There are still a few formalities to settle before it comes into force, but we can now say that there is a code of conduct in Canada to improve relations between grocery stores and their suppliers, which have been at loggerheads for a long time. After two years of work initiated by Quebec, its content was unveiled on Friday. The Minister of Agriculture, Fisheries and Food, André Lamontagne, is convinced that all consumers will benefit.
You had to be particularly optimistic to believe that this day would come.
Moreover, it was with a revealing burst of laughter that Minister André Lamontagne admitted that he had encountered “a lot of skepticism” and that he had had to deal with “a part of the industry for which he does not ‘no problem “.
It was under these conditions that he succeeded in convincing Ottawa and his counterparts in the other provinces of the importance of regulating commercial practices between private companies. So he got retailers and their suppliers to write this code together despite their differences. Hiring a mediator was certainly a wise decision.
“We had to keep people mobilized and our eyes on the ball. As soon as something could derail the process, it was taken care of,” he told me over the phone.
Over the months, eight versions of the code were spawned. Agriculture ministers across the country learned of the result on Friday. Just a little tweaking left to do in the text. A consultation is to be held in February and the entry into force is scheduled for the beginning of the summer.
So far, the project has cost $600,000, a bill shared equally between Quebec and Ottawa only.
By improving the lot of the 2,500 businesses in the province that feed them, the code of conduct will benefit all Quebecers, argues André Lamontagne. “If the chain [d’approvisionnement] is really healthy, it means that the consumer will have the right products at the right price. It also promotes innovation, the creation of new businesses and investment.
The code will be “compulsory”, although adherence to it will be voluntary insofar as it will not be forced by any law. Elected officials believe that all the companies concerned (retailers, processors, distributors, wholesalers, farmers) will want to get on the train to improve their image. If broad participation is not obtained, or if it is eroding over the years, a solution will have to be found.
The text indicates, for example, that the parties “have an obligation to negotiate and conclude agreements by mutual consent” and that they “cannot modify contracts unilaterally”, which is a major source of irritation for suppliers, currently. When a deduction is applied to an invoice, the retailer must “provide reasonable justification, sufficiently detailed and in an effective format for verification”. Yes, you need a code for things like that.
The Bureau of Grocery Code Arbitration (BACE), a self-funded, member-funded non-profit organization that will employ just under 10 people, will be created. Its mandate will be to advise the industry and resolve disputes through mediation or arbitration.
Equally important, the BACE will also play a supervisory role. As such, it will publish public reports which must detail the practices observed in the market and suggest corrective measures. A bit like the Auditor General’s reports.
In the end, what it will do is to expose sensitivities or ways of doing things that should be improved for the benefit of everyone. It will have a positive impact.
André Lamontagne, Minister of Agriculture
The bite of these reports remains to be seen. Will companies be named?
A story like that of chips Lay’s, which disappeared from the Loblaw group’s stores (Maxi, Provigo, Pharmaprix) last year after a dispute over prices would it be mentioned there with many crisp details? Give the runner a chance.
It can’t be said that the big supermarket chains have a good reputation these days.
Almost 80% of consumers believe they are taking advantage of inflation to enrich themselves unduly, according to an AngusReid poll conducted in August. Their profits are scrutinized by the media. Their leaders have been forced to answer questions from elected officials in Ottawa who suspect them of exaggerating.
Their suppliers are no more sympathetic to their cause. They have been denouncing since at least 2005 the fees of all kinds imposed on them without negotiation and the imbalance in the balance of power. I was writing again on this issue on Friday.
In this context, adherence to the code by the giants Loblaw, Sobeys (IGA), Metro, Walmart and Costco will no doubt help them restore their image a little.
Origin of the code
For the record, it’s a Walmart decision revealed in The Press which is the origin of the code.
In July 2020, while you may have been on vacation, the Minister of Agriculture, Fisheries and Food of Quebec, André Lamontagne, hooked on this news: “Investment of 3.5 billion: a note salty for Walmart suppliers”.
In this text, I explained that the American giant had announced to its suppliers that they would have to finance part of the major investments planned in its supermarkets and its website. Checks received from Walmart would simply be reduced by a certain percentage from a given date.
André Lamontage had commented on the case on Twitter, saying he was “disappointed” with Walmart. The leader of the official opposition at the time, Dominique Anglade, had asked the retailer “to be a respectful corporate citizen”.
“At the CAQ, Mr. Economy, it’s the Prime Minister. The day after the news I asked him if he was going to do something with Walmart and he told me to deal with it. I turned around and started talking to my team and officials,” Mr. Lamontagne told me.
It must be said that this surprise and forced contribution came in the context where the pandemic was already difficult to manage for food processing factories and farmers who were struggling to bring in foreign workers.
The dreaded domino effect was not long in coming. United Grocers Inc. (UGI), which negotiates prices for 6,500 Metro, Couche-Tard and Dollarama stores, in particular, warned suppliers that it expected to benefit from the same discounts as those “granted” to Walmart.
André Lamontagne quickly met with Metro, IGA, Loblaw, market gardeners and others. The elected official then made it his mission to convince the federal government and the provinces that the issue of fees imposed by retailers was important enough to put on the agenda of national meetings.
At the same time, Sobeys came out in favor of a code, while Metro deemed it unnecessary, as did the Retail Council of Canada. Everyone finally came around to the idea. A report1 came to confirm last summer that there were problems to be solved in the agri-food industry in the country.
Here we are, 30 months later, with a code inspired by that of the United Kingdom which should give hope to the companies concerned and their tens of thousands of employees.