[Canada] Canadian Politics Redux

[crazy canuck]

Don't put words in our collective mouths. Reduce your gross profit by spending more then. Maybe in salary to employees or less avoiding taxes?

You are fundamentally misunderstanding what I have said repeatedly.  This is a high volume low margin business.  The Libs and NPD are carrying on as if this was a high margin business and all that is needed is for the grocery business to cut its margins.  That is what increasing salary means. 

The economic ignorance of our politicians and in turn our population is deeply concerning.

[crazy canuck]

The minister said the five largest grocers will work with the government to stabilized prices. 

So what is the minister going to do, reach beyond our border to reduce prices throughout the global food chain?

What idiot theatre feeding the populist frenzy of thinking the price increase is because of greedy CEOs.

I can't the five largest grocers doing anything else, really.
What were they going to do?  Tell the minister to fuck off?  In the current political climate, the Libs would have been vindicated to propose some form of additional tax on their gross profit just for show.  An annoyance for them they'd rather avoid, because it would complicate their fiscality needlessly, not because it would cost much more.  And it's likely something that Walmart and Costco could easily dodge.

As for what the minister can do: establish a committee to study the question.  Outside of having more competition so that producers have more choices on whom to sell to, there is no easy, short term solution.

Some of these chains have integrated supply chains, meaning they have their own farms, their own transportation, their own real estate.  There's a lot of waste at every step of the chain, they could put a lot more effort into reducing that waste, or giving their near past due date products to food banks instead of throwing it away.  I know it's hard to sell "imperfect" products, between what customers say and what customers really do, there's a world of difference.  But still, there's got to be a better way than wasting it.  These all add costs in the end, that are sent to the customers.

I agree, the grocery execs had no alternative but to tell the minister what the minister wanted to them to say.  In part because if the Minister put on some form of tax the populists in our population would just cheer them on even though such a policy move would be idiotic and counter productive.

Please identify one chain in Canada that has a fully integrated supply chain.  That is simply nonsense. As for land, yes many do own their own land.  That is how they keep prices down.  Stores that have to pay market lease rates have increased costs and have to charge more for food. 

Economics 101 folks.  The more government increases the costs of these operations the more food is going to cost. 

[crazy canuck]

https://www.theglobeandmail.com/opinion/editorials/article-justin-trudeau-is-having-a-ron-desantis-moment/

An important piece for all Canadians to read  - an editorial from the Globe in which they warn about the dangerous populist path Trudeau has now chosen, and I would add to cover up his complete lack of an tangible public policy to deal with the affordability crisis.

Must easier (and dangerous) to raise the populist temperature.

Justin Trudeau is having a Ron DeSantis moment

What do Justin Trudeau and Ron DeSantis have in common? The two men's ideologies could hardly be more different, but both have shown they're willing to conjure up corporate scapegoats for populist crusades, and to wield the threat of punitive taxes for political advantage.

For Florida's Republican governor, the crusade targets Disney and the company's opposition to a state law that bans teaching gender identity and sexual orientation to pupils in kindergarten to Grade 3. In Canada, the Prime Minister is training his populist lens on grocery stores, now cast as the villain in a plot to fleece Canadians by driving up food prices.

Mr. Trudeau summoned the heads of the grocery chains to Ottawa on Monday; they are to hash out a plan by Thanksgiving to "stabilize and lower prices." If they fail to do so, Mr. Trudeau threatens to take action, including imposing a tax on companies that refuse to get with the Liberal program.

"It does not make sense that in a country like Canada our largest grocery chains should be making record profits while Canadians are struggling to put food on the table, and we're seeing record usage of food banks," Mr. Trudeau told reporters on Thursday.

In an effort to aid the Prime Minister's understanding, we would posit this: inflation has driven up the cost of food production dramatically. Which means shelf prices have risen. Which means revenues have risen. Which means profits have risen even though the gross margins of grocery chains have mostly remained flat during the pandemic.

Mr. Trudeau might be shocked to find that the same dynamic at work in the federal budget, where sales tax revenue has risen 30 per cent from fiscal 2019 to the current year.

