Negotiators from all corners of the food industry are close to finalizing a code of conduct that Agriculture Minister Marie-Claude Bibeau said could be implemented by the end of 2023. The federal government received a draft of the code late in 2022, the product of more than a year of negotiations between industry groups representing farmers, food processors, independent grocers and national retail chains.

If it comes into force as proposed, the new set of rules could mute the power of the country’s grocery oligopoly, which for years has been accused of bullying food producers into paying hefty fees and fines to be able to get products on shelves. “I’m confident that yes, we will see the code of conduct put in place this year,” Bibeau said. “We’ve made a lot of progress.”

In 2020, the federal, provincial and territorial agriculture ministers — an influential body known as the FPT — tasked Bibeau, as well as Quebec Agriculture Minister André Lamontagne to look into controversial fees and fines in the grocery sector. Half a year later, the ministers issued a report that found the five largest grocery chains in Canada had become so big — they control about 80% of total sales — that they could make unreasonable demands, such as $1,000 penalties for late deliveries and payments of more than $100,000 to list a new product on shelves. Suppliers would have little choice but to pay, or risk losing a major customer.

After the report came out, Lamontagne was blunt. He said publicly that the industry needed to fix the problems on its own, or the government would step in. “We suggest they make (the deadline), otherwise we’ll have to be more involved,” he said in an interview at the time.

Since then, a handful of industry associations have going back and forth with a government-appointed mediator, as part of a steering committee trying to hash out a code of conduct similar to the one used in the United Kingdom. But as recently as the summer of 2022, talks appeared to be going nowhere. The committee had blown past two government deadlines, and was suggesting that Lamontagne might have to make good on his threat if they couldn’t reach a consensus by the end of 2022.

In November, however, the committee delivered a draft code of conduct to government. In a statement on Jan. 13, Lamontagne’s office described the draft as a “complete proposal,” which includes a plan to create an independent adjudication office to enforce the rules.

“The foundation looks very good,” Lamontagne said in an interview, adding that he hopes the code could be implemented by the summer. “Let’s say before the end of the year. But I’m positive that it could be earlier than later.”

Lamontagne and Bibeau presented the draft to their counterparts from the provinces and territories at an FPT meeting on Jan. 13. After the meeting, the two issued a joint-statement that said the committee had made “substantial progress.” Lamontagne and Bibeau also said they will encourage players in the industry to voluntarily sign on to follow the code of conduct, “so it can be swiftly implemented.”

In an interview, Bibeau declined to speculate on how the government might react if some of the major chains refuse to adhere to the code. “I don’t want to go there,” she said.

Source: Financial Post