Agriculture Committee on April 23rd, 2009

[Gary Sands]

It's too bad the chair, Mr. Miller, had to step out, because he could give an example in his riding of exactly where this happened, where the local retailer is not interested in interprovincial trade barriers. They simply want to buy from the local meat processor. From a food safety perspective or standpoint, there's absolutely no concern. The retailer is not interested in putting anything on the shelf that isn't absolutely safe. There's nothing wrong with that meat. It's provincially inspected. The problem is because some of the big corporates are dealing across the country, and they're using the federal recognition to say you can only buy from these plants because they're federally recognized. The local meat guy is not sending his product to Manitoba or Quebec or anywhere else. They're only supplying that area. They don't need the federal recognition; they don't want it. We have to do something about that, because it's hurting the retailer, of course, but it's really hurting that local meat processor.

[The Vice-Chair, Bloc, André Bellavance]

Thank you, Mr. Hoback. Your time is up.

Ms. Bonsant.

[France Bonsant, Bloc, Compton—Stanstead, QC]

Thank you, Mr. Chairman.

In my county, 60% of the economic activity pertains to agriculture. We have everything; I often tell people that the only thing missing are snakes and crocodiles. I think that today's young people are more and more aware of greenhouse gases. I talk a lot about food sovereignty. Food sovereignty begins with regional and local products. I agree with you, Mr. Sands, when you say that you do not feel there is any need for some type of pan-Canadian organization, because Quebec and other provinces paid for the problems related to the mad cow disease in Alberta. That is why it is absolutely essential that we protect our food safety in Quebec, this is important. We have not had diseased beef cattle in Quebec in 25 years.

Considering this situation, considering food sovereignty and the fact that young people are aware of greenhouse gas, would this not be a window of opportunity for companies or independents to promote local or regional products? A lot people are involved in secondary and tertiary processing. For example, I have dairy farms in my riding that produce cheese, butter, ice cream; these people are involved in secondary and tertiary processing. Given what is happening in the environmental sector, would this not be an opportunity for you to really sell regional products without having to go through 52 other cities in order to deliver your goods?

[Gary Sands]

We agree with you. That's what we've been talking about. We really believe that a terminal in Montreal would help the local retailers in Quebec hugely. It would help not just the retailers; it would help the whole chain in Quebec to have a terminal in Quebec. That would be a tremendous thing that could help the whole chain.

[France Bonsant, Bloc, Compton—Stanstead, QC]

Perhaps I did not express myself well. In my riding, there is a farm that produces ice cider. It's very good, you should try it. This ice cider does not go to Montreal, it goes directly to the chain stores. I go to the IGA because it has a section reserved for regional products. That's the reason why I go there. I encourage regional products. The store carries cheeses from Quebec, cheeses from my riding. These products did not go to Montreal, Vancouver or London, there were delivered directly to the IGA and they are inspected by the provincial government.

Is this not, for you as well, an opportunity to ensure that all of Canada benefits from this? I am convinced that other people in Canada make products. You could market them directly, without having to travel around the planet and pay transportation costs.

[John Scott]

Yes, of course, and that does happen across Canada. You're talking about major volume here. Not every store has the freedom your IGA does to do what they're doing. That's what I was trying to explain before about the fidelity issues. Not every store has the opportunity to do that.

[France Bonsant, Bloc, Compton—Stanstead, QC]

Yes, but we are now living in the 21^st century. At one point, we have to look at the way this is operating. I am not all that familiar with this issue and I want to get to the matter of agriculture, but as far as fidelity clauses are concerned, you could have a fidelity 2 clause and you could also have a fidelity clause for local products and regional products. That helps the economy in small municipalities. Big cities are great, but let us not forget that there are regions and that there are people who live in these regions. I have a municipality in my riding that has 112 people living in it. From time to time, I would like people to stop thinking about Montreal, Toronto and Vancouver and think about the small municipalities that are there, in the region, who are surviving on and depend on agriculture.

