Canadians need a public option for food
Governments are already massively involved in the Canadian food system and they have the tools to make sure that Canadians in all regions of the country have a public option for food.
On October 13, the Globe and Mail Editorial Board published an editorial critiquing proposals by NYC mayoralty candidate Zorhan Mamdani and NDP leadership hopeful Avi Lewis, for the establishment of non-profit grocery stores in underserved communities. The gist of the editorial was that food retail is a low margin business and simply removing the profit motive wouldn’t do much to bring prices down. The editorial pointed to recommendations contained in a 2023 Competition Bureau report as a better place to start.
The Mamdani proposal that the Globe critiqued consists of five stores in a city of 8 million people, one in each of New York City’s five boroughs. The stores would be city-owned and operated and likely managed by municipal staff. Goods would be sold at cost or with a minimal markup to. The locations would target areas with high food insecurity such as those that have seen supermarket closures.
The stores would be located in city-owned buildings and would not be charged rent. The upfront costs to establish the stores would be covered through reallocations within the municipal budget.
The Lewis proposal is light on implementation details and his comments on the issue have mostly centred on the evils of Canada’s big five grocers (Loblaws, Sobey’s, Metro, Walmart and Costco). That said, as the Globe editorial attests, Lewis’ highlighting of the issue has sparked media interest and there is plenty of time for his campaign to work out the details.
Mamdani and Lewis are right that there should be a public option in food retail but the Globe editorial is also correct that supermarkets are a low margin business. In other words, non-profit food retailers with the necessary supports may be able to offer slightly lower prices than private sector operations but that affordability won’t primarily reflect the fact that there are no shareholders to skim off the profits. It will be because governments at various levels are making strategic interventions to make sure Canadians don’t go hungry.
And that is a good thing, indeed!
What follows is a selection of existing Canadian food retail operations that governments can build upon to realize the Lewis vision.
A chain of 160 co-operative supermarkets exists in Western Canada which are owned by their members (the people who shop there) and where profits are returned to the customer/owners. The 160 food co-operatives, in turn, own a company called Federated Co-operatives Limited (FCL).
Here is how profits work in these co-operatives.
Profits generated at the store level are typically:
Reinvested into the co-op (e.g. infrastructure, services)
Returned to members as patronage dividends, based on how much each member spent at the store.
FCL supports the individual co-ops through wholesaling, marketing, and administration. There are over two million active members and more than 23,500 employees.
These co-operative supermarkets stop abruptly at the Manitoba/Ontario border and there have never been serious attempts to extend them eastward.
Quebec has a somewhat smaller version of the Federated co-operatives called the Sollio Co-operative Group with 72 member co-ops in retail, agri-food, and hardware divisions.
Both groups have their origins in rural areas and while Federated has a significant presence in mid-size western cities such Saskatoon and Regina, Sollio has no presence in Montreal. All told, food co-ops had just four per cent of the market share in Canada in 2020.
Both groups would face significant challenges in establishing a national presence along the lines being advocated by Lewis. In the food retail sector, distribution centres have to be relatively close to the customers and neither Federated nor Sollio have distribution facilities or a cold storage fleet in Ontario.
That said, the federal government certainly has the resources and legal authority to work with one or both co-op groups to establish a national food co-op presence with stores, distribution centres and cold storage fleets across the country. Such a scenario, of course, would be would be much more likely under a Prime Minister Lewis than a Prime Minister Carney.
At the present moment, it is the discount chains of the Big 3 (i.e. FreshCo, No Frills, and Food Basics) as well as Walmart, which consistently rank as the cheapest food alternatives across Canada.
During last Spring’s election campaign, Jagmeet Singh raised the notion of a price cap on a basic basket of goods sold at large supermarket chains. This would work well if applied to the four grocers cited above who are already serving the modest income market.
Singh’s idea was based on something that was put in place in France early in 2023 to control prices in the country’s supermarkets.
Under the threat of government imposed price caps on a basket of essential foods, France’s large supermarket chains entered into a voluntary agreement of food caps with the government.
French retailers were given the discretion to choose which food items to include in the price cap. The goal was to set these prices “to the lowest possible level” to help ease the financial burden on consumer.
The government also conducted spot checks to ensure that retailers complied with the agreement. Products included in the price cap were marked with an “anti-inflation quarter” logo featuring the colors of the French flag.
The cost of the initiative was borne by the large French supermarkets, amounting to several hundred million Euros. This meant that the retailers absorbed the financial impact of the price caps rather than passing it on to suppliers or consumers.
In late 2023, the French government announced that the number of price-capped products in French supermarkets would double to 5,000.
