A Canadian ad-hoc task force is pressing forward to smooth over relations between processors and food retailers, even as a representative of small processors pulled out of the talks.
Ten groups representing both processors and retailers have been meeting with a Canadian government mediator for more than a year. The goal is to straighten out relations between the two groups, which became strained during the pandemic.
The heart of the problem is that five grocery chains control some 80% of Canadian food retail sales. During the pandemic, these grocers alienated processors by imposing large penalties for short or late shipments, at a time when labor and other issues caused problems for processors in filling orders. The processors were especially annoyed because Walmart and Loblaw Cos. assessed fees on them to fund enhancements to the retailers’ e-commerce operations.
The groups blew past a pair of government-imposed deadlines last year, and its progress was further threatened when a representative of Food and Beverage Canada, a trade group for small and mid-sized processors, withdrew from the talks earlier this month. “It is FBC’s view that the Code of Conduct currently being developed will be insufficient to address the needs of Canada’s small and mid-sized food manufacturers,” the representative said in a message to the Financial Post.
However, the remaining participants reported making progress since an apparent impasse this summer. Draft rules from the group include guidelines on fees and penalties, a ban on “punitive or vexatious acts” and the establishment of a Grocery Code Adjudication Office. One negotiator told the Financial Post that the “finish line is within sight” but that some key sticking points remain.