Canada is working on its first-ever Grocery Code of Conduct that aims to enhance “transparency, predictability and fair dealing” when it comes to the grocery business.
On Friday, Agriculture and Agri-Foods Canada (AAFC) announced that significant progress had been made in its development. While we can’t expect it to resolve the country’s supply chain issues, it is expected to help a large number and variety of businesses.
But what exactly will it do for Canadian consumers? Will it help us save money on grocery bills? Will it ensure our food is high in quality? And most importantly, will it hold the billionaires and corporations involved accountable for when they try to take advantage of us?
Daily Hive reached out to AAFC officials to ask a bunch of questions and get a clearer picture. Here’s what they said.
How will the new Grocery Code of Conduct affect or protect Canadian consumers?
The Grocery Code of Conduct is a significant step toward improving the resiliency and efficiency of the grocery supply chain. The primary objective is not to directly rebalance market power, regulate fair dealing, or set the level of retail fees, but rather to improve supply chain relationships through principles of predictability, transparency and fair dealing.
Providing clarity for business practices and establishing guiding principles will improve industry relationships, as the entire supply chain works together to find efficiencies that will ultimately benefit consumers as well.
We know that a competitive grocery landscape is important, which is why the Competition Bureau is also conducting a market study of grocery store competition in Canada. We look forward to the publication of their report in the summer of 2023.
In addition, a fundamental review of the Competition Act is underway to improve the competition framework in Canada to better protect consumers and the integrity of the marketplace.
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When can we expect the Code to be applied?
Industry leaders have made considerable progress in developing a Grocery Code of Conduct. The issues involved are complex and industry is taking the time necessary to build consensus. Similar processes to develop codes of conduct in other countries have spanned several years. We want to make sure a completed industry framework can be swiftly implemented to help improve the strength and resilience of Canada’s food supply chain.
The industry-led process continues to advance and is moving from a development phase into an implementation phase. We look forward to discussing what we can collectively do to support widespread voluntary adoption of the Grocery Code of Conduct. We strongly encourage all agri-food organizations to participate in the consultations that industry will be leading in the coming weeks so that the Code can benefit the largest number and variety of businesses.
Industry stakeholders are close to finalizing a code of conduct that could be implemented by the end of 2023.
What does “enhancing transparency, predictability and fair dealing” mean? How will the Code do all three things?
In its initial work, the Federal-Provincial-Territorial Working Group heard repeatedly that what is concerning for suppliers is the manner in which the more contentious fees are levied, through retroactive, unpredictable and unilateral practices.
Suppliers contend these fees are being applied outside of previously negotiated pricing, and hence detract directly from the supplier’s expected margin. These can range from unexpected and unexplained fees to unforeseen levels of fees, which are simply deducted from the payment for goods. The proposed Code of Conduct draws heavily on best practices internationally, including the Code in use in the United Kingdom.
Among a range of issues, the Industry Steering Committee has noted the need to address issues such as how fees are levied, the need for written contracts, and the importance of joint forecasting of supply orders. These examples provide the basis to improve transparency, predictability and fair dealing in dealings between industry partners in the supply chain.
Will it help regulate fair prices for consumers and businesses?
Rising food prices are a global concern. Many factors have been driving the increase in food prices, including the COVID-19 pandemic, climate events, the invasion of Ukraine, and continuing supply chain challenges.
A Grocery Code of Conduct is expected to improve relations between suppliers and retailers, as well as increase predictability and transparency, which will have positive effects across the supply chain, and ultimately benefit consumers. A Grocery Code of Conduct will not directly regulate prices nor fees that retailers set for processors.
Will the Code also contain other features, like enhanced quality control?
The Code of Conduct is not a singular document and will contain a number of features.
It is a set of integrated measures including: (a) principles, (b) trade rule provisions supported by clear definitions, (c) a dispute resolution mechanism, (d) an adjudication process, (e) mediation and arbitration models, and (f) enforcement mechanisms, which work together to promote fair and ethical trading and contractual certainty
The Industry Steering Committee continues to develop the final elements of the Grocery Code and would be best placed to provide additional information on the features of the Grocery Code of Conduct as part of their broader industry consultation.