Question Period Note: GROCERY CODE OF CONDUCT

Q1 – Will a grocery sector code of conduct increase food prices? Q2 – Why has the government not taken concrete action to impose a code of conduct? Q3 – Will a grocery code of conduct reduce competition in the grocery retail sector? Q4 – Why are provinces and territories not taking more action?

R.1 - Some companies have argued that the code will create unnecessary bureaucracy and lead to higher prices for consumers.

Others in industry disagree with this assessment, including some large retailers, which is why the industry-led code has widespread support across the supply chain.

The reality is that many factors influence the prices consumers pay for food, including the international trade environment, labour costs, transportation, climate change and supply chain inefficiencies.

This is why it is extremely difficult to draw a direct link between any grocery code of conduct and increases or decreases to the price of food.

This is not about prices. Rather, the purpose of a grocery code of conduct is to improve the strength and resilience of Canada’s food supply chain. R.2 - We continue to believe that collaboration around an industry-led solution will yield the best outcome for the sector, but we have been considering next steps if there is no consensus.

The issues at stake are very complex and need to take into account a wide variety of considerations and perspectives.

Experience in other countries demonstrates that the process takes time. The UK code began as a voluntary code before evolving into a mandatory code over 10 years.

This is also not only an issue for the federal government, and we need to work closely with provinces and territories to ensure the best outcome. R.3 - The purpose of a grocery code of conduct is to improve transparency, predictability and fair dealing, and that will create a more competitive marketplace.

While an overregulated environment could create challenges for competition, what is important is that any code takes this into consideration in its design. R.4 - This government has worked collaboratively with provinces and territories to support the industry-led process.
We need to work together to avoid a patchwork of different rules across the country.

My colleagues and I will continue to work with provincial and territorial governments on this important and complex issue.

In November 2020, FPT Agriculture Ministers agreed to create a federal-provincial-territorial (FPT) working group to clarify the impact of certain retail practices and explore potential solutions benefitting the entire food value chain. In July 2021, key findings of the FPT working group were presented to Ministers and released publicly. FPT Ministers called on industry to develop consensus on a proposal for a code of conduct and an approach to dispute resolution to improve predictability, transparency and fair dealing in supplier-retailer relations.
In August 2021, an Industry Steering Committee (ISC) comprised of key industry leaders was established and provided periodic updates to FPT Ministers. A draft proposal for a Grocery Sector Code of Conduct and an Office of the Grocery Sector Code of Conduct became public in May 2023 and was used to conduct a broad industry consultation. A draft Grocery Sector Code of Conduct was submitted to government in December 2023. However, two of the five major retailers, Loblaw and Walmart, indicated that they will not sign on to the Code in its current form. Industry discussions have continued, with Loblaw announcing support for the voluntary industry-led Grocery Code in May 2024. It remains unclear whether the remaining major retailers will also commit to the industry-led solution.
The Grocery Code of Conduct being developed by industry is not expected to address concerns over rising food prices. However, it is expected to improve supply chain predictability, transparency and fair dealing.
Continued inflation and media attention has increased interest in implementing a grocery sector code of conduct to improve supply chain relationships. Implementation of a code has been recommended in multiple Standing Committee reports since 2021 and the Competition Bureau Retail Grocery Market Study of 2023.
The Minister of Agriculture and Agri-Food as well as his Quebec counterpart called on industry to quickly commit to the industry-led code of conduct in a Ministerial statement in January 2024 and on May 16, 2024. Industry discussions continue to advance.

• Canada needs a grocery code of conduct to bring more fairness, transparency and stability to our grocery sector and supply chain.

• After years of work, broad consultations, and unprecedented engagement, I am encouraged to see that additional key stakeholders support a grocery code of conduct.

• Our government continues to monitor industry progress and consider all possible options as we move forward.