Its dispute resolution management process took effect on Jan. 1 — the final component of the framework to roll out.

The code has been in the works since 2021, sparked by friction between grocery companies and their suppliers, which was exacerbated by challenges related to the COVID-19 pandemic.

Provisions in industry-developed code include guidelines around fair and ethical dealing; commercial agreements and would should be contained in them; rules around payments and charges between retailers and suppliers; and dispute resolution.

The Office of the Grocery Sector Code of Conduct oversees the application of the code. On Nov. 28, the office announced it had finalized its governance framework and would formally begin recruiting companies to sign on to the voluntary code.

More than 100 grocers and suppliers had signed on as of Nov. 28. These include Canada’s major grocers like Loblaw, Metro, Sobeys, Walmart and Costco, which joined after significant negotiation.

The post Grocery code of conduct takes full effect appeared first on Alberta Farmer Express.

The proposal is for a voluntary code of conduct that would invite transparency and some form of accountability from retail grocery to the suppliers, including primary producers who market direct to retail.

Will it work?

The U.K. had a voluntary code until 2010, when it changed the legislation to become mandatory. Only then did competition start to creep back into the market. In Australia, the code introduced in 2015 is not mandatory but legally binding once parties sign on. Both jurisdictions report an increase in competition once the code was binding by legislation or legal agreement.

Grocery is big business in Canada, netting $6 billion in 2022. Competition is almost non-existent, with market share during the same year owned by Loblaws (29 per cent), Safeway/Sobeys (21 per cent), Costco (11 per cent), Metro/Jean Coutu (10.8 per cent), Walmart (7.5 per cent) and the balance split between small independents.

Media reports often direct our focus away from dominance in the marketplace toward supply chain issues. But the supply chain is working, even as stores deal with high retail fees.

The industry-led objectives within the code are to enable a thriving industry and to promote trust, fair dealing and collaboration throughout the value chain. There is no relationship in these objectives to a robust agricultural community in Canada from which the domestic supply of food and agri products are derived. It’s a nice set of playground rules to promote, but not to enforce, fair dealing.

The other two objectives are to increase commercial certainty and to establish effective, equitable dispute resolution. As there is an assumption of a need for dispute resolution, it tells me the sector itself has never taken the time to establish values alignment beyond the balance sheet.

The “corporation”, as it will be called, will be governed by a board of directors. Primary producers, wholesalers and distributors selling directly to retail (Class A) are allotted two seats. I find this interesting as the primary ignition to the discussion on a code of conduct was complaints from processors, producers and independent growers (also known as the supply chain) regarding the stiff, unpredictable and ever-increasing retailer fees.

The other nine seats around the table go to grocer retail, and five of those seats will be held by companies with sales of $999 million or more.

The agreements made between retailers and suppliers after implementation of the code will be non-binding, in hopes that each stakeholder will play nice.

Hardly. Food retail margins have doubled since 2019. No investor or company board is going to encourage fair play at the cost of those kinds of profit margins.

At the same time, food prices from 2018-23 have increased by 21.8 per cent. The average retail price for 10 pounds of potatoes at retail in 2017 was $3.99 and as I write this, I see all varieties of potatoes starting at $8.99.

Consider as well that Canadians are spending less per week on groceries than they have in years, although they are visiting the store 32 per cent more times, scouring shelves for sale items and bonuses. In 2020, the per capita expenditure per month on food was $339 and so far in 2024 it is $248, with women spending 13 per cent less on themselves than do men.

Food insecurity has increased and the food bank reports that between March 2022 and March 2023, there was an increase in visits of 78.5 per cent.

This dollar store mentality shifts from a focus on nutrition to a scramble for price. Drifting away from domestic food supplies is terminal to the economic health of Canadian farmers. As consumers scratch for cash to feed themselves, lower-priced imports will hit shelves while our high-quality Canadian production rides the rails for export.

Profits in retail grocery will continue to increase and we can’t be led down the path of the “low margin” discussion. Low margin does not mean low profit. There is a modest capital requirement to build retail grocery. Deliveries are constant and shifting that system keeps suppliers in a constant state of flux.

There is no mechanism in Canada to protect the supply chain from producer through to retailer. Until the bread fixing scandal was made public, the collusion of retailers behind closed doors remained unknown.

