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A working group will be established to look into the supplier fees some of the largest grocery chains have started charging during the pandemic.

Canada’s federal, provincial and territorial agriculture ministers on Friday agreed to launch an investigation to find ways to mend tattered relationships between food producers and supermarkets.

During the last day of their annual conference, the agriculture ministers agreed to set up a working group to look at the controversial fees that some of the largest grocery chains have started charging suppliers during the pandemic.

“We all recognize that these fees, recently imposed by some retailers, are really worrying,” federal Agriculture Minister Marie-Claude Bibeau said at a press conference. “We want to study the problem.”

Bibeau said the working group will “circumscribe the issue, consult experts and industry, and identify actions that can be taken, both at the federal and provincial level,” with a report on recommendations delivered by July 2021.

The decision to start looking into the issue comes amid renewed calls for government intervention to rein in what food producers say are bully tactics from the most powerful players in the consolidated grocery business. Manufacturing industry groups and independent grocers have called for the government to implement a code of conduct, similar to a model used in the United Kingdom.

“I’m delighted. I think it’s a step forward,” said Michael Graydon, chief executive of Food, Health and Consumer Products of Canada, the major trade association for manufacturers, which has been among the loudest critics of supermarket fees and fines.

This summer, Walmart Canada reignited debate over a code of conduct when it started charging its suppliers, as a way to help cover multi-billion-dollar upgrades to its stores and e-commerce operations. Canada’s biggest grocer, Loblaw Cos. Ltd., followed suit last month with a fee to help cover its own upgrades, and a buying group that includes Metro Inc. has asked for similar treatment.

One of the country’s biggest dairy processors is pushing back against the supermarkets. Lactalis Canada Inc., which includes the Beatrice milk, Astro yogurt and Black Diamond cheese brands, told retailers last week that it will no longer pay fines if shipments come up short in the next month, pointing to production challenges caused by the recent spike in COVID-19 cases.

“What is happening today isn’t conducive to having a strong ag sector,” André Lamontagne, Quebec’s Minister of Agriculture, Fisheries and Food, said in an interview. He will co-chair the working group with Bibeau.

“We want to make sure that those smaller enterprises can remain healthy,” he added.

Graydon said it was “ideal” that the working group would be led by a federal and a provincial minister.

The federal government has determined that regulating terms of sale between supermarkets and suppliers is outside its jurisdiction, but has encouraged the provinces to address the issue.

But advocates have warned that any effective response from the provinces would have to be in lockstep, since the food supply chain stretches across the country.

“If there is anything significant to take place, it will require federal-provincial co-operation,” Graydon said. “We should be in good shape.”

The Retail Council of Canada (RCC), the trade group that represents supermarket chains, was unable to comment before press time Friday night.

“RCC cannot comment until we’ve had the opportunity to review the outcome of the meeting in question,” spokesperson Michelle Wasylyshen said in an email.

The fees aren’t the only reason supermarkets have come under scrutiny lately.

At least one member of Parliament has been calling for the Competition Bureau to investigate the big grocers over their decisions to cut pandemic pay bonuses for their staff on the same day.

On Friday, the bureau released a statement clarifying its position on wage fixing and other “buy-side agreements” — meaning agreements between competitors that drive down the cost on the inputs that businesses buy, such as labour, rather than what they sell.

The bureau felt compelled to put out the statement on Friday in light of “recent public concerns in Canada about potential agreements between employers related to wages,” spokesperson Marcus Callaghan said in an email.

The bureau has seen increased interest in the issue from the legal and business communities and wanted to provide “clarity and transparency,” Callaghan said.

The guidance came two days after bureau commissioner Matthew Boswell broke his silence on the grocery chains’ removal of pandemic pay.

In an address to a conference of independent grocers on Wednesday, he voiced concern that top executives at rival grocery chains had held discussions before cutting the pay.

Metro chief executive Eric La Flèche testified at a House of Commons hearing this summer that he placed several calls to competitors in May and June to ask if they were planning to cut the $2-per-hour wage increase.

