Arbitrary Fees Imposed by Large Grocery Retailers Will Cost Canadian Consumers and Impact Canada’s Food Security
Joint Statement by Farming and Processing Associations
(Ottawa) August 6th, 2020 - The latest round of fees introduced by large grocery retailers on their suppliers has attracted coverage in the news media over the past week (for examples, see here and here). This is occurring at a time when farmers and food and beverage processors are already facing a complex web of arbitrary fees and penalties in their relationships with large grocery retailers, in addition to managing the on-going impact of Covid-19 on Canada’s food system.
Arbitrary fees and penalties imposed by large grocery retailers on Canadian farmers and food and beverage processors negatively impact Canadian consumers as it results in lower investments and product innovation. Requiring food and beverage suppliers to cover the cost of investments in retail stores will come at the expense of the farmers’ and processors' own investments in their Canadian facilities. What’s more, it will also reduce revenues for Canadian farmers. There is no scenario under which these arbitrary fees and penalties will benefit Canadians. On the contrary, they will ultimately impact Canada’s food security, as small and mid-sized farms and food processors already struggle to continue participating in this retail environment.
An ever more concentrated and powerful retail sector versus a food production and processing sector that is being weakened to unsustainable levels was precisely what led the UK Government in 2009 to intervene and legislate against inappropriate practices through the introduction of a ‘Groceries Supply Code of Practice’.
This is an issue of strategic importance for Canada's food security. We therefore call on the federal and provincial governments to implement a code of practice in Canadato check this arbitrary conduct from large grocery retailers, review all current fees, penalties, and after sale deductions, and to protect Canada’s agri-food sectors. Governments must heed the lessons of the successful UK experience in rebalancing competitive forces in the food sector. In the words of the U.K. Competition Commission 2008 final report on supplies of groceries: “...we found that the transfer of excessive risk and unexpected costs by grocery retailers to their suppliers through various supply chain practices if unchecked will have an adverse effect on investment and innovation in the supply chain, and ultimately on consumers.”
Joint statement by Farming and Processing Associations:
Canadian Federation of Agriculture
Canadian Beverage Association
Food and Consumer Products of Canada
Dairy Processors Association of Canada
Food and Beverage Canada
Canadian Horticultural Council
Baking Association of Canada
Managing our businesses in challenging times
It has been a time of evolving change since our last newsletter in April. In addition to the fallout from the COVID-19 pandemic, social unrest in North America and throughout the world has raised serious conversations about safety, job security, economic restructuring, physical and psychological wellbeing, and diversity and inclusion.
In the last two months most dairy processors have settled into the ‘new normal’ and we want to acknowledge our members for responding quickly and thoroughly to the changing landscape. We would also like to express appreciation to the provincial milk boards keeping the milk supply flowing, and to our frontline workers for their hard work and dedication in keeping our communities safe, fed and healthy.
From: Agriculture and Agri-Food Canada
June 12, 2020 (Ottawa, Ontario): COVID-19 has caused significant changes and adaptation in Canada’s food system. As a result, Canadian food producers, processors, and manufacturers have taken on unexpected and exceptional activities associated with risk mitigation measures to be able to maintain Canada’s food production.
That is why the Government of Canada is taking steps to ensure the resilience of the food supply chain and to provide support to keep the agriculture sector strong.
The Honourable Marie-Claude Bibeau, Minister of Agriculture and Agri-Food, today launched the $77.5 million Emergency Processing Fund (EPF) as part of the Government of Canada’s action to support Canadians and businesses facing hardship as a result of COVID-19.
The program will prioritize projects based on two objectives:
From: Consumers' Association of Canada
May 24, 2020
The Consumers’ Association of Canada (CAC) is an official observer of our made in Canada supply management system that has served Canadian Consumers well during this difficult period. Says CAC President Bruce Cran, “We have been monitoring dairy prices and availability since the crisis started and I am pleased to say both have remained stable from coast to coast. Well done CDC and all the stakeholders who make our supply management system for dairy a success.”
Allocation of CUSMA’s dairy TRQs: Viability of Canada’s dairy sector at stake
May 27, 2020
Canada’s dairy processors, already hurt by lost business due to recent international trade agreements and COVID-19, are warning the federal government that the continued viability of the dairy sector is at stake if CUSMA dairy import licences (known as tariff rate quotas, or ‘TRQs’) are allocated to non dairy stakeholders.
