Loblaws Is Crushing Canadians With High Food Prices — While Raking in Enormous Profits

“Let them eat price gouging” appears to be grocery giant Loblaws’ response to the rising number of food-insecure Canadians. The company blames supply chain issues and inflation for soaring grocery costs — yet is posting stratospheric profits.

With businesses like these, who needs racketeers? (R. J. Johnston / Toronto Star via Getty Images)

You’re probably not alone if “La Marseillaise plays in your head every time you go grocery shopping. Food inflation costs are crushing Canadians, adding to and exacerbating overlapping and intersecting affordability woes from housing to transit to health and beyond. The list of culprits is vast, but in the grocery sector, Loblaws has become the poster child for corporate greed. Now, after ending its three-month price freeze on its No Name products, the company is on what one might generously call a public relations blitz — trying to explain soaring prices as a result of food inflation being a “global issue.”

Taking to Twitter, the company spent time replying to users, arguing that grocery margins are low and costs are rising because suppliers are raising their prices. There aren’t enough tiny violins in the world. The effort was cringeworthy — especially in light of reports revealing that global food costs have declined by 18 percent since their record high in March of last year.

In 2021, nearly 16 percent of Canadian households were food-insecure. As PROOF, an interdisciplinary research program studying food insecurity and policy at the University of Toronto, notes, that means nearly 6 million Canadians, and 1.4 million children, faced varying degrees of food insecurity. In the same year, over half of households found to be food-insecure “reported their main source of income as wages, salaries, or self-employment,” notes the report. The data also suggests that people who rent, have children under eighteen, or are indigenous or racialized also face higher rates of food insecurity. Food-security advocates are anticipating a rise of 60 percent in the number of Canadians accessing food banks in 2023.

Economist Jim Stanford called the Loblaws effort “inept,” before breaking down the story of grocer profits with four key facts since the beginning of the pandemic: profits are up, way up (double), on food retail; average profit margins are also up, way up (three-quarters); retail volume is down; and while manufacturing supply costs are up, they’ve grown less than food retailers. In short, Loblaws, as Stanford notes in Canadian Dimension, is full of it.

Stanford’s ultimate takeaway is that we ought to criticize both suppliers and retailers, and he’s right. Oligopoly and monopoly are problems in the industry, and consumers pay the price. “Both camps have taken advantage of supply disruptions and consumer desperation to fatten profits amidst deep economic and social crisis,” he writes.

In 2020, Rawan Abdelbaki wrote an excellent, and wildly popular, takedown of Loblaws and their owners, the Weston family. The piece detailed offshore profit stashing, fights against a higher minimum wage, questionable pay-premium decisions, and, who can forget, bread price-fixing. With businesses like these, who needs racketeers?

Public relations specialists, ideologue business professors, and industry parasites will keep trying to use corporate bafflegab to explain away the crisis or at least shift blame. They will claim that it’s the supply chain or the fault of the manufacturers. But it’s impossible for Loblaws to convince us that a 30 percent jump in profits during a crisis, with over C$17 billion in revenue behind the jump, isn’t that much.

Pandemic profiteering appears to have given way to inflation profiteering. No amount of corporate PR can excuse the fact that regular people are getting ripped off while rich folks laugh all the way to the bank.

History teaches us that states have risen and fallen on the price of bread. Food costs can, unsurprisingly, be a direct cause of unrest. Food is an essential need. You can’t live without it. No business and no industry should be permitted to take advantage of consumers’ need for life sustaining goods. Industries responsible for the flow of life-essential needs ought to be thoroughly monitored and restrained.

Canada needs to break up the grocery oligopoly. At any cost. It also needs to ensure that these corporate behemoths cannot vertically integrate and dominate the supply chain from production to retail. Large companies that dominate and distort the market, ripping people off in the process more than usual, must be dismantled. If the market can’t control the price of food, essential as it is to life, then perhaps the state ought to do the job. What if these companies had to, say, compete with a state chain? What if they had to deal with competitors not tied to the imperative of market depredation?

The socialist case against oligopoly is obvious. As with opposition to the concentration of power and extraction of value from workers to line capitalist pockets, so too do we oppose cartel-like profiteering. But there’s even a capitalist case against grocery oligopoly. After all, capitalism is a system of competition, right? It’s meant to prevent oligopoly, monopoly, corporate dominance of the market. According to free-market champions, capitalism is also supposed to operate without state largesse.

Corporate greed is pushing people to, and beyond, the brink. A consensus seems to be building that flagrant price gouging justifies grocery theft. Understandable though this may be, it is no solution. This is as good a time as any to remember that there are other ways of doing things. We could dismantle vertically integrated oligopolistic and monopolistic firms. We could have worker-owned grocery outlets. We could demand nationalized supermarkets. To arrive at a lasting solution, solutions that circumvent or flatten Loblaws are necessary.