The decision by Co-op Atlantic to exit the food wholesale business will leave farmers with one less outlet to sell their products and consumers with reduced choices, predicts the women's district director of the National Farmers Union.
Edith Ling said she was "shocked" when she heard the recommendation from the board of directors of Co-op Atlantic to "divest itself of its corporate food and gas retail and wholesale assets and exit the food and fuel wholesale business."' The board is recommending Co-op Atlantic enter into a purchase and sale agreement with Sobeys.
"As I understand it, the Co-op would then be selling Sobey's products," Ling said.
Ling, who is a Co-op member, said the stores were hurt by the arrival of Wal-Mart into the grocery business. The world's largest retailer has been building "Supercentres" that stock a complete line of grocery products at locations throughout the Maritimes, including Charlottetown and Summerside.
Ling said the move would mean greater consolidation within the retail grocery sector in the region, with Sobey's, Loblaw's and Wal-Mart now essentially the only players. She said many producers throughout the Island sell to the co-op and "we don't know at this point what is going to happen to that market."
"Co-op Atlantic and its member-co-operatives have worked hard to remain viable in the increasingly competitive world of retail food and gas," Co-op Atlantic Board Chair Adélard Cormier said in announcing the recommendation. "This decision has been a difficult one for management and the board but is, we believe, the best option for the continued viability of the member-owned stores and the co-operative movement in Atlantic Canada."
He explained the proposed purchase and sales arrangement would see Sobeys purchase the majority of the corporate food and gas retail sites and wholesale assets. Co-op is recommending its owner-members negotiate wholesale supply agreements with Sobeys to ensure their long-term success moving forward. Those potential agreements will be decided by each member-owned store in discussions with Sobeys.
The member-owners now have until May 12th to vote on this recommendation. Cormier said following the completion of that vote, Co-op Atlantic will be in a better position to assess what this will mean for Co-op Atlantic and its remaining divisions moving forward including home energy and agriculture.