Its dispute resolution management process took effect on Jan. 1 — the final component of the framework to roll out.

The code has been in the works since 2021, sparked by friction between grocery companies and their suppliers, which was exacerbated by challenges related to the COVID-19 pandemic.

Provisions in industry-developed code include guidelines around fair and ethical dealing; commercial agreements and would should be contained in them; rules around payments and charges between retailers and suppliers; and dispute resolution.

The Office of the Grocery Sector Code of Conduct oversees the application of the code. On Nov. 28, the office announced it had finalized its governance framework and would formally begin recruiting companies to sign on to the voluntary code.

More than 100 grocers and suppliers had signed on as of Nov. 28. These include Canada’s major grocers like Loblaw, Metro, Sobeys, Walmart and Costco, which joined after significant negotiation.

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“This is a positive step towards bringing more fairness, transparency, and predictability to Canada’s grocery supply chain and for consumers,” the ministers said.

In the statement, Canada’s federal, provincial and territorial Ministers of Agriculture said “years of work and widespread industry participation” has been put into developing the Code of Conduct. Until recently, Walmart and Costco were the only two major grocery retailers to not join the Code of Conduct. Metro and Sobeys signed on last year, while Loblaw agreed this past May after months-long negotiations and a social media-driven campaign by angry consumers urging others to boycott Loblaw stores due to high prices.

Stemming from friction between retailers and suppliers, the code was developed by the industry to promote transparency and fairness, and to solve disputes. It’s been in the works since 2021.

“The goal of the Grocery Sector Code of Conduct is to bring fairness, transparency, and predictability to our grocery sector and supply chain,” a statement from AAFC said after Loblaw joined the Code of Conduct in May. “We believe that uniting all supply chain partners around these principles will produce the best outcomes for the sector and all Canadians.”

—with files from Janelle Rudolph

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The company’s top brass confirmed their commitment to the policy May 16 at the company’s supplier summit.
“We have worked intensively and collaboratively with industry groups so that the code is clearly drafted and fair for all industry participants,” said Per Bank, Loblaw President and chief executive officer.

Stemming from friction between retailers and suppliers, the code was developed by the industry to promote transparency and fairness, and to solve disputes. It’s been in the works since 2021. 

The announcement comes following six months of company interim board discussions and December statements from Loblaw executive chair Galen Weston that a grocery code would cause higher food prices or fewer food choices.

The company was also at the heart of a social-medial sparked national boycott effort, which was to start this month.
In September 2023, major grocery chains promised to take action to stabilize prices in the wake of continued concern over grocery costs.

Loblaw says the next steps for the code will be for other major grocers—i.e. Walmart—to sign on.

“We believe in the value of a code of conduct for the industry and are happy with the progress made,” Bank said. “The Code now requires the participation of all major retailers and suppliers to help bring in a new era for Canada’s grocery industry, enhancing the relationship between retailers and suppliers, who both exist to best serve customers.”

Lawrence MacAulay, federal minister of agriculture and agri-food, and Andre Lamontagne, Quebec minister of agriculture, fisheries, and food, issued a joint statement following Loblaw’s announcement.

The two echoed Bank’s call for other grocers to follow Loblaw’s lead.

“The goal of the Grocery Sector Code of Conduct is to bring fairness, transparency, and predictability to our grocery sector and supply chain,” the statement read. “We believe that uniting all supply chain partners around these principles will produce the best outcomes for the sector and all Canadians. With the news that Loblaw is signing on, we now call on the remaining large retailers to do what is in the best interests of Canadians and follow suit.”

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“We are ensuring a fair and equitable environment for our growers, which is fundamental for the prosperity of the entire supply chain,” said FVGC in a news release.

FVGC’s executive director, Rebecca Lee, is listed as a member of the steering committee in charge of developing the code.

The industry-developed code, which proposes rules for fairness and transparency in the grocery sector, is expected to stabilize growers’ incomes, the FVGC said.

“Canada’s Grocery Sector Code of Conduct acts as a protective measure for the entire supply chain,” it added. “It addresses longstanding issues such as payment terms and contract fairness, which are crucial for the viability and sustainability of Canadian growers.”

It isn’t expected to increase costs to consumers, the news release said.

The code has run into headwinds in recent days as two of Canada’s largest grocers expressed reluctance to sign on to it.

Last week, Loblaw executive chair Galen Weston told the standing agriculture committee the code as currently written would cause higher prices, and Walmart Canada chief executive officer Gonzalo Gebera expressed similar sentiments.

Weston said Loblaw takes issue with clauses that govern written contracts with suppliers, whether retailers can charge suppliers fees when orders aren’t fulfilled, and others.

Michael Medline, CEO of Empire Company Ltd., which owns Sobeys, supports the code.

“This code is not a document comprising overly prescriptive regulations, but simply a straightforward set of principles of good behaviour developed by industry itself. That’s it. It won’t increase food prices, as Loblaw has claimed,” said Gary Sands, senior vice-president of the Canadian Federation of Independent Grocers.

–with files from Karen Briere. Geralyn Wichers is associate digital editor of AGCanada.com.

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