Loblaws has ordered its suppliers to cut prices by 1.45 per
cent after Sept. 4.
As the largest food retailer in Canada, it has enough clout
to make it happen.The weakest link in the chain – farmers who lack supply
management – will take the biggest hit.
About 18 months ago, Sobeys told suppliers it would be
deducting a percentage from their invoices, and Loblaws followed suit.
At least this time suppliers are forewarned.
Sylvain Charlebois, a professor who left University of
Guelph for Dalhousie in Nova Scotia, has earned a reputation as news media
spokesman for Canadian agriculture and food and he says the clout of the
supermarkets pressures processors to modernize and become more efficient.
I think he’s got it exactly wrong. Canada’s supermarket
chains have had tremendous clout within the food chain for at least 60 years
and I think it’s their greedy pressure that has starved processors of money to
invest in modernization.
The situation is remarkably different between Canadian and
U.S. food processors, and I think a big part of that difference is the lack of
supermarket-company clout in the U.S.
It is only recently that national supermarket chains have
emerged in the U.S. – Krogers, Walmart and Costco. All of the others are really
just regional chains and so processors can pick and choose their clientele if
pressures become too great.
The clout of Canadian chains also explains why there is such
keen interest in niche markets, farmers’ markets and local restaurants with
more direct links to local farms.
In the 1970s, when the Ontario Federation of Agriculture
gave voice to farmers’ concerns about supermarket clout during a provincial
inquiry, there was a recommendation that small competitors, such as convenience
stores, be granted the option of selling beer and wine.
That, it was argued, would help to balance the competitive
playing field.
So what have we got today but exclusive rights for the
largest supermarkets to market beer, but only in selected locations.
Some of those locations, such as in Paris, Ont., happen to be right where
independents are the strongest.
