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Comment by motohagiography | Hacker News Reader

canada's attitude toward competition is different than that of the US though. our agricultural products (dairy, wheat, maple syrup, and to a lesser extent retail beer and alcohols) are controlled by state monopolies who set prices.

the reason food is so expensive is because of fuel costs from the last few years, which were further not-helped by both an increase in federal taxes on fuel and the semi-official policy of weakening the CAD against the USD to support exports that weakens purchasing power. the effort appeals to economically illiterate constituents who support "price controls."

if you want to know where canada is on its de-kulakization spiral, the state is blaming "price gougers" for its policy failures, next are hoarders, speculators and probably "international bankers," on the list of clichés.

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I agree with you that Canada has a very unique attitude to competition - it's "Can't we all just get along?"

Regarding food, I beg to differ. The top 3 grocers have price-fixed bread [1] (one prosecution since that article), wage-fixed [2] and have no-compete agreements for certain times of the year [3]. Food prices are not driven by underlying costs here.

1. https://www.cbc.ca/news/business/bread-price-fixing-loblaw-1... 2. https://financialpost.com/news/economy/how-hero-pay-scandal-... 3. https://www.cochranetimespost.ca/opinion/columnists/charlebo...

as per the articles, the investigation that yielded guilty pleas for price fixing was 20 years ago, the current investigation has had no results so the CBC is just narrative churning there. that the "hero pay" was coordinated hardly amounts to wage fixing unless you are litigating like a union rep.

Food prices are absolutely driven by costs, there is no other basis for them.

Loblaws is a luxury retailer with a limited set of stores and hardly counts as competitive. When someone complains about margins on certain products, ask them to explain complementary goods to you. This project is theatre for people whose understanding of economics ends at monopoly and scrooge mcduck.

> Loblaws is a luxury retailer with a limited set of stores and hardly counts as competitive.

Uh? Loblaws is the largest or only grocery chain in many parts of Canada.

Loblaws owns a huge variety of grocery stores in Canada and they also have a bank (President's Choice Financial) as well as large real estate holdings. There are a fair amount of places in Canada that only have a Loblaws store in the vicinity. As a Canadian, painting them as some sort of boutique luxury store is very strange to me as they have huge grocery stores and are generally considered to be on the cheaper side. You can see by this graph here: https://www.statista.com/statistics/481019/leading-grocery-r... that Loblaws is probably the biggest grocery retailer in Canada.

> Loblaws is a luxury retailer

Is that why they own the chain "No Frills"?

> with a limited set of stores

Only in the sense that it is a finite number of stores. Loblaw Companies is Canada's largest food retailer.

our agricultural products (dairy, wheat, maple syrup, and to a lesser extent retail beer and alcohols) are controlled by state monopolies who set prices.

Every sane government uses taxes, to ensure food independence. A country needs farms beyond all else. The US does this on the back end, using taxes to shore up pricing. One method the US uses is "government cheese", where their federal government buys megatonnes of milk, turns it into cheese, then gives it to welfare recipients. By buying up surplus, the feds keep the price of milk up.

Canada instead regulates milk pricing via quotas.

Both methods involve keeping the price artificially high.

The US follows suit in other markets too.

Yes, the US is no stranger to government influence on the prices of ag products, but my impression is that Canada is a couple notches above, especially the highly populous Ontario. Any comparison of the two needs to take that into account.

Based on a brief look by my layman eyes, it does not seem like Canadian grocery chains are vastly more concentrated relative to the US. It's hard to compare because so many of the chains are owned by the same few brands, but this chart is helpful:

https://www.howtocook.recipes/the-largest-grocery-stores-and...

I'd look at the top ten and then ignore Walgreens and CVS. I think you've got 8 conglomerates serving the vast majority of the 330M Americans. (Unclear to me whether Target should be included; I don't know how much of the sales listed there are actual groceries.) The OP article suggest 5 conglomerates serve the large majority of the 38M Canadians.

Wheat is no longer government controlled in Canada, the wheat board was sold off back in 2015 and no longer is the sole purchaser.

The Canadian Wheat Board (CWB), which only ever served the prairie provinces, was sold off. The Ontario Wheat Board is still in operation (now known as Grain Farmers of Ontario) and declared an end to the single desk in 1999, which was phased out by the early 2000s.

