Ottawa has struggled to increase grocery competition. Will the new food strategy help?

Could food terminals, more domestic food production and tougher enforcement against anticompetitive behaviour finally bring more competition to Canada's grocery sector? Maybe, say independent grocers and industry experts — depending on how the strategy rolls out.

Prime Minister Mark Carney announced a $3.2-billion food security strategy Thursday, with several measures aimed at increasing competition in the grocery sector.

That includes a $1-billion investment to create and expand food terminals and hubs, like Toronto's Ontario Food Terminal, to help independent grocers buy food at more competitive prices. The government aims to expand the Ontario Food Terminal by the end of this year. By 2028, it plans to start construction on two new terminals and establish or expand 10 food hubs.

The strategy also dedicates $12.9 million a year to the Competition Bureau so it can identify anticompetitive conduct in the industry and carry out enforcement actions. It also includes funding for producers to process foods domestically and grow more food in Canadian greenhouses.

Gary Sands, senior vice-president of the Canadian Federation of Independent Grocers, said the measures overall are "good news" for independent grocers and Canadian consumers.

"Some of these [measures] I think will help with affordability and could definitely help strengthen the independent grocer's ability to compete," Sands said.

Many of the initiatives are ones Sands said he's long advocated for — including the addition of more food terminals, which he said could help independent grocers compete.

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"The Ontario Food terminal is a jewel," Sands said.

The warehouse in Toronto's west end brings together small and medium-sized producers of fresh fruit and vegetables in one place. It is also the only terminal of its kind in Canada, which is why Sands hopes the pledge to build two more could bring similar benefits to Eastern and Western Canada.

Christy McMullen, chair of the Ontario terminal's board and vice-president of Summerhill Market, describes the terminal as a farmers market on an industrial scale.

Rather than relying on one or two suppliers, grocers can see options from hundreds of producers at the terminal and bargain with them to buy food at lower prices, McMullen said.

"There's just more opportunities," she said. "You're in there, you're bargaining … compared to, you know, just a traditional supplier that you call up and say, 'Can I get 10 cases of cherries?' And you don't really have a choice."

According to the government, hubs would function like terminals but on a smaller scale and support competition in a similar way.

Despite the distance, Munther Zeid, owner of independent grocer Food Fare in Winnipeg, buys produce from the Ontario terminal because he says it is often one of the cheapest places to get it.

Zeid says he saves 15 to 20 per cent on produce by buying from the terminal rather than wholesalers in his area. But because the terminal only sells fresh fruits and vegetables, he still relies on Sobeys and Loblaw wholesale — his competitors on the retail side — to supply much of his packaged food.

He said additional food terminals and hubs could be most helpful if they offered canned or dry goods, where he sees the least competition.

McMullen said she hopes new federal money will allow the Ontario terminal to upgrade its facilities with temperature controls and refrigeration, which would allow it to sell meat and dairy — bringing price competition to more product types.

Craig Cavin, operations director for independent grocery chain Country Grocer on Vancouver Island, said any benefit from new food terminals remains far off.

The Ontario Food Terminal is a good option for nearby grocers, and a similar facility in his area could benefit all of B.C. But the federal pledge offers no guarantee that a terminal will reach Western Canada, Cavin points out.

"As of today, this changes nothing," Cavin said.

He is also skeptical that new money for the Competition Bureau will be effective, given how consolidated the industry has become.

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The federal government notes in its strategy that a series of mergers since 1986 has reduced the number of major grocers in the market from eight to five. The remaining big five — Loblaw, Empire (parent of Sobeys), Metro, Walmart and Costco — account for 75 per cent of grocery sales, according to the government.

Keldon Bester, executive director of the Canadian Anti-Monopoly Project, said the Competition Bureau has a "history of allowing consolidation to occur, [but] to be fair, under a set of laws that were quite pro-consolidation."

He said the bureau has taken more action in recent years, including a 2023 study of the grocery industry and an investigation into whether Sobey's and Loblaw's are using property controls — agreements between landowners and retailers that restrict competitors from opening nearby.

Competition Bureau spokesperson John Power said the Bureau has in the past reviewed "numerous" mergers in the retail grocery sector. He also notes that the Competition Act (the law that governs business practices and mergers in Canada) has been strengthened since the grocery market study was published, "giving us better tools to challenge anticompetitive mergers and conduct."

"We are now in a stronger position to protect competition than ever before," Power told CBC News in an email.

Given the Bureau's stepped up action in the grocery sector, Bester said the new money for the bureau will be "well used" to find and crack down on anticompetitive behaviour.

"That is meaningful," Bester said. "That's more lawyers, that's more investigators, that's more economists."

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The plan to support more Canadian food production is a glimmer of hope for Cavin. While any benefit remains far off, he said cutting the distance food travels to reach store shelves should, in theory, reduce costs — especially at a time when the war in Iran is driving up fuel costs.

"The more we can bring it home, hopefully the less it will be affected by volatility around the world," Cavin said.

There has been no shortage of government measures aimed at injecting more competition into the grocery sector.

Executives from major grocery chains have been summoned to testify before the federal government, a grocery code of conduct was put in place and policymakers tried, unsuccessfully, to court low-cost grocery chains to enter the Canadian market.

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Bester said many past measures focused on competition at the grocery store level. But he said the new strategy focuses on competition "further up the supply chain," which often shapes prices on store shelves, making the strategy promising.

"Is this gonna happen overnight? Absolutely not," Bester said. "But this is something that, depending on how it goes, I think within a year or two … we could see some material change. If not in the prices, then just in the availability and the variety that the average Canadian has when they go shopping."

Sands said the measures should help independent grocers already operating in Canada, but he is not sure they will attract more of them to set up shop here.

"The measures announced today will help independent grocers in terms of their being able to stay on the playing field and be able to compete and be able to continue to serve Canadians," Sands said. "But will those measures disrupt the dominance that the chains have? No, I don't see that."