A sneaky new policy could see less grocery choice and higher costs.

Could a new Liberal policy worsen food inflation in Canada?

Last week, an Ottawa area food bank cut volunteer shifts due to an extreme food shortage. The cause? Record high grocery inflation and demand for the food bank's services.

This food bank is one of many facing this problem in Canada. Across the country, food inflation has become a centrepiece of Canada's affordability crisis. This issue is also causing political problems for Canada's ruling federal Liberal party. In this scenario, logic would dictate that the government would shy away from any policy that could worsen the problem.

But that logic might have escaped the federal environment Ministry, led by former Greenpeace-activist-turned-Liberal-Member of Parliament Stephen Guilbeault.

As reported by the CBC, during the summer, amid rampant food inflation and tanking Liberal polling numbers, Guilbeault's Ministry quietly launched a consultation on a policy that would place strict and onerous new regulations on Canadian grocers.

The upshot of Guilbeault's proposal is this. Under a new regulatory framework, most grocery chains would be required to limit the total amount of certain types of product packaging sold on their shelves. The grocers would be responsible for complying with federal regulations but would also have control over what products they sold to meet standards dictated by the Liberal's new rules.

To anyone with half a brain, the market implications of these regulations should raise immediate alarm bells. Here's why.

A few vertically integrated grocers rule most of Canada's retail grocery availability. Think Loblaws, Walmart, and Sobeys - grocers who both manufacture and sell most of the groceries Canadians buy. For years, their stranglehold on both the supply and method of sales of groceries in Canada - or "supply chain bullying” - has been decried by civil society groups and independent grocers alike because of less diversity in the supply of groceries and the choice of where to buy it has sometimes translated into higher prices and less choice for consumers.

Said a different way, while Canada's big grocers have made significant profits from this arrangement (and the lack of government intervention), average Canadians trying to buy groceries have gotten the shit end of the stick.

Canada's (arguably grossly inadequate) competition laws have provided some (meagre) pushback to the loss of grocery choices for Canadian consumers. A prime example includes the Competition Bureau's investigation into price fixing in bread among Canadian grocers. 

But Guilbeault's new proposed regulations risk removing even that minor speedbump from Canada's grocery giants.

Let's say one of Canada's mega grocery chains decides that a major brand name retailer doesn't meet their corporate plan to meet Guilbeault's regulatory framework. In theory, they could refuse to sell that product. And because the grocery company is complying with new federal law, it raises questions about what the Competition Bureau could do to prevent those products from not being stocked on those store's shelves.

That could mean that grocers could stock their vertically integrated store bands and exclude major brands more easily. This scenario could result in less choice for consumers and potentially increased prices for store brands, as there would be fewer products on the shelves for consumers to choose between.

Further, major product brands in Canada already face federal regulations that, in some cases, increase the cost of packaging and, in turn, lower profit margins and make Canada a less attractive market to sell products into. You can be sure that Guilbeault's new, mega-onerous and super vague proposed regulations will be making the rounds around the board tables of these companies, who might proactively choose to say "screw it" and pull out of the Canadian market altogether. (While not linked to this new set of proposed regulations, Kleenex made news for this type of decision this week). Again, this would mean less choice for consumers, and less choice always means higher prices.

Further, by making big groceries in charge of food packaging, it could be argued that Guilbeault is turning them into a quasi-regulatory arm of the Canadian federal government, which is objectively insane in and of itself. Further, without a doubt, the cost of administering this system would be passed along to consumers by the grocers.

There is nothing in any of the consultation documents that acknowledges any of these issues, probably because they were written by an overzealous former Greenpeace activist (Guilbeault) who likely has little supervision from a listless, tired, and scandal-deluged Prime Minister's Office.

That the Liberal caucus, many of whom will likely be in a fight for their seats over affordability issues, let Guilbeault get this policy to this stage highlights a party not accustomed to holding its cabinet or leadership to account.

What the federal New Democratic Party, currently in coalition with the Liberal party, does with these regulations will be politically telling. Earlier in the year, NDP leader Jagmeet Singh made a political spectacle of hauling Loblaws executive Galen Weston to a Parliamentary Committee. If he rolls over on these regulations, it will be hard for the NDP to argue that they haven't caved to a Liberal brand of politics that favours the powerful and screws over the working class.

It's important to note that the consultation on the policy is public. If you have faced affordability 

issues with your groceries, you can send an email telling your story to the government at the email listed in the consultation document. Share this article, too. Significant changes like this shouldn't be shrouded in silence.

Looking for ways to make packaging more environmentally sustainable shouldn't mean worsening food inflation and giving Canada's already too-powerful grocers even more power to stack the deck against consumers. There’s been a lot of progress made on this front to date, and more progress can always be made. But that progress shouldn’t come at the expense of consumer choice, further food inflation, and pulling Canadian grocers into a weird umbrella relationship with the federal government.

Godspeed to that food bank in Ottawa. Guilbeault certainly hasn’t thought about their clients with this framework.