Increasing price of beef leading to legal clashes
Published on April 4, 2022 by Sylvain Charlebois
A Quebec-based group is leading a class-action lawsuit aimed at major federally-licensed beef packers. Cargill, JBS Foods, Tyson Foods and National Beef Packing are all accused of colluding and inflating beef prices since 2015.
So if you’re a consumer in Quebec who’s been buying beef since 2015, you can be part of the claim. The authorization application was filed in the Superior Court of Quebec and the group will hear from the courts later this year.
This claim doesn’t appear to surprise anyone. Food prices have been skyrocketing for a while, especially beef. According to Statistics Canada, while ground beef is up only four per cent since January 2015, most beef cuts have gone up from 30 to 51 per cent. Only baby food and potatoes have seen sharper increases since 2015, so beef prices stand out.
Farmers have long complained about how little they get versus how retail prices behave at the grocery store. The correlation between the price farmers receive and retail prices has always been weak for most products. But consumers are noticing, and some groups are acting on concerns that something may not be quite right.
What’s perplexing about the claim is how it only aims at a handful of packers. If collusion did occur at the meat counter, many other companies would have arguably benefited from artificially inflated prices, including smaller abattoirs and, of course, retailers. Margins are significant on meat sales in food retailing, so grocers would have also increased profits as a result of higher wholesale prices.
The claim is likely inspired by what has happened in the United States in recent months. In December, the White House released a scathing report about how profits in the meat-packing sector have spectacularly increased, by over 300 per cent since the start of the pandemic.
JBS USA approved a US$52.5 million settlement in an American lawsuit in which the company was accused of conspiring to boost beef prices. They never admitted guilt in the deal, though. Cargill, National Beef Packing and Tyson Foods were also named in the case, the same companies mentioned in the Quebec claim. Of the four, only Tyson is publicly traded.
When it comes to price-fixing, the United States doesn’t fool around. When Congress and the White House have concerns, they act on them. In Canada, not so much.
The bread price-fixing scandal that came to light back in 2017, when Loblaw admitted having participated 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 when admitting Loblaw’s involvement in a 14-year-long bread price-fixing scheme.
By admitting guilt and supporting the investigation, Loblaw received immunity from the Competition Bureau. The investigation didn’t provide evidence to prosecute anyone else, even though bread prices went up dramatically while the scheme was ongoing.
But a group in Ontario has just been authorized to go ahead with a class-action lawsuit against the bread industry. So the beef claim is the second lawsuit we’ve seen in Canada in just a few months.
Some will say these class-action lawsuits are often launched by ambulance-chasing law firms looking for easy money or cheap publicity. Perhaps, but with higher food prices and Canada’s inability to forcefully monitor retail food prices, these allegations are likely going to make a valuable point.
Canada is really data poor compared to the United States. Statistics Canada doesn’t really report small details about what’s going on with all food categories, at least not as much as the U.S. Many even believe that food inflation is underestimated in Canada since Statistics Canada only relies on a few grocers to measure food inflation.
With strong data, American institutions can and will use the stick. In Canada, we pursue companies in hopes they blink. What doesn’t help is how under-resourced the Competition Bureau is. This needs to change.
At the heart of it all is how we measure greed, or at least how we should measure it. How much is too much, given the relatively small margins in the agri-food industry?
When a consumer walks away from a store with a $40 steak and willfully paid for it while many other options are offered, you can argue the grocer gave choices. But with higher food prices, our inability to measure or detect greed in the system will become more obvious. And consumer trust is at stake.
We need to act before skepticism in Canada grows even further.
ABOUT THE AUTHOR
Dr. Sylvain Charlebois is senior director of the agri-food analytics lab and a professor in food distribution and policy at Dalhousie University.