Is greed driving the beef industry into legal confrontation? – Writer’s Block

A Quebec-based group is leading a class action lawsuit targeting major federally-licensed beef slaughterhouses. Cargill, JBS Foods, Tyson Foods and National Beef Packing have all been accused of colluding and inflating beef prices since 2015.

So if you are a Quebec consumer who has been buying beef since 2015, you can be part of the claim. The application for authorization has been filed in the Superior Court of Quebec and the group will hear the courts later this year.

This statement does not seem to surprise anyone. Food prices have been skyrocketing for some time, especially beef. According to Statistics Canada, while ground beef has only increased by 4% since January 2015, most beef cuts have increased by 30 to 51%. Only baby food and potatoes have seen steeper increases since 2015, so beef prices stand out.

Farmers have long complained about how little they get compared to the behavior of retail grocery prices. The correlation between the price farmers receive and retail prices has always been low for most commodities. But consumers are taking notice and some groups are acting out of fear that something is wrong.

What is perplexing about this claim is that it only targets a handful of packers. Had collusion occurred at the meat counter, many other businesses would no doubt have benefited from artificially inflated prices, including smaller slaughterhouses and, of course, retailers. Markups are high on meat sales in food retail, so grocers would also have increased profits due to higher wholesale prices.

The statement is probably inspired by what has happened in the United States in recent months. In December, the White House released a scathing report on how profits in the meatpacking industry have increased dramatically, by more than 300% since the start of the pandemic.

JBS USA has approved a US$52.5 million settlement in a US lawsuit in which the company was accused of conspiring to raise beef prices. However, they never admitted their guilt in the case. Cargill, National Beef Packing and Tyson Foods were also named in the case, the same companies mentioned in Quebec’s claim. Of the four, only Tyson is publicly traded.

When it comes to pricing, the United States is serious business. When Congress and the White House have concerns, they act on them. In Canada, not so much.

The bread price-fixing scandal that broke in 2017, when Loblaw admitted to participating in an alleged industry-wide operation, opened the door to some public criticism. In 2017, Loblaw CEO Galen Weston Jr. strategically threw everyone in the industry under the bus by admitting Loblaw’s involvement in a 14-year-old bread price-fixing scheme.

By admitting guilt and supporting the investigation, Loblaw obtained immunity from the Competition Bureau. The investigation provided no evidence to prosecute anyone else, even though bread prices rose dramatically while the scheme was in progress.

But a group in Ontario has just been allowed to move forward with a class action lawsuit against the bread industry. The beef claim is therefore the second lawsuit we have seen in Canada in just a few months.

Some would argue that these class action lawsuits are often launched by ambulance-seeking law firms looking for easy money or cheap publicity. Perhaps, but with rising food prices and Canada’s inability to forcefully monitor retail food prices, these claims are likely to make a valid point.

Canada is really data poor compared to the United States. Statistics Canada doesn’t really report fine details on what’s happening with all food categories, at least not as much as in the United States. Many even believe that food inflation is underestimated in Canada since Statistics Canada relies on only a few grocers to measure food inflation.

With solid data, US institutions can and will use the stick. In Canada, we sue companies in the hope that they will wink. What doesn’t help is how under-resourced the Competition Bureau is. This must change.

At the heart of it all is how we measure greed, or at least how we should measure it. How much is that too much, given the relatively low margins in the food industry?

When a consumer leaves a store with a $40 steak and has voluntarily paid for it when many other options are available, you can argue that the grocer has given choices. But with higher food prices, our inability to measure or detect greed in the system will become more evident. And consumer confidence is at stake.

We must act before skepticism in Canada grows even more.

Sylvain Charlebois is Senior Director of the Agrifood Analysis Laboratory and Professor of Food Distribution and Policy at Dalhousie University.