Some industry stakeholders are looking for a grocer code of conduct to find a power balance
By Jackie Clark
Staff Writer
Farms.com
Following the publication of a report by the Federal-Provincial-Territorial (FPT) Working Group on Retail Fees, industry stakeholders are meeting to move forward to build trust and develop solutions for the industry.
The Working Group as established in November 2020 to address concerns of unpredictable and rising retail fees, and published a report on their findings in July 2021, with recommendations for a path forward.
“Included in those recommendations is the encouragement to have industry work together to come towards a solution,” Rebecca Lee told Farms.com. She’s the executive director of the Canadian Horticultural Council.
Industry groups requested that the FPT Working Group help to provide a facilitator to bring those stakeholders together. The government agreed to help, and stakeholder met for the first time in early August.
“It’s very important to have all the people who are affected in one way or another, all the different groups represented in these negotiations, we have to make sure that they’re all included,” Lee explained.
“Further research and data analysis, work on potential solutions, and consideration of stakeholder viewpoints will be important in the development of options moving forward,” said the report from the FPT Working Group on Retail Fees.
The Working Group identified the lack publicly available information from companies about fees as an obstacle toward understanding the current situation.
However, even with that caveat, the group did find that retail sector concentration gives majority of bargaining power to retailers, leading to unpredictability and lack of transparency around fees. That, in turn, strains the relationship with suppliers, makes Canada’s manufacturing market unattractive to investors, and makes it difficult for small producers and processors to access the market, according to the report.
Generally, recommendations from the FTP working group emphasize building fairness, predictability, transparency and a mechanism for dispute resolution.
“The issues are a lot broader than just the retail fees,” Lee explained. There are various equity transparency challenging contractable practices.”
An imbalance exists in the supply chain, she added.
“The suppliers or growers don’t feel able to complain or dispute or say ‘no’ to any of the requirement made by the retailers because they are worried about retaliation, and losing their market,” she said.
Since the majority of the retail market is made up of only a few large companies, if suppliers lose access to one it can make a large impact on their business.
“The margins of the suppliers are very narrow as it is,” Lee said. Suppliers and growers are also facing increasing audit and sustainability costs “and on top of all of that, the retail fees. Producers are price takers. They can’t dictate what they’re going to sell at.”
Those factors give producers very little bargaining power in the supply chain.
“It’s a question of fairness, equity, transparency and getting to a place where everybody wins because in the end, we don’t want a country that is at risk from a food security standpoint,” Lee said. “It has to be a win-win-win solution. We have to have an equitable supply chain. And we believe that a mandatory code of conduct is the way to obtain that.”
The United Kingdom faced similar supply-chain challenges, which the government addressed through a legislated code of conduct.
If a similar tactic was used in Canada, the goal of that code of conduct would be to redistribute power equitably throughout the supply chain, Lee explained. A code of conduct would also include a mechanism to increase trust in the system, prevent retaliation, and an appeal process.
“We are very much looking forward to working with everybody on this. As long as we speak openly and start building that trust, we do believe there’s a way we can resolve this to everybody’s satisfaction,” Lee said.
Click here to read a feature about supply chain imbalance from the April 2021 edition of Better Farming.
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