Question Period Note: FOOD PRICES AND FOOD SECURITY

Q1 – What action is the government taking to stop the persistent rise in grocery prices? Q2 – What is the government doing to support Canadians who are struggling with affordability of food and turning to food banks? Q3 – Why are some recommendations from the AGRI Committee’s Grocery Affordability report not supported by the Government?

R1 - Our Government is committed to ensuring a fair, transparent and competitive marketplace to make life more affordable for Canadians.

On September 21, we introduced the Affordable Housing and Groceries Act. This includes changes to the Competition Act to increase competition, with a focus on the grocery sector. The Government will continue to explore ways to improve competition in the grocery sector.

The Government is committed to improving the availability and accessibility of information on prices along the food supply chain. The Government of Canada launched a Food Price Data Hub to provide consumers with timely data on food prices in Canada in a central and easy-to-access location. This information is provided through a partnership between Statistics Canada, Industry, Science and Economic Development Canada and Agriculture and Agri-Food Canada.

Following the Government's call to take immediate action, grocers are supporting efforts aimed at stabilizing food prices, and each has already identified an initial series of actions that are being implemented as we speak.

Also on October 5, the Government announced the creation of a grocery task force that will monitor actions by grocers and others in the food supply chain, while investigating potentially harmful practices impacting consumers.

In addition, the Government continues to work with provinces and territories to support swift implementation of the industry-led grocery sector code of conduct. I would like to reiterate the Government’s expectation that all key players in the industry, including large retailers, will participate and support the operation of the code. While not directly affecting food prices, the code is expected to improve predictability, transparency, and ultimately benefit consumers. R2 - Canada is not alone in facing high food prices. Since 2021, global food prices have increased at a rate not seen in recent history. Canada’s domestic inflation rates are in line with other OECD (Organisation for Economic Co-operation and Development) countries.

The Government has been working to provide relief for Canadians struggling with the increased cost of living. The 2023 federal budget included a new, one-time Grocery Rebate to offer inflation relief to lower-income families. This is in addition to broader social programming that was previously announced such as more affordable child-care and the development of a national dental care program.

The government is committed to making life more affordable, supporting and protecting Canadians, including stabilizing food prices. To help achieve these goals, the Government of Canada is strengthening support for consumer advocacy groups, working to tackle practices harmful to consumers, and working to support consumers in making informed choices and reducing household costs. These actions build on previously introduced measures such as increases to the federal minimum wage, the Canada Child Benefit, Canada Workers Benefit, and Old Age Security. R3 - Our Government has undertaken significant actions to improve grocery affordability in the short and long term, which is why the Government Response supports in full or in principle most recommendations. Some recommendations were acknowledged as the government has already taken action on these issues. Examples include those related to single-use plastics and tariffs paid on imports of Russian fertilizer.

The Government Response was tabled in the House of Commons on October 5th and is publicly available. We are working to address issues raised in the report, and we look forward to continuing to work with the various industry actors to stabilize food prices in Canada.

In addition, the Government has announced a series of measures to improve transparency and increase competition in the grocery retail sector.

According to the latest monthly Consumer Price Index data for October 2023, prices for food purchased from stores have been increasing at a faster rate than overall inflation since December 2021. Economy-wide prices were 3.1% higher in October 2023 than they were in the same month in 2022. In October 2023, consumer prices for food from stores were 5.4% higher than they were in October 2022.
In October 2023, retail food prices were up 29.6% compared to October 2018. Over the same period, beef and chicken prices rose 38.0% and 31.3%, respectively, while the price of pork was up 10.7%. Compared to five years earlier, the price of fish and seafood increased by 20.7% in October 2023. Other notable price increases include fresh fruits (+27.6%), dairy products (+24.1%), bread, rolls and buns (+28.4%), fresh vegetables (+31.7%), eggs (+40.7%), pasta (+49.5%), and edible fats and oils (+66.3%).
Consistent with Canada’s World Trade Organization (WTO) commitments, provincial and federal governments deliberately have minimal direct involvement in managing food prices or production decisions in Canada. Their influence is mainly through measures to ensure an efficient and fair market, and by measures to mitigate the impact on vulnerable Canadians.
2024 Food Price Forecast
Canada’s 14th annual Food Price Report, a collaboration between Dalhousie University, the University of Guelph, the University of Saskatchewan, and the University of British Columbia, projects that food prices will rise by between 2.5% to 4.5% in 2024. The authors expect inflation to ease slightly during 2024. The anticipated food price increases are attributed to climate change, input costs, inflation, geopolitical risks, policies and regulations, and consumer trends and debt levels. The report is a forecast based on the current and historical economic environment, and what actually transpires may be different.
Recent announcements related to grocery affordability
On September 14, 2023, the Government announced new measures to support Canadians, including action to build more rental housing, provide relief to small business owners, and drive down the cost of groceries.
In particular, to address the escalating price of groceries, the Government called on Canada’s top five grocers to support efforts to stabilize food prices. Each grocery retailer has identified a series of initial commitments and actions to bring relief to Canadians.
On October 5, the Government announced that a grocery task force will be established. Its priorities will be to monitor commitments by grocers and actions taken by other key players in the food industry, including manufacturers, as well as investigate and uncover practices such as “shrinkflation” that could hurt consumers.
The Food Price Data Hub was launched on November 3. The hub provides consumers with timely data on food prices in one central location and it will be updated regularly to show current trends in food inflation along with other information that will help consumers make informed decisions about their food purchases.
In addition, on September 21, the Government introduced the Affordable Housing and Groceries Act, which includes a first set of legislative amendments to the Competition Act to:
• provide the Competition Bureau with greater power to investigate when industries are behaving unfairly and take enforcement action;
• remove the “efficiencies defence”, which currently allows anti-competitive mergers to survive challenges if corporate efficiencies offset the harm to competition; and
• empower the Bureau to take action against collaborations that stifle competition and consumer choice, in particular situations where large grocers prevent smaller competitors from establishing operations nearby.
The actions announced on September 14 complement the Government’s previous actions to address food price inflation, including:
• In Budget 2023, the Government provided a one-time Grocery Rebate to mitigate the impact of food inflation on Canadians through a GST tax credit of $2.5 billion for families with lower incomes, who are likely to be disproportionately impacted by inflation affecting food, shelter, and transportation.
• The 2022 Fall Economic Statement introduced targeted measures to improve overall affordability for Canadians, including more affordable childcare options and delivering on a national dental care program.
• In addition, as part of efforts to address food supply chain challenges, Budget 2023 proposed approximately $52.2 million to fund supply chain infrastructure projects that support the National Supply Chain Task Force’s recommendations and the development of a National Supply Chain Strategy.

