It's time to rein in Canada's grocery retail giants
As B.C.'s politicians campaign for voters' support, it is time they commit to implementing enforceable rules that stop Canada's small handful of powerful grocery retail giants from bullying the province's farmers, grocery suppliers and consumers.
Just five companies control more than 80 per cent of grocery sales across Canada, giving them disproportionate power as the gatekeepers between tens of thousands of farmers and suppliers, their workers (more than 56,000 in B.C.), and the millions of Canadians who rely on our products every day.
Large retailers have exploited this power imbalance for years, using it to unfairly shortchange payments, violate agreements, and arbitrarily impose unfair fines and fees on farmers and suppliers (even fining suppliers for grocers' own ordering mistakes). Even in the midst of the continuing COVID-19 pandemic, some grocery giants have doubled down on aggressive moves that weaken Canada's most essential supply chains.
Last month, Walmart Canada began requiring more than 3,000 Canadian suppliers — and ultimately consumers — to foot the bill for the massive chain's physical and e-commerce expansion. When fully in force, Walmart could extract forced fees costing farmers and suppliers about $300 million per year, none of which will tangibly benefit suppliers or consumers.
Only very few retailers, such as Metro and Sobeys, seem willing to chart a better course. Indeed, as a chorus of farmers, processors, and manufacturers warned, other grocery retail giants are following Walmart's bad example, demanding the same forced “discounts” on payments owed to suppliers.
Sadly, this outrageous behaviour is only the most recent example in a pattern of aggressive moves by Canada's market-dominating grocery retail giants. Farmers and suppliers have to pay an estimated $4 billion per year to get and keep our products on retail giants' store shelves, a cost that has grown 20 per cent since 2012 while staying flat in the United States. These high costs make it increasingly difficult for farmers and suppliers to invest, grow, and create jobs. Canada has become an unattractive place for food processors to invest and do business.
When “Made in Canada” products cannot compete with imported goods, our food system weakens. B.C. workers lose job opportunities, farmers have fewer buyers for their crops, and consumers have less choice for reasonably priced, locally made products.
That's why leaders across the agriculture, food, and consumer product sectors are demanding federal and provincial authorities implement and enforce codes of conduct to hold grocery giants to account. Such codes have proven effective in countries facing similar threats, including Australia, Ireland, and the United Kingdom.
The United Kingdom's code of conduct instituted in 2010 has proven to be a particularly successful example of how governments can protect fair business practices for the benefit of retailers, suppliers, and, most importantly, consumers.
While Canada's federal leaders have expressed sympathy for the plight of suppliers, they have not taken action to correct course.
Meanwhile, voters know the current situation is not benefiting consumers. In fact, polling released by the Dairy Processors Association of Canada on Oct. 8 showed that almost all Canadians want government to strengthen our domestic food system and to play some role in ensuring retailers treat suppliers fairly. Those campaigning to lead B.C. should take note.
Canada's grocery giants may control the majority of stores and shelves in the country, but there would be nothing to sell without our farmers and grocery suppliers. If provincial and federal authorities fail to restore fairness and accountability in retail practice, they will jeopardize the food supply, economic growth, jobs, and COVID recovery in B.C. and every province.