We do not have a value chain in food. We have a supply system that is victim to the end seller. The principles of play introduced in the grocery code of conduct for Canada are dependent on the voluntary involvement of a self-governing system without any oversight that holds it responsible or accountable to Canadian farmers or consumers. It cannot work to its potential without a higher level of liability.

A knowledgeable, advanced, economically stable society is one in which the universal right to access food is upheld and honored. That includes full accountability at grocery retail.

Brenda Schoepp works as an international mentor and motivational speaker. She can be contacted through her website at www.brendaschoepp.com. All rights reserved.

The post Canada’s Grocery Code of Conduct just window dressing appeared first on Alberta Farmer Express.

“This is a positive step towards bringing more fairness, transparency, and predictability to Canada’s grocery supply chain and for consumers,” the ministers said.

In the statement, Canada’s federal, provincial and territorial Ministers of Agriculture said “years of work and widespread industry participation” has been put into developing the Code of Conduct. Until recently, Walmart and Costco were the only two major grocery retailers to not join the Code of Conduct. Metro and Sobeys signed on last year, while Loblaw agreed this past May after months-long negotiations and a social media-driven campaign by angry consumers urging others to boycott Loblaw stores due to high prices.

Stemming from friction between retailers and suppliers, the code was developed by the industry to promote transparency and fairness, and to solve disputes. It’s been in the works since 2021.

“The goal of the Grocery Sector Code of Conduct is to bring fairness, transparency, and predictability to our grocery sector and supply chain,” a statement from AAFC said after Loblaw joined the Code of Conduct in May. “We believe that uniting all supply chain partners around these principles will produce the best outcomes for the sector and all Canadians.”

—with files from Janelle Rudolph

The post All major retailers agree to join Grocery Code of Conduct appeared first on Alberta Farmer Express.

The company’s top brass confirmed their commitment to the policy May 16 at the company’s supplier summit.
“We have worked intensively and collaboratively with industry groups so that the code is clearly drafted and fair for all industry participants,” said Per Bank, Loblaw President and chief executive officer.

Stemming from friction between retailers and suppliers, the code was developed by the industry to promote transparency and fairness, and to solve disputes. It’s been in the works since 2021. 

The announcement comes following six months of company interim board discussions and December statements from Loblaw executive chair Galen Weston that a grocery code would cause higher food prices or fewer food choices.

The company was also at the heart of a social-medial sparked national boycott effort, which was to start this month.
In September 2023, major grocery chains promised to take action to stabilize prices in the wake of continued concern over grocery costs.

Loblaw says the next steps for the code will be for other major grocers—i.e. Walmart—to sign on.

“We believe in the value of a code of conduct for the industry and are happy with the progress made,” Bank said. “The Code now requires the participation of all major retailers and suppliers to help bring in a new era for Canada’s grocery industry, enhancing the relationship between retailers and suppliers, who both exist to best serve customers.”

Lawrence MacAulay, federal minister of agriculture and agri-food, and Andre Lamontagne, Quebec minister of agriculture, fisheries, and food, issued a joint statement following Loblaw’s announcement.

The two echoed Bank’s call for other grocers to follow Loblaw’s lead.

“The goal of the Grocery Sector Code of Conduct is to bring fairness, transparency, and predictability to our grocery sector and supply chain,” the statement read. “We believe that uniting all supply chain partners around these principles will produce the best outcomes for the sector and all Canadians. With the news that Loblaw is signing on, we now call on the remaining large retailers to do what is in the best interests of Canadians and follow suit.”

The post Loblaw to back Canada grocery code  appeared first on Alberta Farmer Express.

One particular individual, an economist seemingly more interested in grabbing headlines and camera attention to boost fundraising and personal interests, made bold claims about “record and excessive profits” in the grocery sector for 2023.

The term “excessive profits” has become a favourite slogan for those seeking to foster animosity toward businesses.

However, it’s crucial to note that his argument relied on Statistics Canada data, which encompasses convenience stores and specialty stores in its dataset, not solely the major grocers. The sensationalized $6 billion figure quickly circulated in the news, causing considerable harm.

