Provinces, feds to probe grocery store fees imposed on suppliers

Canada's federal, provincial and territorial agriculture ministers agreed Friday launch an investigation to find ways to mend tattered relationships between food producers and supermarkets.

During the last day of their annual conference, the ministers agreed to set up a working group to look at the controversial fees that some of the largest grocery chains have started charging suppliers during the pandemic.

“We all recognize that these fees, recently imposed by some retailers, are really worrying,” federal Agriculture Minister Marie-claude Bibeau said at a press conference. “We want to study the problem.”

Bibeau said the working group will “circumscribe the issue, consult experts and industry, and identify actions that can be taken, both at the federal and provincial level.” The group is supposed to deliver a report with recommendations by July 2021.

The decision to start looking into the issue comes amid renewed calls for government intervention to rein in what food producers say are bully tactics from the most powerful players in the consolidated grocery business. Manufacturing industry groups and independent grocers have called for the government to implement a code of conduct, similar to a model used in the U.K.

“I'm delighted. I think it's a step forward,” said Michael Graydon, chief executive of Food, Health and Consumer Products of Canada, the major trade association for manufacturers, which has been among the loudest critics of supermarket fees and fines.

This summer, Walmart Canada reignited debate over a code of conduct when it started charging suppliers more as a way to help cover multibillion-dollar upgrades to its stores and e-commerce operations. Canada's biggest grocer, Loblaw Cos. Ltd., followed suit last month with a fee to help cover upgrades, and a buying group that includes Metro Inc. asked for similar treatment.

One of the country's biggest dairy processors is pushing back against the supermarkets. Lactalis Canada Inc., which includes the Beatrice milk, Astro yogurt and Black Diamond cheese brands, told retailers last week that it will no longer pay fines if shipments come up short in the next month, pointing to production challenges caused by the recent spike in COVID-19 cases.