Canada

The answer, of course, is to quit eating

MICHAEL POSNER July 24 1978
Canada

The answer, of course, is to quit eating

MICHAEL POSNER July 24 1978

The answer, of course, is to quit eating

Canada

Marigolds at a garden’s edge discourage the dreaded nematode—a worm with a fondness for tomatoes and lettuce. Onions repel aphids, and a clove of garlic offends everything. Such nuggets of gardening lore may once have seemed remote for most Canadians, like some esoteric branch of phrenology. But not any more. Surging food prices are bringing back the family garden with vigor. Backyard barbecues rust in idleness—the price of fresh hamburger being what it is ($2 a pound)—but hoes and rakes and rows of marigolds have not been so evident in years. “This and a freezer are the only answer,” says Ontario health ministry supervisor Lou Kerwin, pointing to his thriving vegetable garden on a rented plot in suburban Toronto. “It’s the only way to hedge on rising prices.” The sharp rise in food prices has been swift and sweeping; hardly a supermarket category has been left untouched. In the past year, the cost of beef has climbed 70

per cent (11 pér cent in July alone); fresh produce is up 40 per cent. Chicken, pork, fish, milk, bread, canned goods—virtually the gamut of the average housewife’s shopping list—are all up substantially. Actual prices are enough to curb an appetite. A five-pound bag of Sunkist oranges is $3 in Ottawa. A single head of imported celery was being offered at $1.98 in one Toronto supermarket. An eight-ounce jar of Nescafé instant coffee fetches $6.45 in Vancouver. Sirloin steak is $3.68 a pound in Halifax. And in Winnipeg, where prolonged strikes at Safeway, Canada Packers and Swift have diverted attention from prices, a one-pound box of Duncan Hines cake mix is selling for 95 cents. Spurred by such prices, the 1978 food index (see chart) resembles the route of a Rocky Mountain ice climber: almost straight up. In thousands of homes, choice meats have become a rare delicacy, like truffles. “The last time I bought a roast was 18 months ago,” re-

calls Ottawa researcher Charleen Hertz. “My husband and I planned to have some people over, but it tasted so good we sat down and ate the whole thing by ourselves in one sitting.”

The soaring cost of food follows close upon Ottawa’s dismantling of the anti-inflation program—a succession the food industry swears is mere coincidence. Says Llewellyn Smith, chairman of the board of E.D. Smith, the giant fruit processing firm : “Energy is up. Labor is up. Why isn’t food going to go up? Aren’t food growers entitled to their share?”

The large supermarket chains sing the same refrain: Don’t blame us. The price of food is a function of supply and demand. If supply declines for any reason (as beef has because of diminishing cattle herds or as winter produce did because of heavy rains in California), price hikes are inevitable. Besides, notes Cyril Keetch, vice-president of Vancouver-based Woodward Stores, “the price of food in Canada is still about the lowest in the world.”

Loblaws’ high-profile president Dave Nichol is no less committed to the theme of innocence. “Supermarkets have always taken the heat. It’s a Canadian ritual. It comes with the territory. But when food prices stabilized the inflation rate in 1976, no one suggested a royal commission to investigate the fantasticjob the food industry was doing. We still spend only 17 per cent of our disposable income on food; the rest of the world spends 30 per cent. Cuba spends 40 per cent.”

When all else fails, the major chain stores hastily trot out their 1-to 2-percent profit margins on gross sales—evidence, presumably, of their disinclination to gouge the consumer. “As we found at the Food Prices Review Board,” says Beryl Plumptre, its former chairman, “there is no single villain in the food chain.”

That sort of sentiment is not entirely reassuring. It does nothing to dissuade consumers from believing that the food chain may protect more than a single villainfarmers, food processors and, especially, large retailers. In any event, Plumptre is hardly a disinterested observer; she now sits on the board of directors of Dominion Stores.

On the other hand, there are valid reasons why food prices are at their highest level in four years. The 10-year world beef cycle is dipping into a steep trough; although prices may fall next month, the drop will be strictly temporary. Cattle

Wouldn’t you rather be in Winnipeg?

In the second week of July Maclean’s shopped at supermarkets in seven Canadian cities. The same 24 items were purchased in each, but prices varied.

Winnipeg: $36.83 Calgary: $39.27 Vancouver: $37.76 Ottawa: $41.16 Toronto: $37.83 Halifax: $41.21 Montreal: $37.90

herds are not expected to increase appreciably until the early 1980s. By 1984, food analysts predict, farmers will be getting $ 100 a head for live steers, compared to $43 a year ago, and $64.50 this summer.

