Thursday, July 8, 2021

Canada’s dairy industry wants retailer code

Canada’s dairy industry is pleading with the federal and provincial governments for a code of practice to discipline the major supermarket chains.

In a letter to the federal government, a group of organizations said the supermarkets are using their clout to squeeze suppliers, especially those that are smaller and struggling to expand.

The fees the supermarkets impose cut into their margins, restricting budgets for modernization and expansion and to pay employees. Smaller retailers need to increase their volumes to have enough to stock shelves in all the stores the big chains own.

The federal and provincial ministers of agriculture agreed to take on the issue after the largest supermarket chains unilaterally and suddenly forced suppliers to take price cuts in 2020.

There is now a working group tackling the issue.

In a letter to federal ministers, leaders from dairy groups say the “best solution” to “arbitrary fees and deductions” would be through “the development of provincial codes that are legislated, mandatory and enforceable.”

They want a mandatory code of conduct, either through regulations or law, outlining rights and obligations of all parties. They also requested there be consequences for non-compliance enforced by a specialized body.

“We are convinced that this is the only way to restore fairness and balance in Canada’s food supply, for the benefit of the entire value chain, from the farm to the fork,” the letter said.

It was signed by representatives of the Dairy Processors Association of Canada, Dairy Farmers of Canada, the Ontario Dairy Council and the British Columbia Milk Marketing Board.

In May, Canada’s largest food retailers called for an industry code of conduct, joining the long-standing call from producers and manufacturers. At the time, at least some retailers,such as Sobeys, favoured a government-led approach.

Now the retailer alliance is asking for the rules to “be developed by industry for industry.”

Good luck with that! In the 1970s Ontario farmers complained about the clout of the chains, they were joined by many other grocery suppliers and the province set up a judicial inquiry.

The only thing that changed was the the Justice Leach recommended the one protection suppliers had - an Ontario Food Council which could conduct inquiries - was scrapped. Suppliers ended up weaker than ever. 

Federal agriculture minister Marie-Claude Bibeau, who chairs the group, told reporters when the working group was agreed to in November that fees imposed by retailers “are really worrying.”