It took more than three years of difficult negotiations to get there, but all the country’s major food retailers now support the voluntary code of conduct that is intended to change the culture of this industry. After Sobeys (IGA), Metro and Loblaw (Maxi), the American chains Costco and Walmart have just followed suit.
Once the code is in force, these five companies – which have a lot of power over their suppliers and use it in many ways – will have to comply with a series of rules aimed at cleaning up commercial relations.
The pressure on Costco and Walmart was probably high in recent days, with the annual conference of all the country’s agriculture ministers currently taking place in Whitehorse, Yukon. Without an industry agreement on a voluntary code, elected officials could have lost patience and moved to impose a regulation. No one wanted that to happen.
Costco announced its membership late last week, Walmart on Wednesday, just business hours before the politicians were set to meet.
“It’s very emotional, actually. I’ve had to pull myself together a few times. I’m over the moon,” Michael Graydon, CEO of Food, Health & Consumer Products of Canada (FHCP), the national association that represents major suppliers like Agropur, Dare, KraftHeinz and Pepsico, told me.
This outcome also brings “great satisfaction” to Quebec’s Minister of Agriculture, André Lamontagne, who has been leading the ambitious project since the beginning. During an exchange on Teams, the elected official displayed the broad smile of a proud and relieved man who can claim victory. He also plans to celebrate during his upcoming vacation. The level of skepticism has been high, the headwinds numerous, but he has never stopped believing in it, he swears.
Of course, Minister Lamontagne did not advance the issue alone. But we must remember that he is the initiator of the movement, of the reflection across the country.
In the summer of 2020, when he discovered in The Press that Walmart would force its suppliers to finance its 3.5 billion investments in Canada1he wrote on Twitter that he was “disappointed” with the retailer.
“The next day, I texted the prime minister to see if he wanted to do something with Walmart and he said, ‘No, just deal with it.’ So I took him at his word,” the elected official and former grocer told me. Major supermarket chains, independents, processors of all sizes and farmers then worked together despite their divergent interests. A feat that could mark Mr. Lamontagne’s career.
If suppliers had responded quickly to Walmart’s strategy by imploring the government to step in,2retailers – with the exception of Sobeys – held the opposite view.
Initially, Metro considered it unnecessary to establish a code since its relations with its suppliers were already “win-win”, marked by “respect” and conducted in an “ethical” manner.3The Quebec brand finally agreed to the idea of a code. The Retail Council of Canada also campaigned against the idea.
Canada’s largest retailer, Loblaw, has been giving the committee responsible for creating the code a run for its money. In recent months, the owner of Maxi and Provigo has been pushing for “clarifications” to be added to the text. Those changes won its support in May.
The implementation phase of the code can now begin. The aim is to achieve this before June 2025.
The process includes the creation of the Grocery Code Arbitration Office (BACE), a non-profit organization self-funded by members. Its mandate will be to advise the industry, resolve disputes through mediation or arbitration and play a monitoring role. It will publish reports that must detail the practices observed in the market and suggest corrective measures as an auditor general would do.
This exercise should improve the level of consumer confidence in the food industry, which has been battered since the inflationary surge. A good portion of the population feels like they are being taken advantage of, that there is abuse.
Minister Lamontagne hopes the code will allay this perception.
But don’t expect prices to drop quickly, warns Michael Graydon of the FHCP, because the code’s goal is to bring “transparency, predictability and fairness” to the food industry. If it does have an effect on prices, it will be a few years away, he predicts.
But in the meantime, more eco-friendly packaging and innovation is expected to make its way to supermarkets, as suppliers benefit from a more stable environment that encourages investment and the creation of new products.
Another expected benefit for small food processors: easier access to financing, Graydon suggests. “Right now, it’s hard for them to attract capital, and when they do, it’s usually high-interest venture capital.”
In total, 2,500 businesses in Quebec feed the population. It is important to ensure that they flourish, both for the good of our economy, particularly in the regions, and to maintain a certain level of food autonomy. What impact will the code have on these employers? Only time will tell.
1. Read “$3.5 Billion Investment: A Hefty Bill for Walmart Suppliers”
2. Read “Arbitrary fees imposed by supermarkets: Ottawa’s intervention demanded”
3. Read “Retailer-Supplier Relations: Code of Conduct Not ‘Necessary,’ Metro Believes”