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OFVGA welcomes call for grocer code of conduct


November 12, 2020
By Fruit and Vegetable

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In a statement released today, the Ontario Fruit and Vegetable Growers’ Association (OFVGA) welcomed the support of Michael Medline, president of Sobeys Inc., on behalf of Ontario’s fruit and vegetable growers. OFVGA is encouraged by his call for a grocer code of conduct and condemnation of the recent implementation of supplier fees by certain large grocery retail chains.

Several large retailers have recently announced new supplier fees of up to 6.25 per cent to help them fund improvements to their distribution and retail infrastructure. Farmers are particularly vulnerable to the impacts of the pending additional fees as they already face steep competition from imported products and operate on very slim margins – in some cases, farmers would be operating at a loss as a result of these fee increases.

To address this urgent need, OFVGA is calling on all grocery retailers to work with the fruit and vegetable sector and other suppliers to develop a grocer code of conduct that protects all stakeholders in the value chain, including Canadian consumers.

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“Fruit and vegetable growers have become increasingly challenged by the power of large retailers and their ability to unilaterally set sales terms,” says Bill George, OFVGA chair. “These new fees hollow out the ability of local growers to innovate and remain competitive, and they are especially concerning given increased profits large grocery chains have experienced during the pandemic and at a time when rebuilding the local economy is so important.”

While retailers are approaching these new fees differently, with some exempting products sold in their produce departments, the impact on frozen and canned products like processed vegetables remains a concern for growers. The new fees are in addition to other pre-existing unilaterally imposed marketing fees, extended payment terms, late delivery penalties, and truck unloading charges growers already face. In addition, the COVID-19 pandemic has increased production costs for growers, further challenging the sustainability of local food production.

“The recognition by Mr. Medline that these fees are unfair and unsustainable for farmers and other suppliers and have negative impacts on consumers and domestic production of goods is a significant step forward on this issue,” George says. “The solution will require open dialogue with retailers and the full support of the federal and provincial governments to ensure it has long-term credibility.”

Since the new fees were announced, OFVGA and other industry associations have been raising alarm bells with elected officials about the impact of these fees on local food production.