The grocery code of conduct is set to kick in this week, but it doesn’t mean lower prices – at least not for now, according to Sylvain Charlbois, Director of the Agri Food Analytics Lab at Dalhousie University.
He says it is about putting grocers on an evening paying field when they negotiate their contracts.
“You’re basically protecting processing, which would actually allow for more options to reach the market for consumers. When you do that, you increase competition and keep prices low,” Charlbois.
He says right now we see examples of supply chain bullying, because what is unique to the food industry is that suppliers pay their clients.
“All of a sudden Loblaw would say, I’m going to charge you 5 per cent extra for whatever reason. So, typically suppliers just go ahead with it. They don’t really have an option,” explains Charlbois.
The code would allow for both parties to go back to the bargaining table and negotiate terms that actually make sense for both of them.
Who has signed up?
Metro and Loblaw have signed up and they own quite a few chains including Superstore and Shoppers Drug Mart.
Costco and Walmart have also joined.
How long until we see a difference?
Even though the code is about to come into effect, it doesn’t mean we will see any price adjustments right away.
Charlbois says it will likely take a couple of years.
“It’ll take if it works. If it doesn’t work, then we’re back to the drawing board. It’s a voluntary code, so we’re not sure if it’s going to work,” adds Charlbois. “The concern that I have is that it doesn’t have enough teeth.”
He says there will be a board overseeing the code and hopes it will make the food supply chain much more transparent.
“Let’s say for example, Walmart gets disciplined. Do you think that Walmart will actually listen to the bureau? I don’t know the answer to that question. Nobody knows until it happens,” says Charlbois.
The code starts, January 1.
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