Corporate concentration in the food retail business and the indifference of the Competition Bureau is hurting the independent grocery business and their farmer suppliers, MPs were told last week.
John Scott, president of the Canadian Federation of Independent Grocers, told the Commons agriculture committee April 23 the three biggest grocery distributors with warehouses and retail store chains control 85 percent of the Canadian market.
In many cases, they force independents that buy most of their goods from their wholesales businesses to sign agreements that limit the amount they can buy from other sources. Often, they have to agree to buy up to 95 percent of their products from the central warehouse.
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Scott said that limits the ability of independent grocers to buy from local farmers even though there is a strong and growing demand for buying local.
He urged MPs to look at how the Competition Bureau operates. Although the preamble to the Competition Act says one of the goals is to protect the ability of small business to compete and survive in the Canadian economy, he said the bureau all but ignores that.
“When you meet with the bureau, they’ll tell you they’re only interested in the consumer and they see low prices as the panacea, period,” he said.
Scott told MPs that several years ago, Ontario was left with just two grocery wholesalers that could supply smaller grocery stores. The larger one proposed to buy out the smaller one.
“We told the bureau, ‘if you do that, the result is that independents can only buy from the major,’ ” he said. “They said ‘but this is efficient and this will be good for the consumer.’ “
A month ago, the CFIG met again with the Competition Bureau to tell them the take over indeed turned out badly.
“The independent can’t operate competitively with the result,” he said. “Had they looked at it in terms of protecting small business, they would never have allowed that merger to occur.”
Gary Sands, CFIG vice-president in charge of industry and government relations, said when independent grocers run into trouble, farmers lose a market that pays well and involves little transportation.
“I just want to stress part of the message that we’re trying to deliver here is that for the independents to continue to survive, and this is important for the whole chain, it’s critical that they buy local,” he said. “They have to differentiate their offering to the consumer. We can’t compete with the Wal-Marts on price.”
MPs on the committee, often critical of the Competition Bureau in the past, were sympathetic.
They related constituent tales of having sold to local stores for years but suddenly, because of rules set by the central warehouses on how much a store had to buy from the central supplier, they had to turn away local produce.
Liberal Wayne Easter told the story of fruit and vegetable producers on Cape Breton who for years supplied local independent stores.
“They no longer do,” he said. “Instead, they have to supply the central depot so instead of going six miles to the local store with your strawberries, cabbage and lettuce they now go on a truck, they’re trucked a little over 400 kilometres, they’re taken off a truck, they’re put in a warehouse, run around a warehouse, loaded back onto the truck and taken back where they came from. Now does that make sense?”
Committee chair Larry Miller reported that the large suppliers have such market power over the smaller independents that several smaller grocers contacted would not agree to testify at the committee in public.
