Fuel prices are on the rise due to ongoing uncertainties in the Middle East, leading some Canadian food suppliers to impose additional fuel surcharges on deliveries. Documents obtained by CBC News reveal that suppliers such as Sunrise Farms, CTS Foods, Maple Leaf, and Tree of Life have implemented these surcharges. The move has prompted grocery store owners, especially those managing smaller businesses, to contemplate passing some of the increased costs on to customers.
Sunrise Farms informed buyers in a letter that they would introduce a five-cent-per-kilogram fuel cost adjustment and a $10 fuel surcharge starting April 13. The per-kilogram rate is said to be temporary and subject to bi-weekly adjustments based on fuel market conditions. Maple Leaf, on the other hand, announced an 11-cent-per-kilogram fuel surcharge for shipments of prepared meat and fresh poultry beginning April 6, attributing the surcharge to the surge in oil prices following the disruption of the Strait of Hormuz.
Meanwhile, CTS Foods and Tree of Life disclosed plans to add a temporary $10 fuel surcharge per delivery, with Tree of Life indicating that the charge would be removed once diesel prices reach a “rolling three-month average” of $1.20 a litre or lower. Agropur, a Canadian dairy co-operative, has decided against implementing a fuel surcharge for now.
The escalating fees are causing some smaller grocers to consider price markups. Munther Zeid, owner of Food Fare in Winnipeg, acknowledged that surcharges could add around $100 to the cost of a pallet of goods. While some suppliers have refrained from raising prices, others have adjusted their prices to account for the additional expenses. Giancarlo Trimarchi, president of Vince’s Market in southern Ontario, has received notices of fuel surcharges from suppliers but has not yet increased prices in his stores, recognizing the sensitivity of customers to price hikes.
Larger grocers like Empire, owner of Sobeys and Safeway, have declined some fuel-related surcharge requests from suppliers. Metro and Loblaw are reviewing and negotiating such requests to manage cost increases. Fraser Johnson, a professor at Western University’s Ivey Business School, explains that transportation costs can significantly impact grocery prices, with bigger grocers having more leverage in negotiations with suppliers.
As fuel surcharges continue to affect the industry, negotiations on pricing are ongoing. The federal government’s fuel tax holiday is unlikely to provide substantial relief, given the significant fuel price hikes in different regions. Consumers seeking to save on costs are advised to opt for locally grown produce as the Canadian growing season commences, as these items are less affected by fuel-related expenses compared to imported goods.
