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What Australia and the U.K.'s grocery codes can teach us about Canada's food fight

Progress on a Canadian grocery code of conduct has stalled as two major retailers refuse to sign it, claiming it will raise prices.

The code aims to establish fair rules for negotiations between retailers and suppliers, striving to create a level playing field in the grocery industry.

Politicians and others have opposed claims that the code might hike prices, citing similar codes in the United Kingdom and Australia as evidence of their stabilizing effect.

But what are these grocery rules, and have they affected prices?

While Canada's proposed code differs from those in Australia and the U.K., there may be valuable lessons to glean from these frameworks amid the ongoing discussion about the Canadian code.

Political discussions about the grocery code began before the surge in food inflation. Recently, talks about the code and grocery prices have intertwined as consumers faced higher bills.

As the planned 2024 launch of the code approached, Loblaw and Walmart announced their refusal to sign it in its current form, arguing it could further raise prices.

Conversely, during hearings by a House of Commons committee studying food prices, some MPs argued that the code could alleviate food prices, citing positive impacts in Australia and the U.K.

Michael von Massow, a food economy professor at the University of Guelph, doubts that Canada's grocery code will reduce prices. He believes it might exert upward pressure on prices but would likely squeeze the margins of big grocers rather than significantly increasing costs for consumers.

The code prioritizes economic stability for suppliers and manufacturers over affordability, according to Michael Graydon, CEO of Food, Health & Consumer Products of Canada.

He believes it could help stabilize prices, citing lower food inflation in countries with grocery codes after implementation.

The U.K. has enforced a mandatory grocery code for over a decade, aimed at preventing retailers from transferring excessive risks and costs to suppliers, according to Mark White, the U.K.'s current code adjudicator.

Similarly, Australia implemented a voluntary grocery code in 2015, with all major players in the industry signing on. This code, overseen by an independent reviewer, emphasizes the requirement for retailers to negotiate in good faith.

Comparisons of food inflation data among Canada, the U.K., and Australia before and after the implementation of grocery codes yield mixed results. While there are indications of stabilization in food inflation after the codes were introduced, attributing changes solely to these codes is challenging.

Canada's grocery code, which aims to cover both suppliers and retailers, faces uncertainties regarding its voluntary or mandatory nature.

Without the participation of all major players, advocates and politicians argue that the voluntary Canadian code would be ineffective. There have been discussions about recommending federal and provincial governments to legislate the code if major retailers do not sign on.

In Australia, there are discussions about making the code mandatory following a government-commissioned report's recommendation in April.

While these grocery codes aim to enhance trust, transparency, and certainty in negotiations between retailers and suppliers, they are not viewed as a one-size-fits-all solution for addressing market concentration and other related issues.



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