Canada’s dairy industry is asking for provinces to oversee a code of practice for grocery retailers.
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.”
Why it matters: Fees charged to suppliers by grocery chains have raised concerns about concentration and competitiveness in the grocery sector.
The country’s top grocery retailers drew fire from food suppliers in 2020 after raising fees or introducing new ones.
By November the governing Liberals had created a working group to study the issue and find potential solutions.
“Retailer demands of suppliers increase the cost of getting products to consumers and, for Canada’s dairy sector, undermine the principles which support the efficiency of Canada’s supply management system,” said the letter from dairy representatives.
“The arbitrary fees paid to retailers is money that is not being reinvested in dairy operations, in employees and their communities, or in product innovations that consumers want.”
The authors warned high costs of doing business with major retailers can limit smaller suppliers’ ability to get products to market and argued the root of the problem is a “chronic underinvestment” in processing capacity.
A mandatory code of conduct, either through regulations or law, outlining rights and obligations of all parties, is the request of the letter writers. Consequences for non-compliance, enforced by a specialized body, is also a specific request.
The dairy industry wants the federal government to develop a framework on which provinces can base codes, to ensure rules are “fully harmonized” across the country.
“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 says.
Signees included representatives from the Dairy Processors Association of Canada, Dairy Farmers of Canada, the Ontario Dairy Council, the B.C. Milk Marketing Board and others.
The federal government has already said the role of regulating deals between supermarkets and suppliers is outside its jurisdiction.
In May, Canada’s largest food retailers made calls for an industry code of conduct, joining the long-standing call from producers and manufacturers. At the time, at least some of those retailers favoured a government-led approach to designing a code.
Now the retailers’ alliance is asking for the rules to “be developed by industry for industry.”
Launched in November 2020, the provincial-federal working group made up of agricultural ministers is continuing to study the matter.
Federal Minister of Agriculture Marie Claude Bibeau chairs that group. When first launched, she told reporters that fees imposed by retailers “are really worrying.”
A report of recommendations on how to fix broken relations between producers and retailers is expected this month.