At the same hearing,  Loblaw president Sarah Davis said she had sent a “courtesy email” to competitors about her decision to cut the bonus on June 13, the same day as Metro and Sobeys’ parent company Empire Co. Ltd. All of the companies have strongly denied any wrongdoing.

Empire chief executive Michael Medline said he insisted on having legal counsel on the call with La Flèche and refused to answer the question on pandemic pay. Empire has started paying bonuses again, based on hours worked, for staff working regions now under lockdown orders, including Manitoba, Toronto and neighbouring Peel Region.

For example, the bonus will total $100 per week for staff in Manitoba who work 40 hours, according to a statement from the United Food and Commercial Workers Union. The union said most members can expect between $25 and $75 per week in bonuses.

The Competition Bureau on Friday confirmed that buy-side agreements, including wage fixing, cannot be pursued as criminal offences under the Competition Act. They can be pursued civilly, though such cases require the bureau to prove that the behaviour prevented competition, which, as the bureau noted on Friday, is “not a low threshold.”

Antitrust experts have said they do not expect the bureau will launch an investigation into the grocers. The bureau has declined to say whether it is investigating or not because it is “required by law to conduct its work confidentially.”


11/27/2020 8:07:27 PM

The Rogers Centre in Toronto, home of the Blue Jays.

Like a lot of things in life, a new home for Major League Baseball’s Toronto Blue Jays might have to wait until COVID-19 is beaten.

While there have been some recent upgrades to Toronto’s Rogers Centre, the Globe and Mail reported Friday that Blue Jays-owner Rogers Communications Inc. and a Brookfield Asset Management Inc. subsidiary were interested in tearing down the stadium and building a new one.

The Globe, citing sources involved in the project, said the new stadium would form part of a redevelopment in Toronto’s downtown. Rogers, however, says any plans there might have been were put on the backburner this year because of the coronavirus pandemic. Brookfield, meanwhile, declined to comment.

“Prior to the pandemic, we were exploring options for the stadium but through this year our primary focus has been keeping our customers connected and keeping our employees safe, so there is no update on the Rogers Centre to share at this time,” Rogers said in a statement to the Post on Friday.

Speculation about the future of the Rogers Centre had kicked up in the summer of 2019, around the 30th anniversary of the venue’s opening. Brookfield and Rogers put out feelers around that time, as redevelopment of the Rogers Centre and the surrounding lands would require certain government approvals.

For example, most of the stadium area is owned by Canada Lands Co., a federal Crown corporation, which says it is the landlord under a lease for the Rogers Centre that expires in 2088. A spokesperson for Canada Lands said an “approval and/or lease amendment” would be required from them for redevelopment, which hasn’t happened.

“The proponents made the Province aware of this proposal,” said Ivana Yelich, spokesperson for Ontario Premier Doug Ford, in an email on Friday. “We look forward to hearing more about the proposed project, but at this time, our government’s focus is on getting through the second wave of COVID-19 and preparing for the distribution of vaccines in Ontario.”

Toronto Councillor Joe Cressy, whose ward includes the Rogers Centre, said Rogers, Brookfield and the Blue Jays reached out to him more than a year ago “to have an early discussion about the future of the Rogers Centre in broad terms,” but that he had not heard anything further since the pandemic hit. Whenever those parties are ready to restart talks, Cressy wants the city involved and the public interest represented.

“That includes the clear understanding that public dollars are not used to pay for a revitalized stadium,” the councillor said in a statement to the Post. “It will be especially critical to get any potential changes right because this is an iconic site for all Torontonians, and it is at the centre of neighbourhoods where hundreds of thousands of people live, work, and visit every day.”

Rogers Centre, which was known as the SkyDome until its renaming in 2005, first opened in 1989 after almost three years of construction and around $570 million in costs.