The federal government has promised to fully and fairly compensate dairy processors for their losses stemming from trade agreements, but so far no such compensation has been offered except for a relatively small program announced in 2016 in the context of the trade agreement with the Europe Union (EU). Dairy processors have been steadfast in advocating for a two-fold approach to mitigate these losses:
Dairy processing is carried out in every province by small, medium and large enterprises that provide valuable employment and economic benefits in the largely rural communities they serve. More than 10,000 farms rely on Canada’s 417 dairy processing plants to take their milk and process it into hundreds of nutritious staples, from milk, yogurt and ice cream to butter and award-winning cheeses.
As the dairy sector is already reeling from the impact of COVID-19, allocating CUSMA’s TRQs to non-dairy stakeholders that have no vested interest in the dairy sector, as the federal government did in 2017 through the trade agreement with the EU, will only bring further disruptions to an already fragile domestic market.
Unlike non dairy stakeholders, dairy processors have invested billions in the Canadian dairy industry in the last 10 years through expansion, plant upgrades, and products innovation. If the vast majority of CUSMA’s TRQs is allocated to dairy processors, it will:
The unexpected early implementation of CUSMA on July 1st, meanwhile, will prove unnecessarily disruptive to the Canadian dairy sector. As the dairy processing industry cautiously looks forward to the country’s economic recovery from COVID-19, now is not the time to further disrupt Canada’s supply-managed dairy marketplace by giving a share of CUSMA-related TRQs to stakeholders that have no vested interest in value creation in the dairy sector.
The future of Canadian dairy farmers and processors is intricately tied to the success of the Canadian dairy sector as a whole -- from farm to table. And, Canadian dairy processors need the vast majority of CUSMA’s dairy TRQs to help it remain viable and meet the enormous challenges that lie ahead.
DÉCLARATION DES QUATRE ASSOCIATIONS DE TRANSFORMATEURS LAITIERS SUR LA COMPENSATION AU SECTEUR LAITIER
Répartition des contingents tarifaires laitiers de l’ACÉUM: la viabilité du secteur laitier canadien en jeu
Le 27 mai 2020
Les transformateurs laitiers du Canada, déjà touchés par la perte de marché en raison des récents accords commerciaux internationaux et de la COVID-19, avertissent le gouvernement fédéral que la viabilité du secteur laitier est en jeu si les licences d'importation laitiers (connues sous le nom de contingents tarifaires ou «CT») de l’Accord Canada–États-Unis–Mexique (ACEUM), sont attribuées à des acteurs non laitiers.
Le gouvernement fédéral a promis d'indemniser pleinement et équitablement les transformateurs laitiers pour leurs pertes résultant des accords commerciaux, mais jusqu'à présent, aucune compensation n'a été offerte à l’exception d’un programme de faible envergure annoncé en 2016 dans le contexte de l’entente commerciale avec l’Union européenne (UE). Les transformateurs laitiers n’ont cessé de plaider en faveur d'une approche en deux volets pour atténuer ces pertes:
La transformation laitière est effectuée dans chaque province par des petites, moyennes et grandes entreprises, qui procurent de précieux emplois et d’importantes retombées économiques dans les collectivités en grande partie rurales qu'elles desservent. Plus de 10 000 fermes comptent sur les 417 usines de transformation laitière du Canada pour l’achat du lait cru et sa transformation en centaines d'aliments nutritifs de base tels que du lait de consommation, du yogourt, de crème glacée, du beurre et des fromages de grande renommée.
Comme le secteur laitier est déjà sous le choc de l'impact de la COVID-19, l'attribution des contingents tarifaires de l’ACÉUM à des acteurs non laitiers qui n'ont pas d’intérêt direct dans le secteur laitier, tout comme le gouvernement fédéral l'a fait en 2017 avec l'accord commercial avec l'UE, ne fera que perturber davantage un marché intérieur déjà fragile.
Contrairement aux intervenants non laitiers, les transformateurs laitiers ont investi des milliards de dollars dans l'industrie laitière canadienne au cours des dix dernières années sous forme d'expansion, de modernisation des usines et de nouveaux produits novateurs. Si la très grande majorité des contingents tarifaires de l’ACÉUM leur est allouée, les transformateurs laitiers pourront :
● Assurer la stabilité du marché laitier canadien,
● Introduire une variété de produits importés à des prix compétitifs qui complètent, plutôt que remplacent, les produits fabriqués à partir de lait canadien.