Canada’s debilitated dollar has added 10 to 14 per cent to the cost of imports. Freight, packaging, energy, labor—wherever the wheel stops, the consumer loses. Even Canadian produce is not exempt. A case of lettuce that sells at $3 wholesale is packed in a case that costs 60 cents—and government regulations insist that only new containers be used.

Yet the consumer is clearly not convinced. “Dominion blathers on about power prices,” says Toronto crown attorney Will Hechter. “What they’re really talking about is power profits.” Calgary hair stylist Adrian Staples agrees: “The retailers are pocketing the extra money, even if they juggle their figures so you can’t prove it.” And while personal income has—until recently at least—kept pace with climbing food costs, one still emerges from the weekly ordeal at the supermarket feeling as though $60 has bought a couple of chicken dinners and a light snack. “The major chains say they’re making 2 per cent profit at best on every dollar of sales,” notes Ontario government economist Gordon Framst. “Can you believe that? Neither do I.”

Others are spending more and enjoying it less. Nova Scotia NDP leader Jeremy Akerman, doing a bit of pre-election cam-

paigning this month in his North Sydney constituency, found a mood of “quiet desperation. There’s enormous frustration. Women plan their tour around the supermarket so they don’t have to pass the meat counter for fear of shock or the temptation to buy.”

Atlantic Canadians particularly have cause for complaint. Food prices in St. John’s, Newfoundland, are the highest in the country, except in the Far North. Scallops, once a staple, are 30 cents a pound more than sirloin steak. “It’s a struggle,” admits Susan Medley, who lives in a public housing development in north Halifax. To 'eed five daughters and an infant grand-

daughter on $80 a week, Medley buys fresh mackerel (29 cents a pound), bakes her own bread, and has deferred a planned redecoration of the living room.

This national essay at belt-tightening sometimes takes contradictory form. Ottawans, for example, must endure a waiting list for the right to till one of 4,000 leased ($10-a-year) garden plots. In Richmond, B.C., however, outside Vancouver, two of every 10 sites are vacant. No-name brand products are selling heavily in Ontario, poorly in Quebec (which boasts the lowest food costs in the nation). Curiously, while Loblaws reports sales of four million noname units in three months, revenues for Ziggy’s, the company’s top-flight line of meats and cheeses, are growing by 20 per cent a year. “Often,” says president Nichol, “the same customer is buying both products—no-name peas at 29 cents a tin—and Provini milk-fed veal at $4.50 a pound.” In addition to no-names, Loblaws this month opened a “no frills” store in Toronto, an innovation that may well become a trend. Customers pay all cash, are charged for carry-out bags (unless they bring their own), and must pack their own groceries. Savings range from 10 to 40 per cent.

Responding to the swelling consumer protest, politicians at various levels have launched or threatened investigations of the food industry. Finance Minister Jean Chrétien has promised a three-month study of retailing and processing profit margins.OppositionpartiesinOntarioare demanding a royal commission, with the power to subpoena audits. A continuing B.C. government inquiry has so far found no evidence that co-operative advertising (whereby the manufacturer foots the bill for a chain’s newspaper ads) is illegal, but may voice criticism of a more questionable practice—product listing fees, which manufacturers pay the retailers to carry and promote new products. Last year, for example, General Foods and Borden introduced Quench and Wyler’s respectively, each with 10 flavors of fruit-drink crystals. Dominion Stores wanted $30,000 per flavor to list the product nationally. General Foods agreed; Borden, in tighter financial waters, paid for only five listings. At one level or another, consumer groups contend, the shopper pays for these schemes.

Ownership concentration, consumers also believe, militates against lower costs. Almost half the chain stores in greater Vancouver are owned by Canada Safeway, an American subsidiary with net income of more than $43 million in 1977. In all, according to the 1975 Mallen study of supermarket ownership, four major chains control 85 per cent of the market in western Canada. (The east, by comparison, is a competitive jungle, but even in Toronto, prices at the big six retailers bear an un-

canny resemblance.) Bruce Mallen, a marketing professor at Concordia University, has just completed a new study for consumer and corporate affairs and says, “I have no reason to change my fundamental view of the retail food trade.”

And so it goes. Chrétien says that if cabbage is too expensive, Canadians should buy something else, a remark that may set a new bench mark for Liberal callousness. Warren Allmand, this year’s minister of consumer and corporate affairs, told Maclean’s his department will soon embark on a program to “simplify things for consumers,” touring the country with food talks for old-age pensioners, immigrants and natives. One does not quite turn dizzy at the boldness of this impetus. There is talk again of a new federal food policy—as there has been talk for half a decade.

All fine utterances, none of them likely to make the slightest impact on food prices, which—barring an outright consumer rebellion—seem destined for

fresh heights still. MICHAEL POSNER