Grocery Code of Conduct
Since August 2021, an Industry Steering Committee comprised of key industry leaders has been working to build consensus on a proposal for a code of conduct and an approach to dispute resolution to improve predictability, transparency, and fair dealing in supplier-retailer relations. Federal, provincial and territorial governments have been supporting the industry-led process and regular updates have been provided to FPT Ministers of Agriculture, most recently in July 2023. The Government’s expectation is that all key players in the industry, including large retailers, will participate and support the operation of the grocery sector code of conduct in short order.

The Food Policy for Canada
The Food Policy for Canada seeks to create a healthier and more sustainable food system in Canada; one that builds on the Government’s ambitious agenda to support the growth of Canada’s farmers and food businesses. The Food Policy brings a coordinated approach to dealing with food issues in Canada by building stronger linkages across existing federal initiatives that affect food. During Food Policy consultations, food security was identified as a priority issue that required greater government attention. The Food Policy includes the following four near-term action areas, to address key gaps:
1. Help Canadian communities access healthy food;
2. Make Canadian food the top choice at home and abroad;
3. Support food security in Northern and Indigenous communities; and,
4. Reduce food waste.

As part of the Government of Canada's Food Policy for a healthier and more sustainable food system in Canada, the Local Food Infrastructure Fund (LFIF) was created, which is a 5-year, $70 million initiative ending on March 31, 2024.
The fund supports community-based, non-profit organizations to improve their food systems through investments in infrastructure that are directly related to addressing food insecurities and increasing the accessibility of healthy, nutritious, and ideally, local foods within their community.
Since inception, there have been five intake periods, each with differing characteristics. A total of 897 projects were funded under the first four intake periods, representing $54.7 million in AAFC funding. Projects ranged in funding size from $5,000 to $500,000 and spanned across all provinces and territories.
AAFC is finalizing the negotiation of agreements under the latest intake period. Results are expected to be announced in December.
Food Security in Canada
Food security goes beyond the production and supply of food to include the physical and economic ability to access food, as well as the availability of food that is nutritious, safe and culturally appropriate. Of these factors, income is the primary determinant of food insecurity in Canada. Food insecurity in Canada increased to 18.4% in 2021/22, up from 15.7% in 2020/21.
The HungerCount report, released by Food Banks Canada, is a survey of most food bank agencies, organizations and programs, within and outside of the Food Banks Canada network. The HungerCount provides a point in time snapshot of food bank use in Canada during the month of March each year. Food bank visits had been fairly stable prior to the pandemic, but increased sharply after 2020.
In March 2023, there were nearly 1.9 million visits to food banks reported in the HungerCount– up 32% from March 2022 and up 79% from March 2019.The report noted that about 42% of food bank visits were by those receiving provincial social assistance as their main source of income. However, the percentage of food bank visits by employed clients increased to a record high of 17%, up from 14% in March 2022. The top reasons cited for accessing food banks were food costs, housing costs, and low wages or not enough hours of work.
The report estimates that one third of food bank clients are children, consistent with previous years. In March 2023, food bank visits by those who identify as First Nations, Métis, or Inuit represented 12% of food bank visits. Clients from racialized communities represent about 40% of clients, up from about 33% in March 2022. The share of clients who have been in Canada for less than 10 years (newcomers) has increased to 27%, up from 17% a year earlier.
Food bank use does not represent the full scope of food insecurity in Canada. Many food insecure households will turn to other options before accessing a food bank, like delaying bill payments. Food insecure populations can face barriers to accessing food banks, like eligibility requirements or limited hours, in addition to stigma.
Grocery Affordability Report of the Standing Committee on Agriculture and Agri-Food
The Standing Committee on Agriculture and Agri-Food studied food price inflation and produced a report, Grocery Affordability: Examining Rising Food Costs In Canada. The Committee made 13 recommendations to address the impacts and drivers of food price inflation across the supply chain. The Committee highlighted the importance of improving relations and competition across the food supply chain, particularly in the grocery sector. The Committee also noted the importance of transparency in the food supply chain and how it can help consumers and firms make informed decisions to mitigate and address inflationary impacts.

• Rising inflation and increasing food prices are challenging for many Canadians, and we are working to make life more affordable with a suite of measures to help address the rising cost of necessities.
• The government has called on Canada’s top five grocers to support efforts to stabilize food prices, and each grocery retailer has identified a series of initial commitments and actions to bring relief to Canadians.
• The government will continue to monitor food prices and will take additional action if necessary.
• On November 3, Statistics Canada launched the Food Price Data Hub to provide Canadians with more detailed information on food prices and help them make informed choices about their food purchases.