The grocery code of conduct, a voluntary agreement between suppliers and retailers, is expected to spark more investment and innovation by food manufacturers in Canada, hedging against shortages and price volatility in the future. Michael Medline, chief executive of Sobeys parent company Empire Co. Ltd, believes that the code could lead to lower prices, shorter supply chains, and more choice for Canadians. The code is a voluntary agreement meant to create guidelines for fair dealings and level the playing field for smaller businesses.
Work on the code began in response to calls from some in the industry to address fees charged by large retailers to suppliers. However, there were several months of uncertainty over whether the other major grocers would be on board, with government pressure ramping up and threats of making the code mandatory. Loblaw Cos. Ltd., Walmart Canada, and Costco Costco Wholesale Corp. confirmed their support earlier this year.
Talk of a grocery code predated the COVID-19 pandemic, but the proverbial straw that broke the camel’s back came in 2020 when Walmart and Loblaw introduced new fees for suppliers to help pay for infrastructure investments. Medline became the first major grocery executive to call for a grocery code of conduct, fearing an “exodus” of manufacturers from Canada, resulting in lost jobs, risks to prices, and longer supply chains.
Michael Graydon, CEO of the Food, Health & Consumer Products Canada association, believes that the industry can only benefit from clearer rules over negotiations and disagreements. He believes the code could lower costs for manufacturers by reducing the number and scale of fines they face from retailers.
The code is set to be officially in place next June, with the creation of an office to oversee it under way.
Source: Globe and Mail
Source: The Star