The notion that grocery chains and others are responsible for inflation – greedflation – is not founded in fact. One informed observer put it this way: "... rising global inflation was driven by supply-chain disruptions, strong consumption of goods, and rebounding global demand." Those words are from Mr. Trudeau's own Department of Finance, in the spring budget. (The budget did gloss over the role of continued federal deficits in fueling inflation, but the point on supply-chain disruptions is well taken.)

Without any hint of irony, Mr. Trudeau touted the Liberals' devotion to "evidence-based government" in his Thursday press conference.

The evidence, so far, on inflation in food prices is that grocery chains have for the most part been passing on increases from further back in the supply chain (including steep government-mandated bumps in the regulated cost of milk, cheese, butter, eggs and chicken). The Bank of Canada, arguably a reputable research outfit, has studied the greedflation notion and concluded there is no evidence to support it.

Mere evidence did not stop Mr. Trudeau from co-opting NDP Leader Jagmeet Singh's rhetoric in denouncing grocery chains, and professing his disdain for the market economy.

Now, it must be said, if grocery chains are engaging in anti-competitive practice, the Competition Bureau should expose and punish any offenders. Handily, the government is proposing to give the bureau new powers to compel companies to cooperate with market studies. That change and the scrapping of the outdated efficiencies defence for mergers are long overdue steps.

Once passed into law, newly muscular market studies will give the Competition Bureau the power it needs to fully scrutinize the grocery sector.

But Mr. Trudeau is not waiting on such trifles; due process does not move at a speed sufficient to bolster the Liberals' sagging poll numbers. Instead, the Prime Minister has already decided the verdict – guilty of capitalism – and a threatened sentence: punitive taxes. This is a dangerous path down which the Prime Minister is strolling as he substitutes political whim for the rule of law.

A predictable business environment, free of arbitrary measures, is one of the great economic advantages that Canada has historically had on offer. The Liberals' actions endanger that stability not only for investors in the grocery sector, but in any sector. And it is part of a disturbing pattern of conflating success with greed − look no further than the targeted taxes imposed on the financial sector in 2022.

Of course, few Canadians will spare a tear for Big Grocery or the big banks. Like any ambitious populist pandering to popular misconceptions, Mr. Trudeau has picked his scapegoats well.

[Grey Fox]

Don't put words in our collective mouths. Reduce your gross profit by spending more then. Maybe in salary to employees or less avoiding taxes?

You are fundamentally misunderstanding what I have said repeatedly.  This is a high volume low margin business.  The Libs and NPD are carrying on as if this was a high margin business and all that is needed is for the grocery business to cut its margins.  That is what increasing salary means. 

The economic ignorance of our politicians and in turn our population is deeply concerning.

There's a lot of gross money between 0 and 5% margins these companies have.

But, I don't disagree with you. I just think that the grocery retailers are being dumb and hoping this scrutinity goes away on it's own.

[crazy canuck]

Don't put words in our collective mouths. Reduce your gross profit by spending more then. Maybe in salary to employees or less avoiding taxes?

You are fundamentally misunderstanding what I have said repeatedly.  This is a high volume low margin business.  The Libs and NPD are carrying on as if this was a high margin business and all that is needed is for the grocery business to cut its margins.  That is what increasing salary means. 

The economic ignorance of our politicians and in turn our population is deeply concerning.

There's a lot of gross money between 0 and 5% margins these companies have.

Your point being? 

How are the Grocery executives being dumb?  They have kept food on the shelfs in this country at a lower rate of price increase than many other G7 nations.  Tell me how you would have done better in the circumstances?

[viper37]

 


I don't think there is any business anymore in North America that has a fully integrated supply chain and that is not what I said.

I said they were conglomerates and they own part of their own supply chains. They have some real estates, they have their own transportation in many case, and in the case of Weston, they often have their own farms.  Yes, that is how they keep their own costs down.

But their level of concentration also lead to abuse on their suppliers (those who are independant), which have no choice but to bow to their pressure.  

5 Grocery stores accross Canada when not all them are present in all provinces (at most, 3 have presence in any one province) is not that much competition.  We have known cases where they engaged in price fixation mechanism for some products, and abuse of their suppliers has been known for years.

