Key Takeaways:
- The Canada grocery code of conduct is a set of standards to guide interactions between grocery retailers and their suppliers.
- The code aims to reduce unfair practices, such as retroactive fines and unilateral contract changes, and promote a more stable and predictable grocery supply chain.
- The code will be fully operational on January 1, with an independent adjudicator to monitor compliance and resolve disputes.
- Major grocery companies, including Sobeys, Metro, Loblaw, Walmart, and Costco, have signed on to the code.
- The code is not expected to provide immediate price relief, but may lead to a greater variety of products and more stable prices over time.
Introduction to the Grocery Code of Conduct
The long-debated grocery code of conduct in Canada is finally taking shape, with the goal of making the food supply chain fairer and more transparent. The voluntary code, which applies to relationships between major grocery retailers and their suppliers, was first proposed amid concerns about rising food prices, supplier fees, and the growing imbalance within Canada’s highly concentrated grocery sector. Federal and provincial agriculture ministers have argued that clearer rules are needed to curb practices that can drive up costs throughout the supply chain, even if those costs aren’t always visible to consumers.
What is the Grocery Code of Conduct?
The Canada grocery code of conduct is a set of standards meant to guide how grocery retailers and their suppliers interact. According to Michael Graydon, CEO of Food, Health and Consumer Products of Canada and one of the developers of the code, the goal is to create a more stable and predictable grocery supply chain. The code covers business relationships across the supply chain, from food producers to the shelves where Canadians buy their groceries, and aims to reduce unfair practices like retroactive fines, chargebacks for operational issues, and unilateral contract changes. The code includes principles like negotiating in "good faith," discouraging unilateral changes to agreements, and creating mechanisms for solving disputes.
Why it Matters Now
Canada’s grocery industry is highly concentrated, with a handful of larger retailers controlling most of the market. In 2022, five grocery retailers controlled almost 80% of the market share in Canada, according to the Canadian Federation of Agriculture. The latest Food Price Report produced by several Canadian universities is also projecting an average family of four will pay an estimated $994.63 more for food in 2026 than this year because of issues like trade and climate change. Meanwhile, grocery prices remain the top financial concern across the country, according to a Nanos research survey conducted for CTV News. Forty-two percent of respondents ranked it as their highest financial stress point, and 37.5% ranked it as their second.
Where the Code Stands Today
The code will be fully operational on January 1, when the body that regulates disputes will be open for members to submit formal complaints, and all parts of the code will be expected to be fully implemented by members. Graydon said that to ensure accountability, the code established an independent adjudicator, Karen Proud, with the authority to publicly identify companies that fail to comply. The Office of the Grocery Sector Code of Conduct (OGSCC) will monitor the execution of the code, and an annual report will be issued starting in 2026. If the voluntary framework proves insufficient, Graydon noted, the adjudicator can recommend strong government oversight.
Impact on Shoppers
Graydon said the code could mean consumers will have a greater variety of products to choose from. However, he was clear that shoppers should not expect immediate price relief. "It’s not going to be overnight," he said. "It’s also going to take some time for everyone to really understand how the code works." He added that a year into implementation, the industry should be in a better position to assess whether the code is being applied effectively. Graydon also stressed that the code was never designed as an affordability measure. "It was designed to address the relationship between suppliers and retailers." He cautioned consumers against expecting prices to drop simply because the code is in place.
Measuring Success
As for how success will be measured, Graydon said early indicators will include fewer complaints and faster resolution of disputes. "If, as the year progresses, the amount of complaints diminish, that’s an indication that all stakeholders are participating," he said. "If issues are being resolved through discussion before they even reach resolution, that’s what the code is designed to do." With the code set to take effect on January 1, Canadians will be watching closely to see if it can bring about positive changes to the grocery supply chain and ultimately benefit consumers.