La mise en œuvre inattendue de l’ACÉUM dès le 1er juillet perturbera de façon significative le secteur laitier canadien. Alors que l'industrie de la transformation laitière envisage avec prudence une reprise économique du pays après la COVID-19, le moment n'est certainement pas venu de créer encore davantage de turbulence dans le marché laitier canadien soumis à la gestion de l'offre en accordant une part des contingents tarifaires de l'ACÉUM aux intervenants qui n'ont aucun intérêt à la création de valeur dans le secteur laitier.
L'avenir des producteurs et des transformateurs laitiers canadiens est intimement lié au succès du secteur laitier canadien dans son ensemble, de la ferme à la table. Les transformateurs laitiers canadiens ont besoin de la très grande majorité des contingents tarifaires laitiers de l’ACÉUM pour les aider à demeurer viable et relever les énormes défis qui pointent à l’horizon.
From: Agriculture and Agri-Food Canada
May 15, 2020 – Victoria, British Columbia – Agriculture and Agri-Food Canada
Agriculture, seafood, and food processing businesses in British Columbia can begin to access consulting and planning services to help with COVID-19 response and recovery, through a program offered by the federal and provincial governments.
The latest intake of the B.C. Agri-Business Planning Program is now open to applications and expanded to include aquaculture and seafood companies to develop COVID-19 business recovery plans.
B.C. agriculture, seafood and food processing business owners are encouraged to apply if their revenues have decreased by at least 30% as a result of COVID-19. The funding available includes up to $5,000 in business planning services and coaching for individuals, and up to $20,000 for groups, from a qualified business consultant, to develop an immediate and long-term recovery plan. Eligible applicants may also apply to the specialized business planning stream of the program to further strengthen their business.
Funding for the B.C. Agri-Business Planning Program is provided through the Canadian Agricultural Partnership. The partnership is a five-year federal-provincial-territorial agreement that includes $2 billion in cost-shared strategic initiatives delivered by the provinces and territories, and $1 billion for federal programs and services through March 2023. The new activities related to fish, seafood and aquaculture companies are not eligible for funding under the Canadian Agricultural Partnership. Funding for activities related to fish, seafood and aquaculture companies will be provided by the B.C. Ministry of Agriculture through the B.C. Agri-Business Planning Program.
"The Government of Canada is working around the clock, along with the provinces and territories, to respond to the impacts of COVID-19 on farmers and food businesses. This investment will help B.C. farmers and processors who are experiencing income loss steer the course to recovery and continue to put high-quality food on our grocery store shelves and kitchen tables for years to come."
- The Honorable Marie-Claude Bibeau, federal Minister of Agriculture and Agri-Food
"This a difficult time for all Canadians and that includes B.C. farmers, ranchers, seafood, and food processors. I have been working with my federal colleague on ways to help people who are experiencing income loss through the pandemic, and the expansion of the B.C. Agri-Business Planning Program is a result of this commitment. We will continue to look at ways to help our industry grow the high-quality local food that we depend on."
- Lana Popham, B.C.'s Minister of Agriculture
Office of the Minister of Agriculture and Agri-Food
Agriculture and Agri-Food Canada
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NEWS PROVIDED BY
The Office of the Prime Minister
May 5, 2020 (Ottawa, Ontario): In uncertain times, it is more critical than ever for Canadians to have access to good, high quality, and nutritious food. That is why the Government of Canada is taking steps to support the farmers and businesses who provide Canadians with the food they need to keep themselves and their families healthy.
The Prime Minister, Justin Trudeau, today announced important measures within agriculture programs and an investment of more than $252 million to support farmers, food businesses, and food processors who provide essential services to Canadians every day by ensuring a safe and reliable food supply. He also announced that the government intends to propose an additional $200 million in borrowing capacity for the sector.
The Government of Canada will provide targeted support to farmers, ranchers, agricultural producers, and food processors by:
The Government of Canada recognizes all workers across our food supply chain who provide an essential service to our country. We will continue to monitor and respond to the wide-ranging impacts of COVID-19, and take additional actions as needed to protect the health and safety of Canadians, and stabilize the economy.
“Canadians count on farmers and producers to provide them with the food they need to feed themselves and their families. Today, we are giving them the support they need to keep their workers safe and food systems running during this challenging time, for the benefit of all Canadians.”
- The Rt. Hon. Justin Trudeau, Prime Minister of Canada
“The COVID-19 pandemic has had a profound impact on Canadians in all communities and in all sectors of the economy. With this announcement, we are giving agricultural producers and food processors more resources to adapt to the many challenges brought on by the COVID-19 pandemic and, above all, to keep workers safe. Canada’s agricultural sector is interconnected. So the new investments we are making will have a positive impact up and down the production chain.”