As for market concentration, it is also something that has been known for years, nothing new under the sun here.  The Competition Bureau's study point in the same direction.

Economics 101 folks.  The more government increases the costs of these operations the more food is going to cost.

Well, duh, obviously.

I'm all for free market.  But it is not a free market we have.  Look at my city.  Comme November, there will be one supermarket left (Metro), and one "independent" grocery store left. The "independent" banner also belongs to Metro.  The nearest grocery store is 20 minutes away east of here (20 real minutes, not 20 "city minutes" 2km away  )

[viper37]

https://www.theglobeandmail.com/opinion/editorials/article-justin-trudeau-is-having-a-ron-desantis-moment/

An important piece for all Canadians to read  - an editorial from the Globe in which they warn about the dangerous populist path Trudeau has now chosen, and I would add to cover up his complete lack of an tangible public policy to deal with the affordability crisis.

Must easier (and dangerous) to raise the populist temperature.

[Grey Fox]

Don't put words in our collective mouths. Reduce your gross profit by spending more then. Maybe in salary to employees or less avoiding taxes?

You are fundamentally misunderstanding what I have said repeatedly.  This is a high volume low margin business.  The Libs and NPD are carrying on as if this was a high margin business and all that is needed is for the grocery business to cut its margins.  That is what increasing salary means. 

The economic ignorance of our politicians and in turn our population is deeply concerning.

There's a lot of gross money between 0 and 5% margins these companies have.

Your point being? 

How are the Grocery executives being dumb?  They have kept food on the shelfs in this country at a lower rate of price increase than many other G7 nations.  Tell me how you would have done better in the circumstances?

Better to do what? Being a greedy, in the words of Zoupa,  late stage capitalist? I don't know. They did pretty great.

They are being dumb because their capitalist greed will continue to threaten our liberal society and help ushering a fascist government. They could forego a % or 2 of margins and be leaders instead.

[crazy canuck]

You guys are hopeless.

[Grey Fox]

Could say the same of you.

[crazy canuck]

And it would have as much merit as calling the grocery execs greedy for making money on slim margins in a highly competitive marketplace.  Facts are just such inconvenient things when you want to lash out.

[Grey Fox]

I don't know what you are trying to say anymore.

[viper37]

highly competitive marketplace. 

I am sorry CC, but facts do not support your assertion.
The Canadian grocery marketplace is not highly competitive, it is one of the most concentrated marketplace of the industrialized world.  See the links to the studies I posted.
As for the margins, it is debatable.  They have higher margins than typical retail stores like Wal Mart and Costco.  Lower than other retail stores like exclusive clothing stores.  Retail margins for grocery and foods are typically below 2%, while Canadian groceries are close to double that.

[crazy canuck]

highly competitive marketplace. 

I am sorry CC, but facts do not support your assertion.
The Canadian grocery marketplace is not highly competitive, it is one of the most concentrated marketplace of the industrialized world.  See the links to the studies I posted.
As for the margins, it is debatable.  They have higher margins than typical retail stores like Wal Mart and Costco.  Lower than other retail stores like exclusive clothing stores.  Retail margins for grocery and foods are typically below 2%, while Canadian groceries are close to double that.

Wow, a 4%, at its highest, but your estimate.  Those greedy fucks!

[viper37]

highly competitive marketplace. 

I am sorry CC, but facts do not support your assertion.
The Canadian grocery marketplace is not highly competitive, it is one of the most concentrated marketplace of the industrialized world.  See the links to the studies I posted.
As for the margins, it is debatable.  They have higher margins than typical retail stores like Wal Mart and Costco.  Lower than other retail stores like exclusive clothing stores.  Retail margins for grocery and foods are typically below 2%, while Canadian groceries are close to double that.

Wow, a 4%, at its highest, but your estimate.  Those greedy fucks!

3.96 billions profits out of 100 billions sales for last year.


I'm not using the word "greed" anywhere.  I'm saying the market is concentrated and we lack competition.  This is a fact.  It is the same for telecomms actually, despite their protests or large distance to cover to offer their services.