As the grocery code of conduct nears completion, Canada’s biggest companies in the industry are raising concerns that the guidelines could add fuel to the fire of food inflation.
In a letter sent and obtained Nov. 1 to members of both the steering committee and industry subcommittee developing the code, Loblaw Companies said the code “will reduce food prices for Canadians. He said he was concerned that the tax could be raised by more than $1 billion. Canadian Press.
Grocery stores cannot support the code in its current form, Chief Financial Officer Richard Dufresne wrote in a letter, calling a special meeting of the industry subcommittee to address Loblaw’s concerns. requested that the event be held.
Loblaws spokeswoman Katherine Thomas said in a statement that the draft code has “many challenges” and grocers believe it could threaten product availability and increase food prices. He said that Loblaw’s statement also mentioned a potential “$1 billion in costs,” which Thomas said referred to additional costs to Loblaw’s customers.
Loblaw isn’t the only grocer to express concerns about the code. Sarah Kennedy, a spokeswoman for Walmart Canada, said in an email in late October that the company supports initiatives that will benefit customers, but that they “have the potential to increase food costs for Canadians, especially during periods of inflation.” “We are conscious of adding unnecessary burdens.”
Grocers are under pressure from the federal government to stabilize food prices after high inflation and a series of interest rate hikes have squeezed household budgets.
Michael Graydon, CEO of the Canadian Food, Health and Consumer Products Association and co-chair of the steering committee that developed the code, urged both companies to give the code a chance. If these aren’t included, the code will be less effective, he said.
“Please sign on, be an active participant, be proactive,” Graydon said, adding that the code would be reviewed after launch.
“But it is not in the best interest of the industry to continue to sit on the sidelines and continue to throw stones at the process.”
The code is nearing completion, and the code and the nonprofit organization overseeing it plan to have it up and running by the end of the first quarter of 2024, Graydon said.
Loblaw’s letter refers to specific parts of the draft code that make it difficult for retailers to hold suppliers accountable, create uncertainty in supplier-retailer relationships, and reduce price, availability, He said discount programs pose risks.
Graydon said the committee does not want to negotiate the main points of Loblaw’s letter in the media and would like to discuss it directly with the committee at a future meeting.
But he and Gary Sands, executive vice-president of the Canadian Federation of Independent Grocers and a member of the committee, did not argue with Loblaw’s $1 billion figure.
“There is no evidence to suggest that this code will raise food prices or have a negative impact on retailers’ ability to meet consumer needs,” Graydon said.
Sands said the provision would also raise an alarm if he believed it would lead to inflation, but “we do not believe that to be the case.”
The committee developing the code was established in response to calls from the industry to address the fees large grocery retailers charge suppliers, an issue that came to the fore publicly in 2020. That same year, Wal-Mart Canada announced fee increases and a national purchasing group was created to represent Metro. He said he expects the same from his suppliers. Shortly thereafter, Loblaw also increased its fees.
Michael von Massow, a food economics professor at the University of Guelph, said two of the biggest companies in the market — one of Canada’s largest grocers and the other a major U.S. company — have expressed concerns about the code of conduct. said it was not surprising.
“Frankly, they probably have the most to lose,” he said.
Empire, which owns Metro and Sobeys, confirmed its commitment to adopting the code in a statement Monday. Costco Canada did not respond to a request for comment.
If Loblaw or Walmart Canada ultimately decides not to sign the code, another route may be needed to address the department’s issues, Graydon said.
“I think we need to have some very interesting conversations with a number of governments regarding regulation,” he said.
Quebec’s Agriculture and Food Minister Andre Lamontagne, who co-chaired a working group announced in 2020 to consider the fees retailers charge suppliers, said that by bringing the regulations to today’s level, He said it took several years of hard work.
A July 2021 report by the group noted that any regulatory or legal approach to addressing these fees would require state action, which could lead to a patchwork approach.
Lamontagne declined to say whether Quebec would step in if all grocers don’t agree to the terms.
“I’m always an optimist,” he said in an interview conducted in French.
The federal food minister also did not comment on whether regulations were needed.
“In July, Commonwealth, State and Territory Ministers were briefed on the significant progress made during the industry consultation held in May 2023 and continue to encourage all key players in the industry, including large retailers, to We stand united in calling for support and participation in the operation,” Agriculture Minister Lawrence Macaulay said in an email.
But von Massow said there has always been, and is likely to continue to have, political appetite to step in to regulate when norms break down.
“I think the current environment is increasing that appetite and giving the government the perception that it’s doing something at an affordable price,” he said.
Mr. Graydon believes that given all the pressure on retailers to stabilize food prices and accusations of “greedflation” from consumers and politicians alike, grocery stores will not be able to adopt this standard. I think saying no to something can be a bad choice.
“It would be a public relations disaster for them,” he said.
– with files from bullet bundle
This report by The Canadian Press was first published Nov. 7, 2023.
