Dairy pushes for action on grocery store fees

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.”

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 that 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.

The writers asked for 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.

The dairy industry wants the federal government to develop a framework upon which the provinces can base these codes to ensure rules are standardized nationally.

“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 states.

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.

The federal government has already made it clear the role of regulating deals between supermarkets and suppliers is outside its jurisdiction.

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 favoured a government-led approach.

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

A provincial-federal working group comprising agricultural ministers was launched last November to study supplier fees.

Federal agriculture minister Marie-Claude Bibeau, who chairs the group, told reporters then 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.