At the time of its opening, the Rogers Centre was the world’s first retractable-roof stadium, but the approximately 50,000-seat venue was constructed at the tail-end of a “multi-purpose” trend for such facilities. Not long after the SkyDome’s opening, teams began building more retro-style stadiums that have come into favour, such as Baltimore’s Camden Yards.

 Rogers Communications Inc. and a Brookfield Asset Management Inc. subsidiary are interested in tearing down the Rogers Centre and building a new stadium, the Globe and Mail reported.

In 2016, the Canadian Football League’s Toronto Argonauts, which previously called the Rogers Centre home, began playing their games at BMO Field. The Blue Jays then played their 2020 “home” games in Buffalo, after the pandemic prompted the closure of the Canada-U.S. border and the Canadian government rejected a proposal to play in Toronto.

Still, SkyDome was bought by Rogers in 2004 for $25 million. A recent report by CIBC World Markets valued Rogers’ ownership of the Blue Jays and the Rogers Centre at approximately $1.73 billion.

In addition to ownership of the Blue Jays, Rogers has a valuable stake in Maple Leaf Sports & Entertainment Ltd., the parent company of the National Hockey League’s Toronto Maple Leafs and the National Basketball Association’s Toronto Raptors.

“We have increased our estimates for (the 2021 fiscal year) and have become incrementally positive on the name,” the CIBC World Markets analysts said in their Nov. 19 report on Rogers. “That said, a greater valuation step-up requires better visibility out of the pandemic.”

Financial Post

• Email: gzochodne@nationalpost.com | Twitter:

11/27/2020 4:05:10 PM

DEEP Earth Energy Production Corp.' site is the deepest horizontal well in Saskatchewan’s history and the first 90° horizontal fluid production for geothermal power generation in the world.

CALGARY — A small, Saskatoon-based company has drilled and fracked the world’s first 90-degree horizontal well for geothermal power in a potentially landmark move that signals the arrival of a new energy source in Canada and provides fresh opportunities for oil and gas workers to apply their skills in renewable power.

No company in Canada has produced electricity from geothermal heat, but Deep Earth Energy Production Corp. chief executive officer Kirsten Marcia told the Financial Post that there’s a “big, big future for geothermal power in Western Canada,” as demonstrated by the results of the first ever horizontal geothermal well, which is also the deepest horizontal well ever drilled in Saskatchewan.

“We were looking for a way to explain to people that we drilled a gusher,” said Marcia, a geologist who worked in the mining and petroleum industries before pioneering a geothermal business in Saskatchewan. In the oil and gas world, a “gusher” is an extremely productive well that pumps substantial volumes of oil and gas.

In Canada’s nascent geothermal power industry, Deep’s “gusher” can produce steaming-hot water and brine with a temperature of 127 degrees centigrade at a rate of 100 litres per second. Marcia said those flow rates mean the well will actually be limited by the hardware, such as pump capacity, that are connected to the wellhead. She said the well, called the Border-5HZ well, is capable of producing 3 megawatts of renewable, reliable electricity, enough to power 3,000 homes.

The well will form part of a larger 20MW geothermal power project, which is expected to commence construction in 2023 in southern Saskatchewan close to the U.S. border.

The well is also a first for the global geothermal industry.

 DEEP Earth’s Border-5HZ well in Saskatchewan is capable of producing 3 megawatts of renewable, reliable electricity, enough to power 3,000 homes.


Directional geothermal power wells have been drilled in California, but Marcia said those were drilled at a 75-degree angle, rather than being truly horizontal. Her company’s Border-5HZ well was drilled into the earth at a depth of 3,450 metres before turning at a 90 degree angle and drilling through sedimentary rock along a 2,000-metre lateral route.

“This is a sedimentary geothermal project. There aren’t a lot of them in the world,” Marcia said, noting that most geothermal power projects, including those in world-leading Iceland, drill vertically into volcanic rock formations. “In terms of drilling into a sedimentary basin, you’re drilling into sedimentary units that are like a stack of pancakes.”

