Tangible solutions are needed as grocery price crisis drags on

If you have spent time in grocery stores over the past number of years, you know that grocery prices have risen significantly and that product volumes and sizes have in many cases fallen.

We are paying more for fewer and smaller items, and it is making life much more expensive for families.

The Manitoba government hoped that reducing the taxes it charges on gasoline would result in lower grocery prices, but the strategy hasn’t worked. More recently, it has decided to stop charging the retail sales tax on a number of food items that were previously subject to that tax. Few expect that measure to make a tangible difference, and there is a considerable debate as to why the exemption applies in only certain retail settings.

For example, baked goods such as cakes, muffins, cookies and doughnuts (when sold as a single serving or in quantities of less than six) will no longer be taxable at grocery and convenience stores as of July 1, but the tax will still apply at bakeries. That makes no sense.

Last week, the federal Competition Bureau announced it is investigating how competition within the food supply chain impacts grocery prices. The study will focus on production and processing, transportation and distribution, and retail pricing practices. It will also address the growing problems of algorithmic pricing, shrinkflation and skimpflation.

That may sound like reason for optimism, but the investigation won’t help Canadians anytime soon. The final report is not expected until next spring, and it will only include recommendations that governments may or may not act upon.

This past Monday, Manitoba Finance Minister Adrien Sala released his government’s study of grocery prices in the province. To the surprise of nobody, it found that grocery affordability is being shaped by a combination of global, national and local factors. It says that inflation, supply chain disruptions, energy prices, climate-related impacts, transportation costs and geopolitical instability all contribute to higher food prices.

The study also addressed the dearth of competition in Canada’s grocery industry, concluding that “When fewer companies control more of the market … families can end up paying more, while local businesses have fewer opportunities to grow.”

That reflects the economic principle that a lack of competition often leads to higher prices, but the report fails to identify a viable solution to the problem. Instead, it says “The factors contributing to grocery prices are complex and no single policy can fully address food affordability challenges,” and admits that “There is no single solution to grocery affordability.”

It argues that combining strong consumer protections, competitive markets, resilient supply chains and community-based food access strategies will ensure that Manitoba families have access to affordable and nutritious food. That’s just spin, however. There is nothing in the report that will provide tangible relief for Manitobans in the immediate future.

What should the government be doing? The new provincial law to knock down “property control” agreements used by big grocery chains in order to keep former stores closed and limit competition is a good first step, but more can be done.

While grocery chains are reaping super-sized profits, a record number of Manitobans are relying on local food banks to feed themselves and their families. That’s not merely wrong; it’s predatory and requires a response.

Molly McCracken, the Manitoba director of the Canadian Centre for Policy Alternatives, is calling on the province to impose a windfall profits tax on the big grocery stores, and to use the revenue derived from that tax to help those Manitobans most in need. It’s an idea worth considering, as are measures to encourage additional competition in the province’s grocery industry.

Beyond that, the government should be doing more to encourage the growth of food supply industries here in Manitoba. That would include strategies to promote the growth of the province’s beef, poultry and fisheries sector, as well as tangible steps to increase the year-round production of fruits and vegetables.

None of that will make your bread, fruit or meat more affordable in the short term, but it might make a difference down the road. Doing nothing and hoping for prices to fall on their own is not an option.