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Larkin To ROFDA Wholesalers: Changes Ahead In These ‘Interesting Times’

Peter Larkin, National Grocers Association president and CEO.
Peter Larkin, National Grocers Association president and CEO.

Ahead of the upcoming NGA Show, being held Feb. 11-14 in Las Vegas, we’re taking a look back at some of the most pressing issues presented at ROFDA’s fall conference.

Peter Larkin almost titled a talk he gave at the Retailer Owned Food Distributors & Associates (ROFDA) fall conference in November “We Live in Interesting Times.”

“Because we really do,” he said.

The president and CEO of the National Grocers Association (NGA) said he is “quite proud” of how independent operators are adapting in an era of disruption. They are doing what they’ve always done. 

“We’re the ones that are flexible, we are the entrepreneurs, we’re the ones that are closer to the customer and can see what they want, and I think I see tons of evidence that many of the people in the room here are those that are facilitating this and implementing it; we are changing the way we do business,” Larkin said.

There has been disruption in Washington, D.C., as well. Larkin, whose career began on Capitol Hill in 1975 and has since kept him connected to politics, government and public affairs, said he has never seen a Congress as divisive and dysfunctional as the one in power today. He spoke in November, so the tax reform measure hailed as a legislative victory for President Donald Trump had not yet been signed into law. 

“It’s incredible to me, that with the Republican majorities in both the House and Senate that they have thus far been unable to harness all that power and really get much, if anything, done,” Larkin said.

He said President Trump was elected because people wanted something new and different.

“I’m not sure they understood what ‘new and different’ meant, but we have it,” Larkin said. “He is the most unconventional; that is why he is where he is. The question that remains, though, is can he and the team he has built around him actually govern? And the jury is still out on that.”

There also has been the hampering of agencies responsible for writing and implementing—or undoing—regulations due to hundreds of appointments that have yet to be made or confirmed. Cabinet secretaries are reducing staff at agencies such as the Department of Education, which in November was down by about 350 employees. Larkin said that whether that is by design or due to a lack of political experience is an unknown. 

Tax reform should boost small operators

When Larkin spoke at the ROFDA conference, Congress and the president had yet to cement the most sweeping overhaul of the U.S. tax system in more than 30 years, which was dubbed the Tax Cuts and Jobs Act of 2017. 

Some of what Larkin spoke about was still uncertain then, including how S corps, or pass-throughs, would be taxed. In the final measure, pass-throughs—meaning that small business owners pay taxes on income derived from that business on their personal income tax returns—have a new 20 percent tax rate that will expire in 2025. NGA and other groups wanted the change to be permanent. But combined with lower individual tax rates (that also expires in 2025), the effective tax rate tops out at 29.6 percent for qualified income, according to 

In addition, the estate tax exemption was raised from $5 million to $10 million for tax years 2018-2025. 

The tax rate for corporations is reduced from 35 percent to 21 percent, and that change is permanent.

The new law also increased to $1 million Section 179 expensing for smaller businesses. 

Last-In First-Out (LIFO) accounting was not touched. There also were no changes to the Work Opportunity Tax Credit, new market tax credits—important to retailers who have used them to open stores in food deserts—or to 401(k)s. 

Heading off frivolous ADA lawsuits

Among issues at the forefront of NGA’s focus now are frivolous lawsuits based on alleged violations of the Americans with Disabilities Act (ADA).

“There are lawyers that will come in—and I can’t overstate this—just to make money, not to make changes in the physical structures of stores,” Larkin said. “If you have two inches too narrow a ramp, if you have a door handle that’s a foot higher or lower than it should be, they are filing lawsuits and extracting large amounts of money from our retailers.”

NGA has asked its members to contact their legislators to express support for House Bill 620, the ADA Education and Reform Act of 2017.

“Essentially what it does is say if a lawyer wants to play this game, to try to extract that money, they have to give you written warning/notice beforehand and then give the retailer or whatever entity it is 120 days to either correct the situation or make substantial progress in doing so,” Larkin said. “In other words, if we have a problem, we want to correct it, as opposed to jacking us up for thousands and thousands of dollars.”

Farm Bill could include SNAP changes 

The next iteration of the Farm Bill will come up for passage in September. The bill provides money for nutrition programs, including the Supplemental Nutrition Assistance Program (SNAP) and Women, Infants and Children (WIC). Larkin said NGA will work with other food industry organizations, like the Food Marketing Institute (FMI), to make sure Congress doesn’t try to “block-grant the SNAP program.” 

