Grocery stores must play fair

It takes a complex system of growing, production and distribution to get fresh food and packaged goods from all manner of places to grocery store shelves.

It’s not something most people spend much time thinking about, especially when the system works seamlessly. But that hasn’t always been the case in the pandemic.

Canadians certainly noticed when buying sprees emptied shelves of toilet paper and flour, and global supply chains suddenly became a popular topic of conversation. There were concerns about the price of beef and the over-concentration of the meat processing sector after key plants in Alberta were struck by COVID-19 outbreaks.

Ontarians worried about the fate of local produce when migrant farm workers who plant and pick those crops were delayed in arriving, and then some contracted the virus amid substandard living conditions.

And there was plenty of public support when cashiers and other grocery workers were afforded hero status and an all-too-brief pandemic pay hike.

Now it’s time to pay attention to yet another facet of our food supply chain: the fraught relationship between suppliers and retailers.

Michael Medline, the chief executive of Sobeys parent company Empire, last week condemned moves by several grocery chains to offload their pandemic costs onto suppliers as “repugnant” and “terrible” for consumers. He said they’re “just plain bad for Canada.”

Loblaw, Canada’s largest grocery chain, Walmart and a buying group that represents Metro have all moved to increase the fees they charge suppliers to carry and place their products on shelves.

Those unilateral fee hikes will hurt suppliers, along with farmers and momand-pop retailers, say Medline and other critics.

They disadvantage independent grocers who can’t demand similar terms and hurt local farmers, food-manufacturers and suppliers who can’t absorb fee increases as easily as international conglomerates.

Ultimately, that’s bad for consumers who worry about rising food prices and want access to local products.

It’s welcome to see Medline promise that Sobeys won’t follow its rivals in raising supplier fees. He also says it’s time for a code of conduct to ensure fair play between grocery retailers and suppliers.

The United Kingdom and Australia already have such codes, and Ottawa should look at how one could work here. We need a food supply system that treats everyone fairly, from farmers and food processors through to retailers and consumers. It sure doesn’t look like we have that now.

Loblaws, Walmart and Metro have put the interests of their shareholders ahead of collective interests at the very time the pandemic has shown how interconnected we all are. And it’s not the first time these grocery giants have been disappointing during the pandemic.

They had a massive surge in revenues early on as people stocked up on supplies, and they continue to do very well. And yet they — Sobeys included in this case — choose to end the $2-an-dollar “hero pay” raise for front-line staff at the earliest opportunity.

The executive chair of Loblaw Companies, Galen Weston, whose family wealth has skyrocketed during the pandemic, callously claimed that the pay hike wasn’t necessary anymore.

The grocery giants stripped that extra money from their workers not because their business depended on it, but because they could get away with it.

It’s the same scenario as the grocery giants put the screws to their suppliers.

Loblaws is investing in upgrading its e-commerce capabilities — a measure that presumably will grow their business and provide profits for decades to come — and yet they expect someone else to pay for it upfront.

Again, they’re offloading costs, this time to suppliers, because they think the can get away with it.

When business behaves badly there are always calls for more government regulation. In this case that has surfaced in calls for a code of conduct to ensure fair play.

The only surprise is that this time the alarm is being raised by one of their own.

Ultimately, grocer’s fee hikes on suppliers are bad for consumers who worry about rising food prices and want access to local products