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Earlier this month, the Canadian government revealed that “all major retailers” have agreed to join the country’s incoming grocery code of conduct.
The code, which has been in development since at least 2022, looks to improve transparency and fair competition across the supply chain and operate as a space through which to resolve disputes.
Its evolution is being overseen by the Office of the Grocery Sector Code of Conduct (OGSCC), chaired by Michael Graydon, CEO of the Food, Health & Consumer Products of Canada (FHCP) trade body.
One major sticking point between the major retailers, including Walmart, Loblaw and Costco, and food suppliers has been fees that retailers have charged to keep suppliers’ products in stock and to promote them.
Sylvain Charlebois, a professor in food distribution and policy at the Faculties of Management and Agriculture at Dalhousie University in Halifax, tells Just Food: “The core principles of the proposed code continue to focus on providing food suppliers with a voice in resolving disputes with grocers.”
What has Canada agreed and why?
The code of conduct includes conditions for fair and ethical dealing, commercial agreements and a handful of miscellaneous topics such as how to handle the process of delisting a product.
One section lays out detailed rules about fees and under what circumstances retailers can charge them. The code also sets out a process for resolving disputes if parties can’t come to an agreement themselves.
Charlebois says: “The most straightforward and effective method to boost competition and stabilize prices is through the implementation of a mechanism that upholds supply chain democracy.
“Both domestic and international suppliers are hesitant to invest and expand operations due to market conditions dominated and restricted by major grocers. Currently, decisions are made unilaterally, with grocers often facing no repercussions.
“The proposed code aims to better protect food processors, who are vital for economic growth and innovation in the sector. This protection is expected to enhance competition at the retail level over time.”
Food prices in Canada have risen dramatically in the last few years. As of February 2023, grocery prices rose 10.6% year-over-year, more than double the then overall inflation rate of 5.2%. Meanwhile, corporate profits had risen, and major Canadian grocery chains were reporting very high profits.