B.C. Premier is wrong about what’s driving grocery prices

“At $3 a pound, your apples are too expensive,” said the customer to the grocery clerk. “The store across the street sells apples at $2 a pound.” “So why did you not buy them there?” asked the clerk. “Because they don’t have any.” “Ah,” said the clerk, “when we don’t have any, our price is $1 a pound.”

B.C. Premier Eby, as part of the current election campaign, has said that he will lower grocery prices. He thinks that exorbitant profits by food sellers are keeping prices high and that legislating lower prices will help all of us who buy groceries. His proposed “price guard” would limit how much corporate grocers can make from selling milk, eggs, cheese, butter and poultry. He is wrong.

Certain things cannot be fixed by passing laws. Otherwise, we would long have had a law making the common cold illegal. Capping what retailers can earn on certain foods will not make those foods cost less to produce, transport or sell. The grocers will have to make up the difference somewhere, cut their costs or decide that some products are no longer worth selling.

Eby does not seem to be aware that food retailers are not making huge profits. Most supermarket chains earn in the three per cent range, just enough to be able to keep operating in a very competitive market. Higher prices are not simply putting money in their pockets. They are also the result of higher costs, most of which are beyond the control of the industry.

Climate change, fires and other weather events reduce the food supply and raise prices. Wars push up the price of inputs. Have you looked at the price of diesel recently? Much food is delivered in diesel trucks. And this is before saying anything about the impact of tariffs and trade wars.

Limiting grocery margins creates another problem. Controls are very difficult to enforce and involve setting up and using complex systems that are rarely efficient or effective.

There is a better way to make groceries cheaper for all Canadians, especially when dealing with the specific foods that Eby has targeted, such as poultry and dairy products. As any Canadian who has ever stepped into a food store south of the border knows, prices for some of these products can be considerably lower there than in Canada. There is a reason for this.

Our government has set up legal monopolies through Canada’s supply management system, which limits how much dairy, poultry and eggs can be produced and controls how much can be imported. This benefits the farmers in the system by making food less available and affordable to Canadian consumers.

It hurts us in other ways, too. Our use of this protectionism makes it harder for us to achieve and benefit from freer trade with the U.S. and others.

The producers that have long been profiting from this cost imposed on all Canadians who eat would be affected by the loss of their monopolies. However, if they are like most business people, they tend to be optimistic and adaptable and will follow examples from other countries to become more productive and provide us with more and better food.

If David Eby really wants to make food more affordable for B.C. citizens, he should be putting his efforts into leaning on the federal government to remove the constraints that have been keeping food expensive for all Canadians for so long.

Dr. Roslyn Kunin is a respected Canadian economist known for her extensive work in economic forecasting, public policy, and labour market analysis. She has held various prominent roles, including serving as the regional director for the federal government’s Department of Employment and Immigration in British Columbia and Yukon and as an adjunct professor at the University of British Columbia. Dr. Kunin is also recognized for her contributions to economic development, particularly in Western Canada.