Are city-run grocery stores really the answer for soaring food prices? | Gabriel Giguère

Added: 2026-05-12

[00:00:03]The price of groceries has skyrocketed over the last few years and there doesn't seem to be any relief on the horizon. One of the potential solutions being floated recently though is government-run grocery stores. Some love the idea if it will bring prices down while others loathe the idea of more government control. So, joining us today to discuss this is Gabriel Jaguar, a senior policy analyst with the Montreal Economic Institute. Welcome to Bridge City News, Gabriel. Hi.

[00:00:35]Hello. Okay, how much does the average family spend on groceries roughly? It's thousands of thousands of dollar every year and so it is a problem because food inflation has been a real concern for many Canadian families. And so it's normal to have some public policy recommendation regarding how to reduce that grocery grocery bills because it costs a lot for family. And so public grocery stores is is an idea.

[00:01:02]Unfortunately, I don't believe it's a good idea simply because it's not a problem of the goal cuz the goal to reduce grocery bills is very good. The problem here is mechanic incitation, economic incitation. The problem right now is that we have private player groceries and they are able to to to to give to do the job but the problem is that if they don't do a good job, well the consumer won't go back to the same groceries. Now, the problem with the public groceries proposition is the following one. If nobody's go there, well we won't pay less as a consumer but we will pay more as a taxpayer because they can simply take it from our pocket as a taxpayer if it's not as a consumer.

[00:01:48]Okay, well that's interesting. You know, it's somewhat alarming right now the statistics on food banks too. Here in Lethbridge where I am, food banks have seen a 90% increase in demand over the last 5 years. And I do know that groceries have gone up seemingly everywhere these days. And my grocer in Lethbridge, even simple things like milk and eggs have seen a significant increase. So, you know, but Gabriel, many consumers believe that these stores are gouging customers. So, does the evidence back this up? Are we being ripped off by huge profit margins? Or are they raising prices because they are paying more for product and for shipping? Well, that's the that's the latter. They are increasing their price basically because of shipping. Everything costs more for them. And when you're looking at margin, we're around 3 to 5% margin, which is thin margin. And so, even when we're looking into uh some brief that has been tabled regarding the Toronto willingness to open those kinds of public groceries, what we saw is that they are food banks that are saying it is not the right approach. I mean, theoretically, if we completely erase those very thin margin, this would have an impact of $11 to $18 per month per person. It is not enormous, and it's only theoretically. Cuz in practice, as we said, they don't they don't have the same economic incentives to do the best for the consumer. So, I do not believe it will happen. An international example demonstrate that. When we're looking into Kansas City, there was the a Kansas City Sunfresh Markets, where it's a public groceries. And basically, after a couple of years, well, it cost more than $25 million of taxpayers' money. And two main problems was there. It was not the consumer were not able to find perishable food, namely fruits, milk, egg. The shelves were basically empty. And a lot of violence also an unsecurity problem there. And so I do not believe that either can Canada, Quebec or even municipalities at the provincial level also will be able to have those kinds of groceries but not but it's clear that something needs to be done by the government. It is not that policy but other things can be done.

[00:04:14]>> Yeah, is the concept of a government-run grocery store based on the idea that they would not use a profit markup? It is exactly that they think because they will not have profits, it won't be any problem but you know when it's governmental people have higher salaries. So you are pushing up the costs usually. So if you're pushing up the cost how will you be able to compete against private grocer with very thin margin and lower cost. There's also a very complex logistic. So at the end of the day I do not believe we will have a lower grocery bill as a consumer. But certainly a higher bill as a taxpayer.

[00:04:52]So that's one of the very real problem and we don't hear that enough. Now there are other things that the government can do to lower the bill. Three things. So first thing's first they can lower interprovincial trade barrier that add up to the cost. But also and people might not know it because we're talking a lot about Donald Trump when we're talking about tariffs. But when we're looking at the World Trade Organization and in Canada what we're what we're learning basically is that Canada is applying a on average 15% on agricultural importation which add up to the cost. And finally, it's a very important policy that I do believe we need to abolish to lower grocery bill for Canadian family. It's the supply management. Milk, egg, chicken, turkey is more expensive than the private market could could be if the the if no policy was in place so that Canadians could have access to cheaper product but not in lower quality. Mhm.

[00:05:54]Right now, what percentage of our overall family budget goes towards groceries? It's a it's a important amount. So, if you have a household of $100,000 Canadian, it's usually way more than 10,000 per year. And so, you are maybe at 15 to even maybe 20. It depends how many people are in the household.

[00:06:16]Obviously, if you are three, it won't be the same amount as if you are five or six. That's that's obvious. But at the end of the day, it's a it's a big it's a big spending element for every Canadian family. And so, there is an importance to act as a government to reduce prices.

