Ag minister open to grocery code idea
`I think it's unfair,' Bibeau says about recent extra fees for manufacturers
Federal Agriculture Minister Marie-claude 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 the Financial Post.
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 multibillion dollar 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 grocer, 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 the feds have 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 on Friday. 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.
She said “at the end of the day it will be a decision that will have to be taken by the provinces.”
On Tuesday, Metro told the Post 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, the chief executive of Sobeys parent company Empire Co. Ltd., who advocated for change in the industry last month.
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, because it's a very complex industry ...,” 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 on Friday and continues on Nov. 27, could be the first step toward a co-ordinated government response.