A new coalition led by the Retail Council of Canada (RCC) has presented a roadmap to peace within the food industry. It’s a positive step forward for the food production industry and consumers.
For years, grocers have unilaterally imposed fees on their suppliers, with questionable excuses. While grocers maintained a hard line to protect margins, food manufacturers and farmers – often family-owned and operated – were squeezed financially.
RCC, which represents Canada’s major grocers, always opposed any form of intervention and maintained no changes were required.
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That all changed recently.
RCC and its alliance of stakeholders suggest an industry-led code of conduct, without public regulations. The model mirrors the Code of Conduct for the Credit and Debit Card Industry in Canada and the Fruit and Vegetable Dispute Resolution Corp. These bodies operate without any government intervention.
The alliance includes several other interest groups in the food supply chain, like farmers, processors and independent retailers. Almost 40 trade groups reportedly support this model, including 19 farming groups and 15 food processing groups. The approach is incredibly inclusive.
The federal working group charged with submitting a final report in July has received the proposal.
Just a few weeks ago, another code of practice proposal was presented to the working group by Food, Health & Consumer Products of Canada, with the support of Sobeys, the number two grocer in the country. The principles were very much the same, except this proposal suggested the involvement of public authorities.
Both the United Kingdom and Australia implemented similar codes years ago. It was argued then that compliance could only be assured by getting governments involved. Since only provinces can provide oversight on these matters in Canada, a buy-in from all provinces is critical.
So two views are being presented to increase our country’s food autonomy by recognizing manufacturing as the anchor to the entire food supply chain. Since many farmers produce finished products, food manufacturing includes them.
The question is no longer whether Canada will have a code of conduct to support farmers, food manufacturers, and independent grocers. It’s more a matter of what it will look like and who’s responsible for oversight.
This supply-chain issue may be seen as irrelevant to Canadians, but it’s not. This is very much about realigning a power imbalance that has been prevalent in the industry for years, and that imbalance favours grocers.
More discipline and predictability related to market conditions will give more authority to food manufacturers and farmers. Such measures will also likely give space to more diversity, excitement and innovation in food retailing.
Loblaw or Walmart may very well think they know what consumers want and need. But with consumers seeking value, and product attributes changing regularly, an efficient code will ultimately give more power to consumers.
Independent grocers could also get a chance to compete against larger operators.
Setting up the right model in Canada won’t be easy. The system needs to be transparent and effective. As much as industry wants to self-regulate, it has some embarrassing baggage it needs to consider.
Given what happened in recent years with the bread pricing scandal, for example, it’s unclear if Canadians have an appetite for more self-regulatory arrangements.
While industry needs an effective code, Canadians need to trust it to not feel cheated at their favourite grocery store. We must remember that a code of conduct isn’t just about helping the industry; it’s mostly about creating a moral contract between the public and the food industry. A new code should be about serving Canadians and our economy, not just the latter.
The support of provinces, with some federal co-ordination, would be needed. And given their sizable markets and strong track records for appreciating our food supply chain’s integrity, Ontario, Quebec and British Columbia should be influential voices.
But more government involvement could come with unwarranted headaches. With governance, we need to move with extreme caution. Once we create more governance, the industry will need to live with it. Change, however necessary and however small, will always be challenging. If governments are involved, and the model is ill-designed, implementing changes could be a nightmare.
But ultimately, it’s a win for everyone that a federal working group is looking at the issue and that many stakeholders are already providing potential solutions.
Dr. Sylvain Charlebois is senior director of the agri-food analytics lab and a professor in food distribution and policy at Dalhousie University.