Deep is also responsible for the deepest vertical well ever drilled in Saskatchewan, after announcing in Nov. 2018 it had drilled a 3,530-metre well.

Governments in Alberta and Saskatchewan have been revamping regulations for drilling and for power generation in an attempt to stimulate geothermal power investment in their provinces partly because the geothermal industry uses many of the same skills as the existing oil and gas industry.

This week, Alberta MLAs passed legislation that will allow the province’s energy regulator to develop a new framework for geothermal wells to be licensed and drilled in the province. The bill is considered a way to keep oilfield services workers, such as drillers, working as investment in renewable energy is projected to rise in the coming years.

While other geothermal wells have been drilled in Canada previously to channel heat directly from the earth, Deep and a handful of other companies are among the first in the country to use the earth’s heat to generate electricity.

In Alberta, Calgary-based oil and gas producer Razor Energy Corp. is working on a geothermal project north of Edmonton that would retrofit existing wells to produce 3MW to 5MW of geothermal power.

Near Fort Nelson, B.C., a natural gas-rich town, a non-profit research association called Geoscience BC is undertaking a feasibility study of the Clark Lake Geothermal project that would repurpose a gas field to produce geothermal power.

 Kirsten Marcia, president and CEO of Deep Earth Energy Production Corp.

At Deep, Marcia said it’s very difficult to repurpose existing oil and gas wells to produce geothermal power because the diameters of most existing wells are too narrow for the tubing that geothermal wells need to pump water in a cycle through the earth’s crust.

However, geologists have identified multiple locations in Western Canada to produce geothermal power and use existing oil and gas skills in renewable power production, Marcia said.

Over 100 oilfield workers were on site to drill and hydraulic-fracture her company’s horizontal well in southern Saskatchewan in September and October, including a drilling crew from Houston-based Weatherford International Plc, and a pressure-pumping team from Saskatchewan’s Element Technical Services Inc.

“It’s amazing. Everything we’re doing is figuratively and literally on the backs of these highly skilled oilfield workers. We couldn’t do this without this expertise in this part of the world,” said Marcia.

She added that the project was de-risked in part by funding from the federal government, which committed $25.6 million in funding in January 2019 for the project. All told, the geothermal power project is expected to cost $51 million.

• Email: gmorgan@nationalpost.com | Twitter:

11/27/2020 10:05:36 AM

Ontario’s restrictions for the hot zones Toronto and nearby Peel Region allow big-box businesses to be fully open as long as they also sell some items deemed essential.

An uneven approach to pandemic-driven lockdowns across the country is putting some businesses at a disadvantage, particularly independent retailers that are facing major losses during the crucial holiday season, industry groups say.

“This is being pitted as big business versus small business, but it’s actually an issue with inconsistent and piecemeal restrictions seen across Canada,” said Alla Drigola, director of parliamentary affairs and small business policy at the Canadian Chamber of Commerce.

In Manitoba, for example, businesses are permitted to sell only essential items such as food and pharmaceuticals regardless of the full inventory they carry, she said. Meanwhile, Ontario’s restrictions for the hot zones Toronto and nearby Peel permit big-box businesses to be fully open as long as they also sell some items deemed essential.

“We need to ensure that there is a level playing field and that regulations … are not picking winners and losers,” said Drigola.

Stores in Toronto and Peel, which are closed to in-person shopping unless they sell essential items, usually ring up sales comparable to all of Manitoba and Ottawa combined, according to Diane Brisebois, president of the Retail Council of Canada. Now, she said, those retailers have been reduced to whatever sales they can pull in from curb-side pickup and delivery and online orders, if they have the capability.

In contrast to Ontario, Alberta recently adopted much looser rules for its hot zones, aimed mostly at controlling the number of people who can congregate in stores through capacity limits.

Premier Jason Kenney went as far as to apologize this week for a spring lockdown that shuttered mom-and-pop stores while allowing consumers to buy a variety of goods at big box retailers such as Walmart and Costco that also sold food or pharmaceuticals.