[Gary Sands]

We agree, and that's what Mr. Scott said earlier about having exceptions to the fidelity agreements that take into account some of the regional demand. Maple syrup is an example. We agree with you. Let's flip the coin. Let's make the fidelity agreement.... That's what Mr. Scott was saying about exceptions.

I will add one other thing, too. To be honest with you, the province that as been the most aggressive in terms of trying to do something with the “buy local” issue, outside of Quebec, because Quebec is very strong on this, has been Ontario. One of the challenges, though, because we have to be honest here, is that we have to also challenge the on-farm sector. The on-farm sector has to recognize that there's a lot more they need to do to get out there to the independents. That's what we're doing in Ontario. We have projects under way. We're connecting the retailer, the processor, and the manufacturer. We need to see more of that happen right across the country.

[France Bonsant, Bloc, Compton—Stanstead, QC]

I would just like to ask a small question.

[The Vice-Chair, Bloc, André Bellavance]

Sorry, Madam Bonsant.

Mr. Richards, you have five minutes.

[Blake Richards, Conservative, Wild Rose, AB]

Thank you.

I want to back up a little bit and get a little bit of general information about your organization. We'll start with how many members you have. My home province is Alberta. How many members would you have in Alberta, and how many members in the different regions of the country?

[John Scott]

We have about 4,000 members across the country. They can be large. In fact, the largest food floors in Canada are Highland Farms, which are pure food floors. They're in Toronto. I don't know of any independents in Alberta that are not members of CFIG. Sunterra and the majority of the Sobeys stores in Alberta are franchise stores. The Super A Foods.... I'm not sure what your riding is. Which riding are you in?

[Blake Richards, Conservative, Wild Rose, AB]

It's Wild Rose, north and west of Calgary.

[John Scott]

Okay. The IGA is owned by the Lovsins. They're part of it. We have a huge membership in Alberta.

We have an affiliation in Quebec. They have their own provincial association, and we speak for them on a national basis when we're in hearings like this, so that would augment our numbers significantly. The people who pay and are part of it number around 4,000. Some of them can be so small you're out the back before you're in the front, and some of them are absolutely huge. It's right across the country.

The only thing we insist on is that you're basically full service. We're not convenience stores selling bananas and Cheerios.

[Blake Richards, Conservative, Wild Rose, AB]

How is your association governed? You have a range of everything from the large IGA or Sobeys-type store to the small local grocer in a small town. How is it governed, and what comprises your governance? I would assume there's a board.

[John Scott]

CFIG's principle is to further the unique interests of independent franchise grocers. That's number one.

Number two is that we're governed by an elected board of 18 directors. Every year the chair changes. That's a good thing for me, because I get to keep my job, and they don't get upset with me. The reason the chair changes every year is that becoming chair of CFIG is one of the great things you can do as an independent grocer. The regional selection ensures that we have people on the board of directors from every nook and cranny of the country, and we try to make sure there's a split between specialty, franchise, and full independent.

[Blake Richards, Conservative, Wild Rose, AB]

Then there is some consideration given to making sure that all the different types of members are receiving input into the association.

[John Scott]

There has to be. Yes.

[Blake Richards, Conservative, Wild Rose, AB]

Great--

[John Scott]

We even make sure that every couple of years the chair comes from one of those little wee stores. Last year's chair came from a very tiny store.

[Blake Richards, Conservative, Wild Rose, AB]

I think of conversations I've had with the various people in my riding who have products, particularly farmers or owners of small meat-cutting operations and these kinds of things, and they're always looking for ways to get their products into stores. Does your association deal strictly with lobbying on behalf of your members, or do you actually deal directly with people who are looking into getting their products onto the shelves of some of the members you have?

[John Scott]

We do a couple of things, and this might be interesting for some of those who are looking at this local stuff.

First of all, we run the two largest trade shows in Canada. We run a big one, Grocery Innovations Canada, in November in Toronto. We run Grocery Showcase West in Vancouver; next year it will be at the end of April. These are great shows, and small processors often go there because virtually everybody goes to the shows, including the major corporate chains and Wal-Mart, looking for what's new in the marketplace. They're good shows.

