Agriculture ministers from across Canada appeared to cut the grocery business some slack on November 10, extending their deadline for industry leaders to come up with a deal that could end years of fighting between food producers and supermarket chains. Ten trade associations representing retailers, farmers and food processors have been in formal talks for months to develop a code of conduct, which proponents say would stop the big grocers from charging their suppliers unfair fees and fines. Food producers say they currently have no choice but to pay the fees, since the top five grocers in Canada control the vast majority of sales.

Many in the business believe it will take a code of conduct to fix the power imbalance, one similar to the model adopted in the United Kingdom that successfully reined in the bully tactics once rampant in that country’s concentrated food retail market. Ottawa has determined it can’t regulate a code of conduct itself, so federal Agriculture Minister Marie-Claude Bibeau and a group of provincial and territorial ministers have asked the industry to come up with one.

Negotiations on a Canadian code started in the summer of 2021, after agriculture ministers from the federal, provincial and territorial levels — a group known as the FPT — got together and gave the industry an ultimatum: call a truce on your own, or the government will get more involved in designing a solution. “By the end of the year, we want to have the solution ready to be implemented,” said Quebec Agriculture Minister André Lamontagne.

However, with the end of year just over a month away, the ministers gave the industry more time. During a three-day conference in Guelph, FPT ministers agreed to give the grocery negotiations until March 2022 to present a concrete proposal “for a code of conduct or practice and a dispute resolution framework.” The FPT is also asking for a progress update to be delivered in December.

In an interview after the meeting, Lamontagne said he wasn’t concerned by the change in timing, since the industry reps appear to be working “very, very seriously” toward an agreement. The fighting around fees has been around for years, he said, and “nothing has ever come close to what we’re achieving. So a few more months to get that proposal, for me, it’s a non-issue.”

One of the industry leaders who are in negotiations on a code said it wouldn’t have been wise to rush such a complex policy. “We all want to see this grocery code realized as soon as possible. But we’re less interested in meeting an arbitrary time deadline and more interested in getting this done right,” said Gary Sands, senior vice-president of the Canadian Federation of Independent Grocers. “It has to be something that’s workable. We can’t roll something out across the entire industry and then come back in six months because it’s blown up in our faces.”

Federal Agriculture Minister Marie-Claude Bibeau said the deadline isn’t “being pushed.” She framed the government’s approach as setting up a series of checkpoints, starting in December, to keep pressure on the 10 groups on the code of conduct design team. “Every time we get an update, we see progress,” she said. “Minister Lamontagne and myself are hopeful, and I would say even confident, that we will get to this code of conduct.”

Source: Financial Post