[00:06:35]I would simply be careful because the reality is that public policy or simply measure such as public groceries, even though it's good intention, the result doesn't care about the intention. So, we need to keep in mind that if we want to have the good good result, it's not about intention, it's about mechanism put in place and the recommendation. So, if we lower tariffs, we know product will cost less for groceries that that are importing them. That's a good thing. Now, if we think that public groceries will lower the bill, I simply don't think it will work. So, we need to be careful because example throughout the world demonstrate that it doesn't work and the government should should make sure not to go ahead with that measure. Yeah, I know the the new NDP leader Avi Lewis is proposing to establish a network of government grocery outlets across the country promising to save 30 to 40% per family. That sounds like a huge number. But according to your study, Gabriel, if government-run grocery stores were to succeed, how much money would the average family actually save? You were saying it wasn't much at all.

[00:07:44]Theoretically, and it's a food bank that was pushing that number. So, theoretically, it would be $11 to $18 per month per person. The reality is that the new NPD's numbers, I will be very clear, those are creative accounting to be nice because it doesn't it doesn't stick to reality when we're talking about reducing by 30 to 40% grocery bills when margin are 3 to 5%. I'm going to where we will find the other 35%. Yeah, what are some of the root causes of the high grocery prices right now? So, there's a lot of reason. There's of course the There's also the the carbon tax that have a And then back on the groceries, there's the interprovincial trade, international trade. So, there are a couple of element there that explain that.

[00:08:31]There's also supply management that artificially doesn't lower the price.

[00:08:36]So, when we compare to United States, the Midwest, which is the closest to home, we realize that milk There's a There's a tremendous difference between milk sold in Canada compared to the Midwest and in the United States.

[00:08:49]There's also the same difference with eggs. There was a a little exception while there was a a fluctuation in the recent year, but other than that, when we're looking into the average of the last 20 years, it is very clear we are paying more for the same product. And so, government has some key policy that it could put in place to lower grocery bills. Unfortunately, right now we are only talking about the public groceries, which is very attractive on paper, but very bad in reality.

[00:09:17]>> Interesting. So, uh you've mentioned interprovincial trade barriers there.

[00:09:21]So, is it possible that these could be dismantled? Is there any progress being made in this area? Oh, that's a That's the question, I do believe, because the reality is that before 2025, before the President Trump came into power and said, "Well, I'm going to put some tariff on Canada. The discussion there was really any discussion at all.

[00:09:43]We have a a a a something in place in 2017 with all the Canadian province and we we we basically are in favor of reducing those barrier, but nothing concrete has been done. Now, in the last 2 years or a year and a half, we saw new bills, provincial bills tabled and adopted by saying, well, we will reduce those barrier, but more needs to be done to concretely put that into power. And so, it's not necessarily to harmonize, but it's to recognize that your regulation that yeah, your your regulation will will be respected in Ontario even if you're from Quebec or in Alberta if you're from British Columbia cuz there's a a lack of harmonization and it's a bit normal because it's a provincial competency, for example, on the health and everything, but more needs to be done, most definitely, to make sure that we lower price because transportation is a very good example. If you need to go to United States to to transport some kind of agricultural product, which is basically which was the case from British Columbia to Alberta, well, the transportation cost is higher and so by extension, the the food price will will the food cost will be higher. So, if we can reduce those barrier, it will be better for the consumer, but not related to public groceries and it's better that way. Yeah, uh you mentioned that supply management is one of the contributing factors to higher grocery prices. So, to what degree does this impact us, the consumer? So, we did a study a couple of years ago when we were looking at a couple of hundreds of dollar per household so per year. So, it's a lot of money and in that sense, milk, eggs, chicken, turkey, those are more expensive because of this and chicken, for example the consumption of chicken has grown in the last couple of decades in Canada and so knowing that we pay our chicken with higher price than the United States because of that policy I do believe it's a bad thing. I do believe that if we can afford chicken because we have we have more variety on our shelves. It's a good thing cuz at the end of the day Canadian families will still decide what they want to consume. Another element that is very important is that supply management has created tension trade relation tension not only with United States which is pretty clear right now with the Kuzma negotiation the problem that it that there is with the supply management but also with the UK and with New Zealand. So it's it's a problematic element for external international trade and this need to be this need to be fixed. Yeah and also whether our federal government will address any of these issues anytime soon.

[00:12:31]The problem is that it's not necessarily politically popular but I do believe that when we think we need to think about the consumer before popularity and the consumer need to pay less. So in that sense I sure hope the the current federal government will understand that reality and will act upon it. Now he is only the one who knows if he's going to do it or not. Gabriel thank you so much for being with us today. We really appreciate having you on.

[00:12:57]It's a pleasure.