee put forward. It said the federal government should work with provinces and territories to investigate how the elimination of “best-before” dates on foods would impact Canadians and partner with non-profits along with large grocers to develop programs that divert food, which would otherwise be wasted, to Canadians experiencing food insecurity, among other measures.

Some other recommendations for the federal government include directly reimbursing farmers and retailers who have paid a 35 per cent tariff on their imports of Russian fertilizer since March 2022 and discontinuing the tariff, along with supporting producers and others in the agri-food industry to mitigate their costs and ensure they have sufficient cash flow during this period of high inflation.

Grocery prices were up 9.1 per cent in April compared to a year ago, more than double the overall rate of inflation of 4.4 per cent.

The committee said it held eight meetings and heard from 58 witnesses, including stakeholders representing the primary production, food and beverage processing, and food retail sectors, as well as representatives from civil society groups, to come up with these recommendations.

The findings and recommendations highlight the “need to increase transparency in the grocery sector and to strengthen its collaboration with other supply chain actors to ensure fairness in the business relations between each link in the chain,” it said.

“Food price inflation affects a fundamental aspect of Canadians' lives: their ability to feed themselves adequately,” the committee stated in the report.

“While driven in part by global factors, such as rising input and fuel costs, relationships in the food supply chain have a major influence on how prices are transmitted along the supply chain and ultimately to the consumer.

The full report and set of recommendations is available online.