There are still some formalities to be completed before it comes into effect, but we can now say that Canada has a code of conduct in place to improve relationships between grocery stores and their suppliers, which have long been at odds. After two years of work initiated by Quebec, its contents were unveiled on Friday. The Minister for Agriculture, Fisheries and Food, André Lamontagne, is convinced that all consumers will benefit.
Posted at 6:30am
One had to be particularly optimistic to believe that day would come.
Furthermore, Minister André Lamontagne admitted with a revealing laugh that he had encountered “a lot of skepticism” and that he had to deal with “a part of the industry for which he has no problem”.
Under these conditions, he was able to convince Ottawa and his counterparts in the other provinces of the importance of regulating trade 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 mobilize people and keep our eyes on the ball. As soon as something could disrupt the process, it was taken care of,” he told me over the phone.
Eight versions of the code were created over the months. Agriculture ministers across the country learned the result on Friday. There are only minor adjustments to be made in the text. A consultation is to take place in February and entry into force is planned for the beginning of the summer.
So far, the project has cost $600,000, a bill only split equally between Quebec and Ottawa.
By improving the situation 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 truly healthy, it means the consumer is getting the right products at the right price. It also encourages innovation, new business creation and investment.
The Code will be “mandatory” although compliance will be voluntary unless enforced by law. Elected officials believe all affected companies (retailers, processors, distributors, wholesalers, farmers) want to get on the bandwagon to improve their image. If there is no broad participation or if it erodes over the years, a solution must be found.
For example, the text points out that the parties “are obliged to negotiate and conclude agreements by mutual consent” and that they “cannot unilaterally amend contracts”, which is currently a major source of irritation among suppliers. If a deduction is made on an invoice, the retailer must provide “reasonable justification, in sufficient detail and in a format effective for verification”. Yes, for such things you need a code.
The Bureau of Grocery Code Arbitration (BACE), a self-funded, member-funded nonprofit organization that will employ nearly 10 people, will be formed. His role will be to advise the industry and resolve disputes through mediation or arbitration.
Equally important, BACE will also play an oversight role. As such, it will publish public reports that must detail the practices observed in the market and suggest corrective actions. A bit like the Auditor General’s reports.
At the end, sensitivities or procedures are revealed that should be improved for the benefit of all. It will have a positive impact.
André Lamontagne, Minister of Agriculture
The bite of these reports remains to be seen. Are companies named?
A story like that of Lay’s Chips, which disappeared from Loblaw Group stores (Maxi, Provigo, Pharmaprix) last year after a price dispute, would it be mentioned in many crisp details? Give the runner a chance.
It cannot be said that the big supermarket chains have a good reputation these days.
According to an AngusReid survey conducted in August, nearly 80% of consumers believe they are taking advantage of inflation to improperly enrich themselves. Your winnings will be scrutinized by the media. Their leaders have been forced to answer questions from elected officials in Ottawa who they suspect of exaggeration.
Their suppliers are no longer sympathetic to their cause. Since at least 2005 they have denounced all kinds of fees imposed on them without negotiations and the imbalance of power. I wrote again on Friday on this topic.
In this context, compliance by the giants Loblaw, Sobeys (IGA), Metro, Walmart and Costco will certainly help them to restore their image a little.
origin of the code
For the record, it’s a decision by Walmart, revealed in La Presse, that represents the origin of the code.
In July 2020, while you might have been away on vacation, Quebec Minister of Agriculture, Fisheries and Food André Lamontagne gushed over this news: “3.5 billion investment: a salty note 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 planned major investments in its supermarkets and website. Checks received from Walmart would simply be reduced by a certain percentage after a certain date.
André Lamontage had commented on the case on Twitter and said he was “disappointed” with Walmart. The leader of the official opposition at the time, Dominique Anglade, had urged the retailer to “be a respectful corporate citizen”.
“At the CAQ, Mr. Economy, it is the prime minister. The day after the news I asked him if he would do something with Walmart and he told me to look into it. I turned around and started talking to my team and the officials,” Mr Lamontagne told me.
It has to be said that this surprising and forced contribution came in a context where the pandemic was already proving difficult for food processing factories and farmers who were struggling to hire foreign labour.
The dreaded domino effect was not long in coming. United Grocers Inc. (UGI), which specifically negotiates prices for 6,500 Metro, Couche Tard and Dollarama stores, warned suppliers it expects to benefit from the same discounts “granted” to Walmart.
André Lamontagne quickly met with Metro, IGA, Loblaw, Gardeners and others. The elected official then set himself the task of convincing the federal and state governments that the retail tax issue was important enough to put it on the agenda of the federal assemblies.
At the same time, Sobeys advocated a code, while Metro, like the Retail Council of Canada, found it unnecessary. Eventually everyone came up with the idea. A report1 last summer confirmed that there are problems to be solved in the country’s food industry.
Here we are, 30 months later, with a UK-inspired code that should bring hope to affected companies and their tens of thousands of employees.