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Pressure mounts to find a path forward after Canada’s grocer code stalls

Click to play video: 'Loblaw head Galen Weston says grocery code of conduct would raise food prices'
Loblaw head Galen Weston says grocery code of conduct would raise food prices
Loblaw head Galen Weston said Thursday while testifying at the House of Commons Agricultural Committee that the federal government’s proposed grocery code of conduct would raise food prices, not lower them. Weston said he was concerned the code could remove “a retailer's ability to hold vendors accountable.” – Dec 7, 2023

Canada’s long-planned grocery code of conduct was expected to take effect early in 2024, but the industry board devising the code reached an impasse this week that raises questions about its future.

Grocery giants Loblaw and Walmart Canada are refusing to sign on to the code in its current state. The path forward, as consumers continue to struggle, is unclear even as some members of the industry say they want to see the code move forward.

“There’s been robust discussions and a lot of compromises made, but we’re very proud of what we have come up with,” said Gary Sanders with the Canadian Federation of Independent Grocers. “We think the code is a really good one for the industry and we know it will also benefit consumers.”

Sanders is also a member of the board working to draft and implement the code. The goal is for this voluntary code to establish a set of rules that help govern relationships between retailers, manufacturers and producers up and down the grocery supply chain.

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Last week, Loblaw chair Galen G. Weston and Walmart Canada CEO Gonzalo Gebara said that they aren’t open to signing the code in its current form, saying it would drive up costs.

Weston said that Loblaw estimates the code will add $1 billion in added costs to the supply line, which will be passed along to consumers.

Gebara did not give MPs a value estimate like Weston but said added bureaucracy will increase costs that have to be passed to consumers.

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“If you’re saying that you’re not going to be supporting or signing on to this industry governance code, then other players in the marketplace are going to say, ‘Well, I’m not going to follow that. I’m not going to be put in a competitive disadvantage by being bound by rules that my competitor isn’t following,’” Sanders said. “So, until we resolve this issue or governments resolve it for industry, we’re definitely at an impasse.”

Click to play video: 'Canada’s Food Price Report 2024'
Canada’s Food Price Report 2024

In response, Agriculture Minister Lawrence MacAulay says that the government is examining all options to push the code forward, including potential legislation.

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“What we need to do, of course, is totally examine the code, make sure and decide which is federal and provincial jurisdiction, and then make the decision as to what the next step is,” MacAulay said. “What we want to make sure is that we have a code that’s effective. We want to have fairness right along the chain, from the producer to the consumer. And we intend to do that.”

NDP agriculture critic Alistair McGregor led the push to bring the grocery heads back to committee to talk about what they’re doing to stabilize prices. Regarding the resistance to the code as it stands, he doesn’t buy what Loblaw and Walmart are selling.

“After hearing from Mr. Galen Weston at committee, his arguments don’t hold a lot of water. The fact (is) that some of his major competitors are signing up,” MacGregor said. “I think we’ve given the corporations a lot of leeway here, a lot of time to come up with something that was voluntary. If they’re not going to abide by the space in the time that they were given, then I think it’s time for government to step in to make sure that the process is fair for all players involved.”

In a statement, Conservative agriculture critic John Barlow said that if the government wants to lower grocery prices they should remove the carbon price from farm operations, like grain drying.

“Common sense Conservatives brought a food affordability bill to take the tax off farmers, but the Prime Minister and his activist environment minister called their Liberal-appointed senators to delay and gut the bill in the senate to protect their punishing carbon tax,” he wrote.

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“If the Liberals cared about lowering food costs for Canadians they would have supported our common sense Bill C-234 without amendments and delays.”

The federal government has previously floated changes to the Competition Act and tax measures to stabilize grocery prices.

However, Sands is unsure what Ottawa could do unilaterally to implement the grocery code.

“Our understanding legally is this would have to be legislated by provinces and that that causes us some concern because that could mean that some provinces end up developing a code or enacting a legislation to have a code and others might decide not to,” he said. “So we don’t want to have a patchwork of different kinds of codes or some codes and no codes across the country.”

– With files from The Canadian Press.

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