Second, you can be affiliated with CFIG in many different ways. Gary has actually facilitated one of the things we have done, which is to take 15 to 20 of our members in any one part of the country, and 15 to 20 processors who are having trouble getting their product distributed, and put them in a room. We spend one hour telling them what the independents are all about, we spend one hour working between the independents and the manufacturers on what the barriers are to getting their products into the store, and then in the last two hours you can't have lunch and leave the place unless you've done some business with each other. We try to facilitate that. The reason we do that is that the point of differentiation of the independent grocer is something different in the marketplace. This is very important to us. It's critical to us.

If you had a retailer that wanted access--in fact, I just did one with a couple of retailers. I did a seminar in Alberta and got a couple of manufacturers into retail stores there. If you have somebody who has a burning itch and something that can help somebody differentiate themselves, then call us. We're happy to do a marriage of some degree.

[The Vice-Chair, Bloc, André Bellavance]

Unfortunately, your five minutes are already up.

Before I give the floor to Mr. Easter, I would like to ask a question. Obviously, we are talking about the agrifood sector a great deal, but you are first and foremost business people. Recently, in the Bloc Québécois caucus, retailers from Quebec and Canada came to talk to us about credit card and debit card fees. When we talk about competitiveness, I would like to know whether, as far as you're concerned, more and more people are using these payment methods. Perhaps this is occurring more in other businesses than in the food sector, but I think that the percentage of people using these methods of payment could be similar. Do the fees charged by the companies that issue these credit and debit cards have an impact on you? What do you think about this?

[John Scott]

Some 50% to 75% of all transactions in a retail food store in Canada are by debit card. For whatever reason, Canadians are more reticent to put their food on credit cards than they are in the United States.

The debit card issue is huge for us; it's just huge. Let me explain very quickly, and we're going to be doing so in front of the Senate banking committee in a few weeks.

If right now I'm a small guy in Thunder Bay, I might be paying 5¢ per transaction, and I can handle that. If all of a sudden I have to go to a percentage, as I have done with Visa, or whatever—1.75%—the transactions I am dealing with are on the order of $200, and my costs of dealing with that transaction have all of a sudden gone up.

You'll say it's no big deal; it's the same thing for everybody. That's not so, because some of my competitors, being the major corporates, may be carrying their own credit card and may have their own access to debit card systems. Their actual cost may come down. The danger of what you're dealing with right now, of scrapping the agreement the Competition Bureau has with Interac, is exacerbated in the competitive structure, particularly in our industry.

If I had a chart here, I'd explain to you exactly how it works.

[Gary Sands]

Let me add that our interests are also the interests of the farmers and the processors, and it's been a difficult challenge for us, with all due respect to that sector, to get them to understand that. There are a lot of opportunities that exist between the on-farm sector and the retailers.

If independent retailers see the Interac system, for example, move to a for-profit basis and our fees triple, that becomes bad news for independent retailers. Since 1992, by the way, we've lost 15,000 independents. It's bad news for the whole chain, and with all due respect, it should therefore be bad news in this committee's view as well. We would urge you to look at this issue from that perspective.

We don't like to use the phrase “level playing field,” because when you have the concentration in the food industry that you have in this country there is no level playing field. Our interest is just ensuring that we stay on the field. Inadvertently, sometimes, governments make regulations and do things or allow things to happen that change the competitive landscape. If the fees for Interac triple, for the independent retailers it's disaster, and it will ripple right through the entire system. And unfortunately—we're coming back to what we talked about earlier—there's a systemic problem with the Competition Bureau.

Mr. Scott and I had this discussion just a few weeks ago with the bureau. They don't get what I just said. All they see is that Interac will be competing with the credit card companies, and isn't that wonderful? Great news! Well, you know what? When the independents continue to go out of business, that's bad news. It's going back to what Mr. Scott said earlier: the bureau needs to take a good, hard look.... Take it home and read it at night, and read your preamble. When we're gone, everybody is hurt. That's what they're not seeing.

I'm sorry to get passionate about this, but it's extremely frustrating. It's a systemic problem.