GFO continued to run an optional pool until the 2020 crop year, but that has now also come to an end. I can't imagine anyone was still using it. It was a product of a bygone era.

Thank you for the context and info, good to know.

Your analysis of food price increases "in the last few years" doesn't mention the worst financial crises the country has faced in (at least) 80 years and the effect it had on inflation. It also doesn't mention the record corporate profits being recorded in several sectors. The profit margin of our largest grocery chain actually increased 50% during Covid for instance.

Instead, your analysis is simply: "Government bad!"

Don't get me wrong. I'm not saying the government isn't a very large part of the problem (ie for increasing the money supply and a lot of the things you mentioned) but to try and explain what happened to food prices without even mentioning Covid, or record corporate profits, is extremely disingenuous.

But damn those "economically illiterate" serfs complaining about high prices, eh?

>The profit margin of our largest grocery chain actually increased 50%

That's not exactly a strong indictment: when the average margin for the industry is about 1%, all kinds of things are going to cause this or that industry participant's margin to fluctuate up or down by a factor of 50%, i.e., to go down to 0.5% or up to 2%.

It's not the same thing as Apple's margins, which last time I checked 12 years ago or so hovered around 33%, so if they went up by 50% (i.e., to 50%) it would mean something (at least if they stayed at that high for many years, which BTW you have not mentioned whether the largest grocery chain's did).

Except we're talking about Covid. When all input costs were skyrocketing (according to the grocers themselves). Accordingly, there were no magical cost-saying measures or new efficiencies unleashed.

That tracks with their financial statements (no new efficiencies).

So, the only way to increase profit margin when input costs are rising is to raise prices more than your costs are rising.

As an aside... Loblaw's margin is upwards of 3.7% not 1%. Before Covid it was around 2% (give or take) for over a half century. The grocery industry may have low margins but they were remarkably stable. Until Covid.

Your list isn't quite right. I produce in two of those agriculture sectors in Canada. I'm able to charge whatever price I see fit for my products, independent of anyone else producing something similar. About the only thing that comes close in the one instance, which may be what you're thinking of, is if I decide to sell my product through the government store (optional) I contractually cannot sell my product at a different price in my store – but I still get to set the price used in both places. There are no encumberments to speak of in the other case. It is about as "free market" as it gets.

At the same time, you missed eggs and poultry, which are also under supply management like dairy. If we're to be technical it the milk/egg/chicken/turkey marketing board is responsible for managing the supply and therefore prices, which is decidedly not a government entity, but the existence is granted by the government so we'll give you that one.

yeah this is some ideological nonsense.

Loblaws and other companies have a lengthy history of illegal price fixing, monopolistic behaviour and other manipulative activity. Pretending that just more unregulated free market nonsense is going to help the situation is really naive.

People generally get the govts they deserve. Canadians are no different. i.e blame Canadians not their overlords.

Can't it be both?

Well yes, it can be both. But overlords are a)universally corrupt b) they are always a minority. The overlords have their way only because the majority allow it. You will see these dynamics even in tiny groups where the minority loud/obnoxious individuals rise to power.

Focusing on the overlords is almost always a distraction on the underlying issue - that of the the electorate being too stupid, or ignorant to realize that they are being taken advantage of.

Wild that Costco can be orders of magnitude cheaper than the competition despite your defending of Galen's honour.

I've never seen Costco be multiple orders of magnitude on any item. That would be a huge difference.

This is the most laughable part, it means Costco has to be in on it too. And I can show they’re not, easily: the prices at Costco are more than the grocery chains!

They are colluding... to keep prices low

I'm not sure your proof works. In the absence of collusion, you'd expect vendors selling the same thing to ultimately end up with the exact same prices. After all, why would the customer keep buying from Player B if Player A is selling the exact same thing for less? The only way Player B has any chance of finding any customers and dividing the market, without some other differentiating factor, is to sell at the same price as Player A.

If anything, Costco's higher prices is more likely to suggest collusion (but still does not imply it).

Don't forget "trickle down economics." After collusion, price gougers, speculators, hoarders and bankers you always get to fall on "trickle down economics" as the convenient scapegoat.

Unless of course you're a conservative. Then it's somehow always immigration's fault.

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