Ottawa disappointed with grocers’ treatment of producers
OTTAWA., Ont. — Federal Agriculture Minister MarieClaude Bibeau is taking aim at some of the biggest supermarket chains in Canada, saying their treatment of food producers has been “a big disappointment,” and pledging to tackle the issue at a meeting with her provincial and territorial counterparts.
“This is something that worries me,” she told Postmedia in an interview on Tuesday.
Since the summer, food manufacturers have been up in arms over what they say are bully tactics from major players in Canada’s heavily consolidated grocery business.
Walmart Canada and Loblaw Companies Ltd., both imposed new fees for suppliers in recent months as a way to help cover multi-billiondollar investments in store upgrades and e-commerce. While supermarkets in Canada regularly charge fees to display products on their shelves, manufacturing advocates described the latest slate of fees as a step too far and called for the federal government to step in and implement a code of conduct. Similar codes have been in place in the U.K. and Australia to establish fair business practices that guard against surprise fees and fines.
“I know how our farmers are working with very tight profit margins … And we know that retailers have had quite a good year,” Bibeau said. “I think it’s unfair.”
Retailers have seen major sales increases during the pandemic, partially offset by extra safety costs, as Canadians have shifted to eating more at home.
On Wednesday, Metro Inc., the third-largest Canadian grocer, reported quarterly net earnings of $186.5 million, up 11.4 per cent over the same period last year. Meanwhile, the country’s top gro-cer, Loblaw, announced on Nov. 12 it was raising dividends for shareholders after its quarterly food sales rose by roughly $2.5 billion, or 9.7 per cent, compared to last year.
While Ottawa has determined that it’s not able to get involved in dealings between grocers and their suppliers, because the terms of sale between businesses are the province’s jurisdiction, Bibeau stressed that she isn’t walking away from the problem. The topic is officially on the agenda for her annual two-day conference with the provincial and territorial ministers of agriculture, which starts today. Part of those discussions are likely to include a code of conduct. If the provinces are open to it, she suggested she could help co-ordinate the effort.
“I can facilitate the work, but I’m not the lead on this,” she said. “Obviously if it was harmonized with the rest of the country, it could make things more efficient and easier.
“But at the end of the day it will be a decision that will have to be taken by the provinces.”
Bibeau spoke to Postmedia in advance of her appearance at the University of Guelph’s Arrell Food Summit on Thursday, where she was expected to announce the federal government’s Food Waste Reduction Challenge, a new $20-million program to incentivize new methods of limiting food waste.
On Tuesday, Metro told Postmedia it was open to discussions on a code of conduct, but only between industry players.
“We do not believe that government intervention is required,” Metro spokesperson Marie-Claude Bacon said in an email, adding that government intervention “may lead to unintended consequences.”
Metro’s comment echoed earlier remarks from Michael Medline, chief executive of Sobeys parent company Empire Co. Ltd., who last month advocated for change in the industry.
Medline said relations between grocers and suppliers in Canada are the worst he’s seen during his decades in the retail business, going as far as criticizing his competitors for their “repugnant” new fees. While he said he was open to the concept of a code of conduct, he cautioned against too much government involvement.
“I don’t think a government unilaterally coming in and putting in legislation will probably help, be-cause it’s a very complex industry and I don’t want unintended consequences,” he said during a virtual event hosted by the Empire Club of Canada on Oct. 28.
The upcoming talks at the conference of Canadian agriculture ministers, which runs today and continues on Nov. 27, could be the first step toward a coordinated government response.
André Lamontagne, Quebec’s agriculture minister who will lead the discussion, said his aim is to organize a working group to explore possible solutions, including the code of conduct models used in other countries.
Food, Health and Consumer Products Canada, a major trade association for the manufacturing sec-tor that has led the push for government intervention, said it is hoping for the federal government to still play a major role, despite the jurisdiction issue.
“Our goal is to get Ontario, Quebec, British Columbia and other provinces to say, ‘Let the federal government create the framework … and then we will regulate it at the provincial level,’” FHCP chief executive Michael Graydon said.
FHCP said this week that it has engaged Christine Tacon — the U.K.’s first-ever Groceries Code Ad-judicator who enforced that country’s code of conduct for seven years until she stepped down late last month — as a consultant to speak to its members about how the code improved the U.K. sec-tor.
“Honestly this is not a negative impact on a retailer,” Tacon told Postmedia on Wednesday. “(U.K.) retailers have established that life has become more efficient after becoming code compliant, because they’re learning what their issues are from suppliers.”
But the Retail Council of Canada, a trade association for grocers that has often been at odds with FHCP on the fee controversy, stressed on Wednesday that grocery code isn’t necessary in Canada. Spokesperson Michelle Wasylyshen said FHCP’s members include multinational food manufacturers and cautioned the government against “putting their thumb on the scale in favour of behemoths” in the food processing industry.
“Grocery is a thin-margin business, which in turn helps keeps food prices affordable for consumers,” she said in an email. “Suppliers are constantly pushing for price increases, while grocers push back in order to maintain, or when possible, lower, prices.”
“I know how our farmers are working with very tight profit margins … And we know that retailers have had quite a good year. I think it’s unfair.” Marie-Claude Bibeau
Federal Argicultural minister