REGINA — Canada’s grocery code of conduct appears to be in jeopardy after Loblaw and Walmart said last week they weren’t prepared to sign on to it.
Loblaw executive chair Galen Weston told the standing agriculture committee the code as currently written would cause higher, not lower, prices. Walmart Canada chief executive officer Gonzalo Gebera said the company has a history of lowering prices and wants to make sure it can continue to do so.
“We believe the code is not in a position for us to commit to signing and we want to commit to continue to discuss and continue to be involved,” Gebera said.
Weston said the company has already reduced prices on staple items that make up about 10 percent of its sales.
“As the code is currently drafted our strong conviction is that it will raise prices,” he said. “The principle is fine, but the way it’s drafted is what we have an issue with.”
For example, he 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.
He repeated comments from earlier this year that grocers are not responsible for high food prices.
“We are here being held accountable for high food prices that are not the direct responsibility of the grocery industry,” Weston said. “Now you’re asking us to sign onto something that we believe in our bones is going to do the opposite of what other people say it’s going to do.
Michael Medline, CEO of Empire Company Ltd., more commonly known as Sobeys, supports the code.
“In no way do we believe, nor does evidence show, that a grocery code of conduct would lead to higher food prices or less choice for Canadians. In fact, it’s quite the opposite,” he told the committee.
The company leaders appeared before the committee as part of its study on stabilizing food prices. Earlier this fall the federal government summoned them to a meeting as Canadians grappled with food inflation. Since then, the rate has declined to about 5.4 percent compared to the peak of 11.4 percent in January 2023, Medline said.
Sobeys began implementing its plan in November by expanding its typical November-to-January practice of freezing prices on packaged products. Medline said the company usually holds prices on about 90 percent of packaged products; this year it expanded the freeze to all packaged productions or about 20,000 items until the first Sunday in February.
That means about 1,700 expected price hikes didn’t occur, he said.
Medline outlined steps the federal government could take to help, including backing off on labelling requirements and supporting implementation of the grocery code.
“Let me say this, however, although we are ready, willing and able to sign the code today we now have serious doubts as to whether the code will actually come into effect due to recent opposition by some retailers,” he said. “We would be pleased to see more immediate action from the government on this issue.”
Medline said the code isn’t quite on life support but is in dire straits and that those who don’t like the code are stalling.
“They’re saying things that aren’t true and they’re hurting our chances of putting the code forward,” he said.
Gary Sands, senior vice-president of the Canadian Federation of Independent Grocers, said there can be unintended consequences to trying to stabilize food prices. He noted many of the 6,900 CFIG members are in rural communities.
“If, as a result of making commitments to the government, retail chains are using their leverage to impose price freezes or discounts on their suppliers, where does that leave the independent grocer and their customers? An independent grocer has no leverage to demand a price freeze or a drop in price. If government wants price stability, then it has to be for all Canadians,” he said.
“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.”
Michael Graydon, CEO of Food, Health and Consumer Products of Canada, said he didn’t think the code would move ahead because some retailers will see it as yielding competitive advantage to Loblaw and Walmart. Manufacturers will also be concerned if more than 40 percent of the industry is outside of the code, he said.
Graydon said changes requested by Loblaw will neuter the code and render it ineffective.
Federal agriculture minister Lawrence MacAulay and his Quebec counterpart last week issued a news release about the code.
“After years of work, broad consultations, and unprecedented engagement across the grocery supply chain, we’re disappointed to see that the Grocery Sector Code of Conduct has still not been launched and that supply chain partners are hesitant to move forward,” they said.
“At a time when Canadian families are struggling with the cost of food, we need the major grocers and all supply chain partners to adopt and adhere to the Code. The Code is a tangible way to bring more fairness, transparency and stability to our grocery sector and supply chain.”
The ministers said they would review all options, which could include making the voluntary code mandatory.
The committee expects to hear from industry minister Francois-Philippe Champagne, finance minister Chrystia Freeland, MacAulay and other stakeholders as part of its study.
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