“This government made … a grave mistake in the spring when we made, frankly I think, a stupidly arbitrary distinction between essential and non-essential retail businesses,” Kenney said in a video posted to his Twitter account.

“This had the unintended consequence of allowing Wal-Marts and Costcos to sell darn near everything because they have a grocery store or they sell pharmaceuticals, while shutting down thousands and thousands of retail small- and medium-size businesses.”

The Canadian Federation of Independent Business is pushing for the adoption of capacity-based restrictions and caps across the country, as well as appointment-based alternatives for small retailers and service providers to avoid completely shutting down.

Brisebois said consistency is “not just important, it’s crucial” to the viability of some businesses that are losing out. Many specialty retailers such as toy stores count on this holiday season for between 25 and 40 per cent of their annual sales, and it carries them through the first and second quarter of the year when they are in the red, she said.

“You can imagine if you are an independent how much is done at this time of year,” Brisebois said. Even with online sales, “there’s no way you’ll survive.”

The varying approaches to shutdowns across the country — and the definition of what is essential — have led to confusion and outcries about what is fair. In Toronto, for example, a downtown Hudson Bay Co. store briefly opened this week at the beginning of the latest lockdown in the city because the building contained a grocery outlet. The Bay at that location has since closed.

Opponents of widespread shutdowns also argue that not enough consideration is being given to how COVID-19 is being spread.

Brisebois said recent figures out of the Peel region revealed that just 18 out of more than 8,000 cases came from retail.

 “If Mastermind can’t be open to sell toys then Walmart shouldn’t be able to sell toys either,” said teacher and biostatistician Ryan Imgrund.

However, Ryan Imgrund, a high school teacher and biostatistician who posts daily charts on Twitter tracking rates of COVID-19 infection and spread in Ontario, said studies in the United States based on cellphone data show that transmission does happen in grocery stores and big retail stores. While mask-wearing regimes differ in Canada, he said there is reason to believe there is transmission here as well.

“Masks are just another layer of protection,” Imgrund said.

He suggested that large retailers, if open, should be restricted to selling only essential items, as opposed to the Ontario regime that allows them to open for consumers to buy everything from medication to toys.

“If Mastermind can’t be open to sell toys then Walmart shouldn’t be able to sell toys either,” Imgrund said.

Drigola, of the Canadian Chamber of Commerce, said both transmission data and the steps taken by retailers to reduce the risk of disease spread should be taken into account when making lockdown policy decisions.

“We have long stressed that restrictions must be evidenced-based,” she said. “Businesses have done the work to implement rigorous health and safety measures.”

Brisebois said her group has been lobbying to make the rules consistent across the board so they’re easier for both retailers and consumers to understand and comply with, and then for authorities to enforce once they’re in place.

“Let’s make sure we punish those who are not complying, versus the ones who are,” she said.

A report published Thursday by Toronto-Dominion Bank said the near-term outlook for Canada’s small businesses is “grim.” Economist Ksenia Bushmeneva noted that the assessment was based on data collected earlier this month, which would not have captured the latest restrictions imposed in Toronto and Peel, or the exit of Newfoundland and Prince Edward Island from the relatively unscathed “Atlantic bubble” that includes Nova Scotia and New Brunswick.

“As such, the near-term outlook will likely deteriorate further in the coming weeks,” Bushmeneva said.

Financial Post

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11/27/2020 8:42:00 AM

Biotech demands more risk of its investors but the paybacks can create real value.

Most Canadians see themselves as more than mere diggers of bitumen and assemblers of American and Japanese automobile parts, so it was brave of Prime Minister Justin Trudeau to acknowledge this week that the capabilities of the country that invented insulin have eroded to the point to which it now lacks the factory infrastructure needed to manufacture a COVID-19 vaccine.

It’s generally safer for politicians to let us carry on thinking we inhabit the “greatest” country in the world, rather than to hold up a mirror so we can inspect ourselves more closely.

