Farmers and food groups call on government to regulate grocer fees

A coalition of groups representing farmers and food and beverage companies is renewing calls for the Canadian government to introduce a code of conduct governing the grocery industry in this country.

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In a joint statement released on Thursday, seven industry groups decried the “complex web of arbitrary fees and penalties in their relationships with large grocery retailers,” and warned that new fees imposed by large grocers will hurt farmers and food and beverage processors.

The statement was spurred by a notice late last month from Walmart Canada, advising suppliers of a hike to the fees the retailer charges to sell their products both in stores and online. Following Walmart’s notice, last week United Grocers Inc., a group representing other retailers, also sent out notices to suppliers saying they expect the same terms offered to any competitors. UGI’s members include Metro Inc., Alimentation Couche-Tard Inc., Dollarama Inc. and others.

Suppliers have raised concerns about the new fees, estimating that if all of the major grocery retailers follow suit, it could mean more than $1-billion in new costs for manufacturers.

Thursday’s statement was issued by industry groups the Canadian Federation of Agriculture, the Canadian Beverage Association, Food & Consumer Products of Canada, the Dairy Processors Association of Canada, Food and Beverage Canada, the Canadian Horticultural Council, and the Baking Association of Canada.

Retailers’ contracts with suppliers typically include a number of fees deducted from what stores pay for products. Those fees cover things such as product promotions and shelf placement. Retailers also occasionally charge “compliance” fines for orders that are late or incomplete.

As fees have increased or payment terms have changed in recent years, supplier groups have regularly lobbied the government for greater industry oversight.

Walmart said its new fees, which take effect Sept. 14, will include a 1.25-per-cent charge for “infrastructure development” and a 5-per-cent “e-commerce development fee” for products sold online. The fees are designed to partially offset new investments that Walmart is making to renovate stores, build new distribution centres and improve its e-commerce operations.

“Requiring food and beverage suppliers to cover the cost of investments in retail stores will come at the expense of the farmers’ and processors’ own investments in their Canadian facilities,” Thursday’s statement said.

In a statement the Minister of Agriculture and Agri-Food, Marie-Claude Bibeau, called the new fees “disappointing,” and said that the health of food processors and growers will be important to the recovery of Canada’s economy.

“We recognize that terms of sale are generally the exclusive domain between suppliers and buyers,” the minister’s statement said. “However given the scale of the costs raised here when compared to the current market-wide conditions and the impacts associated with the ongoing pandemic for both suppliers and retailers, such circumstances should be fully considered in the pending industry discussions.”

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