All major grocery retailers agree to sign on to industry-developed code of conduct
Code good for supply chain, won't have much impact on prices, economist says
All major retailers have agreed to an industry-developed Canadian grocery code of conduct, Agriculture and Agri-Food Canada announced Thursday.
In a statement, the federal department said, "After years of work and widespread industry participation, we are pleased to announce that all major retailers have agreed to join the Grocery Sector Code of Conduct. This includes Loblaw, Sobeys and Metro, and most recently, Walmart and Costco."
The statement called it a step toward "bringing more fairness, transparency and predictability to Canada's grocery supply chain and for consumers."
The voluntary grocery code is meant to level the playing field for suppliers and smaller retailers by providing guidelines for fair negotiations, including for the application of penalties and fees.
Gary Sands, senior vice-president with the Canadian Federation of Independent Grocers, said it will provide more stability for independent grocers.
"When larger players have made demands of suppliers for extra supply, that's been a problem for independent grocers," Sands said. "They tend to get ... pushed to the side a little bit. So the code addresses that."
He said many of Canada's roughly 6,900 independent grocers are in rural and remote communities that often don't have chain retail stores. That means access to fair supply is a food security issue.
While the code won't level the playing field for independent grocers Sands said, it will give them the "opportunity to stay on the playing field."
The industry committee tasked with creating the code was established in response to contentious fees being charged to suppliers by large grocery retailers, an issue that came to a head in 2020 when Walmart Canada and Loblaw each introduced new supplier fees to help pay for infrastructure investments.
Canada's five biggest grocers have been under intense public and political pressure as the price of groceries has risen by more than 22 per cent over four years.
Having a code of conduct is a good thing for the supply chain, said University of Guelph food economist Mike von Massow. But he doesn't expect it will have a significant impact on food prices.
"Most of us will be oblivious to it on a day-to-day basis," said von Massow.
The code will also provide financial stability to grocery suppliers, said the CEO of supplier industry group Food, Health & Consumer Products of Canada.
"With a consolidated retail market, there was the potential for volatility in your costs, unexpected demands from retailers ... and there was always that lack of economic certainty," said Michael Graydon, who is also interim chair of the group overseeing the industry-developed code.
The major grocers are on board with the code, but Graydon said individual suppliers, independent retailers and others will have to sign on as well.
He said the plan is to fully launch the code in June 2025.
With files from The Canadian Press