Another NDP leadership candidate, Heather Macpherson, has endorsed this approach.
Both Mamdani and Lewis would probably reject Singh’s price cap idea as it does not represent a “public option”. But there is, in fact, an existing non-profit food distribution model that does target modest income workers and the poor and operates on a significant scale. These entities are better known as food banks and while food banks and non-profit food stores may seem worlds apart, recent developments in the sector may offer some insights into how the Mamdami/Lewis idea could be operationalized.
In Toronto as of 2024, 207 food banks and meal programs operated across the city. The Daily Bread Food Bank coordinates food sourcing, warehousing, and distribution for these food banks. It also collaborates with the North York Harvest Food Bank to cover the full city, including Scarborough, Etobicoke, and North York.
The reason I’ve included food banks as part of a discussion of non-profit grocery stores, is that over the past decade the business model of Daily Bread and other food banks has been undergoing a dramatic change wherein a much larger portion of the food distributed is purchased the same way any other retail food venture would.
Over the past decade, the Daily Bread Food Bank’s food purchasing budget (as opposed to donated food) has increased dramatically—from $1.5 million annually before the pandemic to $22 million in the 2023–2024 fiscal year.
Now, a small portion of the produce, meat and canned goods distributed by Daily Bread (30%) is still donated but it is a diminishing share.
While they haven’t published a detailed breakdown of volumes or vendor relationships, the Ontario Food Terminal is a key source for wholesale fruits and vegetables for Daily bread and many other food banks in Ontario. The Terminal, of course, is also the source of produce for fruit and vegetable stores throughout southern Ontario. The Terminal allows Daily Bread to purchase in bulk and to respond quickly to seasonal availability and pricing shifts, especially as their food purchasing budget has grown dramatically in recent years.
The Food Terminal is owned and operated by the Ontario Food Terminal Board (OFTB), which is a provincial agency under the Ontario Ministry of Agriculture. In other words, the gigantic Food Terminal is a non-profit as well as being Canada’s largest wholesale fruit and produce wholesale market, distributing over 2 billion pounds of produce annually from its 40-acre site.
The Food Terminal sourcing for produce complements Daily Bread’s partnerships with meat wholesalers who also increasingly benefit from the larger purchasing budget. Daily Bread’s 108,000 ft² warehouse includes over 5,000 ft² of cold/frozen storage, enabling safe handling of fresh and frozen meat.
I mentioned earlier in this post that the core of Madmani’s plan for non-profit stores in each of NYC’s five boroughs was that the municipal government of New York City would pick up the tab for much of the infrastructure.
Well, in the City of Toronto, some food banks and community food programs already operate out of City-owned buildings or spaces leased by the City at reduced or no cost to the food banks. In these cases, the City may cover rent, utilities, and maintenance as part of its broader support for the food banks. More specifically, in Toronto this is done through the Community Partnership and Investment Program (CPIP), which provides funding that can be used for operational expenses, which may include rent and utilities.
Finally, there is more overlap than one might think between the folks who use food banks and those who would patronize an affordable, non-profit grocery. Many people who use food banks in Canada—including in Toronto—are part of the working poor. These are individuals and families who are employed but still cannot afford basic necessities due to low wages, high living costs, or unstable employment.
According to the Who’s Hungry 2023 report by Daily Bread and North York Harvest, one in three food bank clients had employment income in the past year and many clients work full time but still rely on food banks due to rent consuming 70–90% of their income. As far as I know, Daily Bread has no plans for getting into food retail but the point of this excursion into their operations is that they are currently doing pretty much everything that goes into a food retail operation except charging for their food.
Because of that, it would not be difficult for the City of Toronto (and perhaps other large municipalities) to expand its food bank infrastructure to serve a wider range of low and modest-income customers. In other words, the City could be the driving force behind the transformation of its emergency food assistance program into a broader food affordability program comprised of both food banks and non-profit grocery outlets.
As this post shows, governments at different levels are already massively involved in the Canadian food system and have a variety of tools at their disposal to ensure a more equitable distribution of food.
It is time for those governments to get to work to make sure that Canadians in all regions of the country have a public option to ensure that they don’t go hungry.
Thank you for this column Ethan. I am sure there are many areas of Canada that are "food deserts", that is, locations where there are no grocery outlets because it is not profitable for a grocery store to operate there which would be good locations for publicly owned grocery stores. Additionally this would improve the health of those who shop there because surprising enough, junk food is cheaper than healthy food, and junk food is a lot more available than healthy food.
Also, I don't know if it is you or substack, but would it be possible for you to change the colour of your active links, as the yellow does not show up very well against a white background.