Larkin said that one of the reasons SNAP works is because the rules of the program are uniform across the country. If SNAP revenues are given as a block grant to individual states, there will be “50 different SNAP programs, and that would be disastrous for our members,” Larkin said. “We want to avoid any kind of a good food/bad food debate or restrictions put on us.”

Larkin also spoke about the Food Insecurity Nutrition Incentive (FINI) grant program, which supports projects to increase the purchase of fruits and vegetables for low-income consumers who participate in SNAP. 

“The way this plays out at the retail level is what they call a Double Up Food Bucks program so that SNAP recipients can get extra dollars to buy produce, perishable items, and it has worked very, very well for our members,” Larkin said. “We’ve been on the Hill and had our members testifying about this program, and we hope to not only preserve it but grow it.”

He reiterated NGA’s stance on keeping SNAP redemption data confidential.

“Because if everybody and his brother can see what our retailers are doing in terms of store-by-store SNAP redemption, much larger predatory competitors could come in and wreak havoc market by market,” Larkin said.

According to, Congress has not finished a Farm Bill on time since 1990.

Menu labeling

Another sticky issue for the food industry is menu labeling, which is part of 2010’s Affordable Care Act and requires that calorie information be listed on menus and menu boards. It covers “like” food establishments, or those that sell restaurant-like food and operate 20 or more stores under the same banner. Larkin said the requirements were designed for chain restaurants, not grocery stores. 

“All we’re trying to do is get clarification and frankly, the (U.S. Food and Drug Administration) won’t step forward and give us the information or the guidance we need,” Larkin said. “We continue to be proponents of a bill in Congress that would not eliminate the need for us to do it; we are supporters of nutrition labeling. What we are looking for is more flexibility, more lenience and flexible enforcement and a variety of different things that will make this livable.”

The law is scheduled to take effect in May.

Preserving the Durbin Amendment

The Durbin Amendment also passed in 2010. It provides relief from exorbitant interchange fees that card issuers charge retailers whose customers pay with debit cards. The Federal Reserve limits how much the issuers can charge. Prior to the Durbin Amendment, the fee averaged about 44 cents per transaction; now the fees are limited to about 21 cents for each swipe of a debit card. 

Larkin said there have been “numerous attempts to try to eliminate the Durbin Amendment, and it is big, and I mean big, big, big bucks for our members. And we will always be in this.” 

He said the fight over fees is far from concluded.

“NGA is party to one of the longest-running lawsuits against Mastercard, Visa and all of the largest issuing banks, and we will continue to do so until that is resolved to our satisfaction,” Larkin said. “Which may take another year or two, but I may be alive to see the end of this battle. We’ll see.”

NGA also is looking at regulations that haven’t been reviewed or rewritten in a while and considering whether some should be repealed because they no longer are relevant.

“We are reviewing all of those, working with a lot of our industry colleagues to see how we can eliminate some of those unnecessary regulations,” Larkin said.

Labor issues

An audience member asked Larkin about the push for a $15 minimum wage. Larkin said the path to $15 per hour seems to be the new normal. In New Jersey, Democratic gubernatorial candidate Phil Murphy ran on the issue and won with a promise to raise the wage.

Meanwhile, there have been positive changes for business in the area of labor, including the elimination of the overtime rule that would have doubled the annual salary threshold from $23,660 to $47,476. It would have expanded overtime protection to 4 million Americans. 

The courts found that the Obama administration overstepped its authority in issuing the new rule. The ruling stated that the Department of Labor should have looked at job descriptions, not salary, when determining who should be eligible for overtime pay.

“They are going to rewrite that in a way that is probably more palatable to us,” Larkin said. “There will be a lot of progress in the labor area. I met with the new secretary of labor (R. Alexander Acosta), and I am very impressed with him.”

Larkin said one of Acosta’s main initiatives is developing a new apprenticeship program. NGA’s education foundation is working on ideas that may help establish a program for meat cutters and other skilled positions.

Keeping the right perspective

Larkin says of the work at NGA: “I tell our staff, much to their surprise, that our retailers don’t get up every day, our wholesalers don’t get up every day and drive to the office and think ‘what are they doing to me in Washington today?’ They are more interested in getting customers in the door, serving them right, making sure you’re doing what you do, and that’s why you have us back there. But from time to time we have to call on you to get engaged because they’d much rather hear from you. It’s important.”

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