Unless Team Trudeau was just manipulating us again. A friend who keeps his eye on the Ottawa scene wondered if the prime minister was simply ginning up demand for a major sop that he intends to supply to the life sciences industry in next week’s budget update.

It’s a trick he might have picked up from U.S. President Donald Trump: convince voters that the society they inhabit is terrible, and then anything you do thereafter will be seen as an improvement.

“I really hope so,” Karimah Es Sabar, chief executive of Quark Venture LP, a Vancouver-based investment firm that backs biotechnology and health companies, said when asked if she thought there could be new money coming to help restore Canada’s pharmaceutical industry to its former glory. “I shall be extremely disappointed if not.”

COVID-19 is among the worst things that has ever happened to the Canadian economy, but the pandemic could end up reviving the country’s life sciences industry by forcing governments to get serious about a high-risk, high-reward business that is unusually dependent on public policy.

“There’s a role for government to play, but not forever,” said Ty Shattuck, chief executive of McMaster Innovation Park, a technology incubator owned by Hamilton, Ont.-based McMaster University that caters to biotechnology and advanced manufacturing startups needing specialized infrastructure to scale production.

“If they want to get private-sector leverage, you put in a small amount and it creates value,” added Shattuck, who thinks governments should categorize life sciences as critical infrastructure, an area politicians and bureaucrats typically have little trouble funding.

Trudeau’s remarks sparked another tiresome spat between Liberals and Conservatives over who ruined the country: former prime minister Stephen Harper’s laissez-faire approach to economics, or the current government’s inability to execute any of its big ideas. (Both sides are right.) That’s worrisome because getting back in the biotech game will require a comprehensive approach that requires regular co-operation by multiple jurisdictions on a multitude of issues. Partisan warfare will only slow things down.

“You have to be intentional,” Es Sabar said. “We can no longer inch along.”

 To get ahead of situations such as the one we face with access to a vaccine Canada should look to mid-size life science startups ready to scale.

Perhaps the biggest reason our capacity to make vaccines has deteriorated is that we no longer have any fighters in the heavyweight division. Maybe the federal government could have done more to get to the front of the queue of importers, but it has placed far more orders per capita than any other country. We’re being left out on the first round of shipments because the developers intend to serve their home countries first. We’d expect a Canadian company to do the same.

The way to respond to this embarrassment is to train a new generation of fighters. Everyone agrees the talent is there. The news this month that Peter Thiel, the billionaire backer of some of Silicon Valley’s most famous companies, has joined the board of Vancouver-based AbCellera Biologics Inc. was the most recent evidence that Canada’s life sciences industry could be on the verge of having a moment.

Seizing that moment will require some adjustments. We’ve become pretty good at churning out promising startups, thanks to a collection of world-class universities and generous support for the incubators that have popped up in every technology hotspot over the past decade. And Canadian governments have always been good at handing over hundreds of millions of dollars to famous multi-national companies, as the recent donation to Ford Motor Co. by the governments of Canada and Ontario attests.

The problem is that we tend to fail mid-tier companies that would like to become heavyweights. Banks are wary of handing out mortgages for specialized industrial space, and politicians find it easier to back youngsters toiling in their dorm rooms than to make bigger bets on companies looking to scale. That’s one of the reasons so many ambitious biotech entrepreneurs end up in places such as Boston: their investors want them close, and those cities have plenty of unused factory space.

Shattuck has a plan to address the problem. McMaster Innovation Park’s advantage is that it caters to would-be manufacturers by offering the infrastructure they need to get to the next level. It currently controls about 700,000 square feet of real estate and plans to grow to 2.8 million square feet.

But he’s going to need policymakers, banks and investors to play along, which means confronting something they tend to dislike: risk.

“Startups don’t create value, they consume value,” Shattuck said. “You can’t be all-startups any more than you can have a school with all kindergarteners. You’ve got to have graduates that eventually grow up and do the hard work and create value. And, frankly, we don’t have that yet.”

11/26/2020 6:13:11 PM

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