A
efforts to improve relationships between retailers and suppliers are set to go into full effect on January 1, but
does not guarantee
.
“The biggest misconception at the moment is that food codes will somehow deal with food inflation or price declines,” said Karen Proud, president of the Food Sector Code of Conduct Authority. “It’s really important for us to continue to get the word out that this is not what the code is designed to do.”
If the code doesn't lead to lower prices, what should it do? Why was it created? Will it be
at all? Here's what you need to know:
Why was the Canada Food Code created?
The Code was created to improve relations between companies that
provide food and other products
And
retailers who sell their products
.
The current relationship between the two groups is “not the best,” Proud said, as Canada has five very large retailers that maintain a balance of power when it comes to supplier relationships.
There are various concerns, but one that Proud “hears about quite often” is that suppliers do not have the ability to enter into agreements that can change “unilaterally from day to day.”
She said the code should help “alleviate” some of these problems. It tries to “first push the parties towards a mutually agreed upon agreement” and then any changes that occur after that must be “discussed and agreed upon”.
Another common problem relates to the fines and penalties that suppliers must pay to retailers, some of which Proud said are “flying under the radar.”
She said it was fine if the agreement included certain penalties that suppliers had to pay if they failed to deliver the promised volume of goods, but the problem was that there were penalties that were not part of the agreement. Such fines will not be tolerated by retailers who are signatories to the code.
“A retailer could suddenly put in place a whole new policy and say, 'This is our policy going forward,'” she said. “If you don't do the following things, you may be subject to a deduction (payment withholding),” and suppliers right now feel that as long as they want to continue to do business with that retailer, they don't really have the ability to challenge that.”
However, thanks to the code, they now have an office where they can go and file a complaint.
Another issue that often arises is the unfair delisting of a product, Proud said.
A retailer has the right to remove any product it does not want on its shelf and delist it, but the code does not allow this to be done without notice. She said there should be “reasonable notice” so the parties can discuss why a product is being delisted, and then her office can evaluate whether the delisting decision was correct.
In making its decision, the office will consider factors such as whether the product is perishable, manufactured for that particular retailer, or cannot be sold elsewhere.
How will consumers benefit?
Some analysts argue that if
supplier-retailer relationship
is improving and suppliers are not being penalized as heavily, which could potentially prevent price increases to a certain extent. But Proud said it's “a little dangerous” to make such leaps without gaining more experience with the code.
“There are certainly a lot of positives, and one would hope that pricing can be sort of a happy part of the code,” she said. “But at this stage I would caution against raising those expectations. If only we had that silver bullet, but we simply don't.”
The code is not specifically designed to lower food prices, but Proud said it could bring other benefits to consumers.
First, if relationships between suppliers and retailers improve, suppliers will be more likely to invest in Canada, which could mean “new and innovative” products appearing on grocery store shelves.
Better planning could also mean fewer “gaps” on shelves during supply chain disruptions and more opportunities for smaller suppliers to “make it” in a difficult sector.
The code also aims to distribute goods more efficiently across different stores, which is important for remote areas or towns that rely solely on one independent grocer to meet their needs.
“During Covid-19, for example, you couldn’t find toilet paper that could save your life,” Proud said. “This code is intended to address those distribution issues so that consumers who depend on these small independent stores can get the products they need and that supply is fair between large and small grocers.”
In the past, most supplies went to large retailers, which then led to supply constraints in smaller towns or other areas that rely on independent grocers.
Which companies have signed the code?
All five major grocery retailers –
,
,
,
And
— signed the code. The Empire was the first to
in July.
Several major suppliers have also signed on, Proud said, and there are “several” others in the process and expected to join by January.
There are quite a few independent retailers and smaller suppliers who will also sign up, she said.
“Throughout 2026, our membership will continue to grow,” she said.
Those who sign the code must abide by the rules, but they are not legally required to follow them since it is a voluntary initiative. Members who do not follow the rules may be removed.
“At some point, any retailer or supplier can say, ‘We don’t like decisions being made from the office. We're no longer going to be a party by code,” Proud said. “We will certainly report things like this because that's really the only tool we have as an office for enforcement: our ability to publicly report these things.”
The code has already been in place on a limited basis since June. This gave retailers and suppliers time to make confidential complaints to Proud's office about things they didn't like.
However, starting Jan. 1, groups can begin filing formal complaints with the state-funded office, and a decision will be made at the end of that process, she said.
“It's a very exciting time,” she said. “This is a first in Canada. It has been tried in other parts of the world with varying degrees of success. We are very hopeful that this voluntary code will work.”
• Email: [email protected]
