Will The Implementation Of A Grocery Code Of Conduct In Canada Solve The Problem Of Inflation?

The new code of conduct appears to be a significant step forward, aimed at making relationships between large grocery retailers, suppliers, wholesalers and agricultural producers fair, transparent and predictable. However, the question remains whether the code will bring any real relief to consumers, especially Canadians who are already struggling with inflation. The continued rise in food prices in Canada over the past few years has been a source of public anxiety. The global supply chain crisis that has emerged in the wake of the COVID-19 pandemic, coupled with inflation, rising fuel prices and public debate over the profits of large corporate chains, has put the grocery industry under political and social pressure. In such an environment, the implementation of the grocery code of conduct is not just an administrative step but also a symbolic message that both the government and the industry are not ignoring the crisis.
This code of conduct was originally developed to address internal industry issues, particularly the various fees, penalties, and conditions imposed on suppliers by large grocery retailers. Complaints have been common in the past that powerful retail chains take advantage of their market position to impose unexpected costs on suppliers, putting small and medium-sized suppliers under severe financial pressure. It was against this
backdrop that the need for a grocery code of conduct was felt most acutely. The code now sets clear procedures for the implementation of fees, the terms of contracts, and the resolution of disputes. In addition, a formal office has been established that will not only hear complaints but will also be able to take action on violations of the code. This aspect undoubtedly sets a new precedent in the Canadian grocery industry.
Importantly, Canada’s five largest grocery retailers, including Empire, Loblaw, Metro, Walmart Canada and Costco Canada, have now officially joined the code. Without their involvement, the code would have remained a mere piece of paper, but the inclusion of these big names gives it practicality. However, it is also true that some of these companies initially had reservations about the code, calling it a potential cause of price increases.
It is important to note that the creators and overseers of the code themselves emphasize that it is not intended to lower food prices. The code neither controls prices, nor interferes with the allocation of shelf space, nor restricts business negotiations. Its scope is simply to make trade relations fairer in order to restore confidence within the industry.
In this context, it would not be wrong to say that public expectations associated with the code may be somewhat unrealistic. The majority of the public wants to end inflation or at least stabilize prices, while this regulation is primarily designed to reform the business structure. This is why economists and industry experts seem divided on its potential impact.
Some experts believe that if suppliers are freed from unnecessary fees and penalties, they can pass on the savings to consumers in the form of lower or at least more stable prices. According to them, better relationships, shorter supply chains and new opportunities for investment in the industry can ultimately benefit consumers, even if the effects are not immediately visible.
In contrast, some experts fear that if the bargaining power of large retailers is limited, they may increase prices to maintain their profits. For them, the idea that removing financial pressure from large corporate chains will reduce prices is not easily accepted according to economic logic. This debate leads us to a fundamental question: Is the problem of food prices limited to the relationship between grocery retailers and suppliers? The fact is that the factors affecting food prices are much more complex. Factors such as global market conditions, climate change, agricultural production costs, energy prices and currency values ​​cannot be ignored.
However, it would not be fair to dismiss the Grocery Code as completely ineffective. At the very least, the code is an acknowledgement that the balance of power in the grocery industry had become one-sided and needed to be corrected. If the code truly promotes transparency, trust and a predictable trading environment, it could provide a basis for further reforms in the future. Another important aspect is that the code is voluntary in nature, although the government has also indicated that it could be made mandatory if all major players do not join. In this context, the inclusion of large retailers can be considered to some extent the result of political pressure, which reflects that the grocery issue has become not just an economic one but also a political one.

In conclusion, it can be said that Canada’s grocery code of conduct is an important but limited measure. It is neither a magic bullet for inflation nor a quick fix for all consumer grievances. However, it is certainly a serious attempt to improve the internal structure of the industry, the effects of which may emerge over time. It is important to keep public expectations within realistic limits, and the government should coordinate this code with other economic and social policies to find a comprehensive solution to the serious problem of rising food prices.