Ottawa should make the grocery code of conduct mandatory

The code will safeguard the interests of Canadian consumers and foster a fair and competitive food supply chain
Sylvain Charlebois
Professor, Dalhousie University
sylvain charlebois

Canada's Food Price Report 2024, released by Dalhousie University, the Universities of Guelph, Saskatchewan, and British Columbia, has unveiled a nuanced and complex landscape of the nation's food pricing. This landscape is underpinned by diverse factors that extend beyond the supermarket shelves. The report predicts that food prices will increase by as much as 4.5% in 2024, with meat, vegetables, and bakery products driving food inflation higher at the grocery store. While many Canadians may hope for price drops, it's essential to understand that the issue is entangled with the complexities of the global economy, and no nation is immune to worldwide uncertainties.

As most Canadians are aware, except for those who subscribe to the notion that food prices are solely driven by one individual or one company, the persistent rise in food prices reflects broader inflationary trends affecting the economy. This surge in costs is not isolated to food alone; it's a symptom of increased expenses in production, transportation, and the ripple effects of global economic shifts. These elements collectively contribute to the steady climb in food pricing, making it a multifaceted economic issue.

Climate change also plays a crucial role in shaping the food pricing narrative. Extreme weather events directly impact agricultural productivity, disrupting crop yields and the availability of essential food products. These incidents serve as a stark reminder of the food supply chain's vulnerability to environmental changes and the urgent need for resilient and sustainable agricultural practices. Whether we employ carbon taxing or a cap-and-trade system, decarbonizing the food economy should remain a priority.

In response to rising costs, Canadian consumers are adapting their spending habits. There's a noticeable shift towards more budget-conscious shopping, with consumers increasingly seeking value and adjusting their dietary choices in light of price hikes. This change in consumer behaviour is a critical aspect of the food pricing equation, influencing retail and production strategies across the food industry. The recent string of interest rate hikes by the Bank of Canada has had a significant impact on households across the country, forcing many to reduce their food spending despite inflation. The past year has been challenging, but there are signs of improvement as consumers are gradually reallocating their budgets away from mortgage and rent payments towards food expenditures.

READ: Grocery code of conduct nears the finish line

As we approach the target food inflation rate of 1.5% to 2.5%, likely to be reached in 2024, consumers should have certain expectations from our policymakers. The introduction of regulatory measures, such as a grocery industry code of conduct, signifies a growing awareness of the need for more oversight in the food retail sector. This initiative aims to balance the scales, ensuring a fair distribution of costs and profits within the food supply chain, ultimately protecting consumers, promoting equitable practices, and fostering healthy competition. It's worth noting that Loblaw and Walmart both of which have expressed reservations about the code – currently hold significant power in the industry, which needs to be addressed to benefit consumers.

If Ottawa is genuinely committed to stabilizing food prices, it should consider making the grocery code of conduct mandatory. This move would be in the interest of fostering competition and improving the food supply chain for the benefit of all Canadians. Failure to do so may raise questions about potential inappropriate political interference between some grocers and the Liberal party.

The insights gleaned from Canada's Food Price Report 2024 underscore the potential for Ottawa to make a difference with strong leadership. While Loblaw and Walmart are well-managed companies that have reaped the benefits of their success, their influence in the food industry has become a concern for the broader population. Addressing this issue is crucial for the well-being of Canadian consumers and the overall health of the food supply chain.

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