Food industry heavyweights to sit down and hash out code of conduct: internal report

According to a report sent to government this week, executives from Canada's largest food companies and retail chains will meet this month to iron out new rules that could end years of squabbling in the grocery business.

A new phase in the campaign to establish a code of conduct for the food industry will be marked by the Roundtable. A code would end the historic power imbalance between big grocers and their suppliers, advocates say. The process of writing those rules continues to get longer, with negotiations missing another deadline this month.

Canada's federal, provincial and territorial agriculture ministers have been closely following rising tensions between grocers and suppliers throughout the Pandemic, the most recent of which has been the standoff between Loblaw and PepsiCo over the price of chips.

The ministers gave the industry an ultimatum, if they didn't call a truce and draft a code themselves, the government would do it for them. The ministers appointed a mediator to facilitate talks between 10 trade associations representing grocers and suppliers, hoping for a solution by the end of 2021. The 10 groups were asked to come up with a concrete proposal by March.

We feel confident that the big picture is coming together

report

The trade associations went back to the ministers with a progress report. Significant progress has been made, but there are still disagreements, the report said.

The deadline wasn't realistic according to one of the industry reps.

The expectations of the government were met by March. Michael Graydon, CEO of Food, Health and Consumer Products of Canada, said that they had no idea of the complexity of what they were trying to deal with.

The trade associations agreed that the next step is to get professionals from the field to sit down and tackle the major subjects, including what sorts of products and dealings should be covered by a code. The discussions so far appear to have made headway on a key issue, with all lobby groups involved in agreement that the code should be mandatory and enforceable, though it isn't clear how it will be enforced.

It is too early to say if a regulatory or non-regulatory route is required.

The Financial Post has confirmed that senior leaders from food companies behind some of the biggest brands in the world are involved in the cross-industry working group. Empire and Metro Inc., the parent company of Sobeys, will also be involved. Roughly 30 companies and organizations are participating.

The Retail Council of Canada expects strong and capable representation at the working group meetings, according to an email.

The executives at FHCP will bring an on-the-ground perspective, which has been lacking so far in negotiations between industry lobbyists.

When they actually get down to it, they are going to look each other in the eye and say, "Yeah we can do that," Graydon said. I don't think anyone wants this to last a long time. They all have full-time jobs.

The meetings will start this month, according to the progress report.

The agriculture minister of Quebec is satisfied with the progress of the investigation into the grocery business.

The important issue is progressing well, according to the spokesman.

The issues at stake are very complex and the Federal Agriculture Minister is reviewing the progress report.

For years, food producers have complained that a handful of dominant grocery chains are taking advantage of their position in Canada's consolidated food retail market to foist fees and fines on their suppliers. Suppliers say they have no choice but to pay up since they can't afford to lose customers to one of the five retail chains.

The tensions got worse when Walmart and Loblaw started charging fees to suppliers to recover the costs of their investments in e- commerce. The retailers said the investments would lead to higher sales for suppliers, but food manufacturers thought it was a step too far. Suppliers complained that some retailers continued to charge fines for late deliveries even though manufacturers were struggling to maintain output due to the COVID-19 outbreak and global supply chain disruptions.

Empire broke ranks with the big grocers and endorsed supplier demands for a code of conduct, similar to a model used in the United Kingdom's consolidated grocery industry. Empire CEO Michael Medline has said supplier-grocer relations are the worst he has seen in his career, and has criticized the process toward a code in the last year.

He said in an interview in December that it was taking too long.

Email: jedmiston@postmedia.com