Ottawa, provinces to investigate grocery store fees 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 agriculture 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 reign 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 United Kingdom.

“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 its suppliers more as a way to help cover multi- billion- 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 its own upgrades, and a buying group that includes Metro Inc. has 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.

“What is happening today isn’t conducive to having a strong ag sector,” André Lamontagne, Quebec’s Minister of Agriculture, Fisheries and Food, said in an interview. He will co- chair the working group with Bibeau.

“We want to make sure that those smaller enterprises can remain healthy,” he added.

Graydon said it was “ideal” that the working group would be led by both a federal and provincial minister.

The federal government has determined that regulating terms of sale between supermarkets and suppliers is outside its jurisdiction, but has encouraged the provinces to address the issue.

But advocates have warned that any effective response from the provinces would have to be in lockstep, since the food supply chain stretches across the country.

“If there is anything significant to take place, it will require federal- provincial co- operation,” Graydon said. “We should be in good shape.”