Source: Agriculture and Agri-Food
This document outlines the key findings of the work of the FPT Working Group on Retail Fees, which was established by Federal-Provincial-Territorial (FPT) Ministers of Agriculture in November 2020. The Working Group was mandated to clarify the impact of retail fees with the objective of proposing potential solutions that benefit the entire food supply chain. It engaged with stakeholders and experts by holding over 60 meetings, commissioned research reports by former industry executives and economists, and researched international approaches to similar issues.
Retail fees are payments made by suppliers to many retailers in exchange for the stocking of products on shelves and associated costs. While some fees are generally accepted, an increasing number of others are seen as contentious (such as retroactive or unilateral fees). This has caused tensions in supply chain relationships, especially between processors and retailers, as retail fees have increased in their form and scale, and they have changed in the manner in which they are imposed. Moreover, the lack of predictability and transparency creates uncertainty which some processors indicate has affected their interest in investing, and which primary producers have argued increases costs on suppliers from fees and associated administrative costs, and for which there is a lack of avenues for recourse. . This dynamic can have other effects on the food supply chain, including adding obstacles to market access for small processors and producers, slowing down innovation, and creating supply and pricing challenges for independent retailers. While the general analysis is clear that there is an issue, it is important to note that the private nature of data on retail fees precludes providing a definitive and precise impact assessment.
Canada is not unique in this regard. Several other countries facing similar situations regarding the imposition of retail fees have developed strategies to address issues which have arisen. The United Kingdom and Australia, for example, worked with their retail and processing sectors to develop approaches that recognized the inherent benefit of retail fees and hard bargaining, but sought to ensure that there were appropriate constraints on how fees were levied.
The findings gathered since November suggest that industry is engaged in seeking a tangible solution. Industry has collaborated with the Working Group in providing their perspectives, analysis and advice. More importantly, there have been exceptional collaborative efforts across the supply chain. The result has been a variety of proposals to address this issue that are supported by processors and retailers. Common across all of these is a general sense that retail fees need to be addressed, and that certain principles and good practices such as predictability, transparency, fair dealing, and access to recourse for dispute resolution need to be at the heart of any approach.
Despite the limitations of the data available, this document provides a new base of information and analysis on this issue. More importantly, the Working Group has noted there is a mobilization of the industry to foster better, smoother and more balanced retailer–supplier relations, with positive effects for the entire food supply chain.
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