The facts indicate that gross margins, a valuable metric for assessing whether a company overcharges for its goods, will remain at 3.4 per cent, consistent with the five-year average for Loblaw, Empire and Metro.

Regrettably, we shouldn’t expect an apology from this economist. He seems intent on misleading Canadians, insisting that profits should continue to rise due to inflation, all the while resorting to attention-grabbing headlines and fearmongering tactics. This was a reprehensible misuse of a platform to advance a political, anti-corporate agenda — utterly disappointing and disingenuous.

Loblaw also made some questionable claims during a visit to Ottawa concerning the potential impact of a grocer’s code of conduct. The company admitted on Dec. 23 that the Australian example cited by its CEO, Galen Weston, to justify the company’s refusal to sign the code of conduct, was inaccurate.

At that time, Weston expressed concerns to federal officials that the current code of conduct could potentially increase food prices by $1 billion, arguing that, in Australia, the third party responsible for enforcing the code favoured suppliers seeking higher prices, which would harm consumers. None of these claims held.

At least Loblaw eventually acknowledged its error, albeit on Dec. 23, when most of us were preoccupied with holiday preparations.

Leaving aside Loblaw’s failed attempt to obstruct the industry’s efforts to implement a more disciplined and fair code of conduct, Ottawa’s primary focus should be on fostering competition. Providing consumers with more choices and making the Canadian food market more attractive to external investors is essential.

The code of conduct should be a non-government, third-party-led mechanism enabling companies to resolve disputes related to contractual terms rather than pricing per se.

Currently, as grocers unilaterally raise listing and marketing fees imposed on suppliers, the manufacturers, in turn, increase prices to offset these higher fees set by grocers. This results in a cycle that ultimately impacts consumers, often without their awareness.

This is the only way food prices can become more stable over time. In countries like Ireland, Australia and the United Kingdom, where such a code exists, food price increases, adjusted for inflation between 2013 and 2023, have been negative, whereas Canada’s food price increase adjusted for inflation over a decade was 8.9 percent.

While a code of conduct may not entirely curb food inflation, it will help the industry coordinate vertically and address market turbulence, which is often triggered by factors like climate change and geopolitics, leading to price volatility and sticker shocks.

Ottawa should compel all parties, including those who oppose the code like Loblaw and Walmart, to adhere to the code of conduct. That should be the shared goal of all Canadians for 2024.

Sylvain Charlebois is professor of food policy and distribution at Dalhousie University, and senior director of the Agri-Food Analytics Lab.

The post Loblaw’s gaffe and apology appeared first on Alberta Farmer Express.

“We are ensuring a fair and equitable environment for our growers, which is fundamental for the prosperity of the entire supply chain,” said FVGC in a news release.

FVGC’s executive director, Rebecca Lee, is listed as a member of the steering committee in charge of developing the code.

The industry-developed code, which proposes rules for fairness and transparency in the grocery sector, is expected to stabilize growers’ incomes, the FVGC said.

“Canada’s Grocery Sector Code of Conduct acts as a protective measure for the entire supply chain,” it added. “It addresses longstanding issues such as payment terms and contract fairness, which are crucial for the viability and sustainability of Canadian growers.”

It isn’t expected to increase costs to consumers, the news release said.

The code has run into headwinds in recent days as two of Canada’s largest grocers expressed reluctance to sign on to it.

Last week, Loblaw executive chair Galen Weston told the standing agriculture committee the code as currently written would cause higher prices, and Walmart Canada chief executive officer Gonzalo Gebera expressed similar sentiments.

Weston said Loblaw takes issue with clauses that govern written contracts with suppliers, whether retailers can charge suppliers fees when orders aren’t fulfilled, and others.

Michael Medline, CEO of Empire Company Ltd., which owns Sobeys, supports the code.

“This code is not a document comprising overly prescriptive regulations, but simply a straightforward set of principles of good behaviour developed by industry itself. That’s it. It won’t increase food prices, as Loblaw has claimed,” said Gary Sands, senior vice-president of the Canadian Federation of Independent Grocers.

–with files from Karen Briere. Geralyn Wichers is associate digital editor of AGCanada.com.

The post Grocery code will stabilize producer incomes, say fruit and vegetable growers appeared first on Alberta Farmer Express.