- The Hon. Bill Morneau, Minister of Finance
“I want to reassure all our farmers and agri-business owners across the agri-food industry that our government fully understands that they are essential to our communities and that we are fully engaged to help them through this unprecedented period. We are grateful for the dedication of our hard working food workers – from the farm to the retail store – every day to ensure we continue to have food on our family tables. This support will help food producers and processors to continue providing the food Canadians need, and help ensure food availability for all Canadians in these uncertain times.”
- The Hon. Marie-Claude Bibeau, Minister of Agriculture and Agri-Food
NEWS PROVIDED BY
Dairy Farmers of Canada (DFC) Apr 29, 2020, 14:37 ET
OTTAWA, April 29, 2020 /CNW/ - The Dairy Farmers of Canada and the Dairy Processors Association of Canada confirm today, that not only were parliamentarians misled by the Trudeau Government, but they too were misled on the date of implementation of Canada-United States-Mexico Agreement (CUSMA). As such they echo the concerns expressed by the Honourable Don Plett, Leader of the Opposition in the Senate, who indicated he had a commitment from the government on the date.
The dairy sector had secured the support of parliamentarians to have the Canada-United States-Mexico Agreement (CUSMA) come into force in conjunction with the beginning of the dairy year (August 1, 2020). This would have allowed the sector a full 12-months of exports per the negotiated concession for year-one threshold limit on key dairy products, before being constrained by the significant reduction conceded in year two of the agreement. As part of CUSMA, Canada not only transferred to the US part of our domestic dairy production, but it also agreed to self imposed limits on exports of key dairy products.
"Our government was first out of the gate to give notice to the other parties that it was ready to implement CUSMA. The dairy sector was informed at the last minute and judging by the reaction from the opposition parties, we weren't alone in this being a complete surprise," said Jacques Lefebvre, CEO of Dairy Farmers of Canada.
The Trudeau government proceeded to reassure the sector said Mathieu Frigon, President of Dairy Processors Association of Canada, "It told us not to worry, Canada had to send a signal to the US administration that it was committed to CUSMA, but that both the US and Mexico were nowhere close to being able to give notice, thus we shouldn't be concerned about an early implementation date".
The impact of yet another concession on dairy to the US on the part of the federal government is significant. By coming into force before the start of the dairy year on August 1, 2020, the first-year export cap and access volume will apply immediately and for just a few weeks before a significantly lower second-year export cap is triggered, and significantly more volume is imported into Canada.
That means an almost 40% reduction in exports being imposed on the Canadian dairy sector as we are focused on ensuring a continued supply of fresh, local dairy products for Canadians. For dairy producers and processors the early implementation by one month of CUSMA is estimated to represent up to $100 million in losses. Furthermore, the sector will need to contend with an additional $330 million in annual perpetual losses as a result of the lost market share.
ABOUT DAIRY FARMERS OF CANADA
Dairy Farmers of Canada is the national policy, lobbying and promotional organization representing Canadian dairy producers. DFC strives to create stable conditions for the dairy sector in our country. It also seeks to maintain policies that promote the sustainability of Canadian dairy production and promote dairy products and their health benefits.
ABOUT THE DAIRY PROCESSORS ASSOCIATION OF CANADA
The Dairy Processors Association of Canada is Canada's national industry association representing the public policy and regulatory interests of the Canadian dairy processing industry. DPAC's members represent some of the most recognized brands in Canada, providing work to over 23,000 Canadians and contributing $17.3 billion to the national economy.
SOURCE Dairy Farmers of Canada (DFC)
For further information: MEDIA CONTACTS: Lucie Boileau, Director of Communications, Dairy Farmers of Canada, firstname.lastname@example.org, 613-220-1724; Amélie Baillargeon, Coordinator, Public Affairs and Operations, Dairy Processors Association of Canada, email@example.com, 613-232-7242 ext. 104
On April 24, 2020, the United States notified Canada and Mexico of the completion of its domestic ratification procedures for the Canada-United States-Mexico Agreement (CUSMA). Canada and Mexico have already provided their notifications (on April 2 and April 3, respectively). According to the CUSMA text, which specifies that the Agreement is to enter into force on the first day of the third month following the last notification, the entry into force date would be July 1st, 2020.
CFIA releases Expectations for the Prevention of and Response to Suspected and Confirmed Cases of COVID-19 by Operators
News and Articles are posted by Members of the Western Dairy Council.