Created on 7/22/2021 8:40:05 PM
Written by Michael Graydon, CEO of Food, Health & Consumer Products of Canada
Published on March 25, 2021
I could not be more proud to share that Food, Health & Consumer Products of Canada (FHCP) and Empire, owner of Canada’s second largest grocery retail chain, announced yesterday our joint proposal for a legislated, enforceable Grocery Supply Code of Practice for Canada.
FHCP and Empire worked hard on the basis of a common vision and shared intent — to create tangible solutions for a supply chain built on mutual trust and confidence that treats businesses of all sizes fairly and delivers for the tens of millions of Canadians counting on us every day.
It’s a much-needed transformation — FHCP has argued for decades that unfair practices imposed by some large retailers weaken Canada’s self-reliance, harm our economy, drive away investment and job creation, and ultimately leave consumers with fewer, less innovative choices for the food, health, and consumer products they rely on every day.
Reflecting Empire’s values, Empire CEO Michael Medline was the first grocery retail CEO to call out these unfair practices and support a Code to change the status quo. Under Michael’s leadership, Empire has been unflaggingly committed to thoughtful, industry-led, values-driven solutions.
The COVID-19 crisis revealed the remarkable results possible when large grocery retailers and suppliers choose collaboration over zero-sum competition. That’s why FHCP and Empire’s worked hard together to draft a Code that promotes efficiency, transparency, predictability. Our joint proposal is grounded in international best practice and adapted to the Canadian context.
While the grocery supply chain is complex, the principles and objectives of FHCP and Empire’s jointly-proposed Code are quite simple. Fairness and accountability in relationships between large grocery retailers will benefit everyone - farmers, suppliers, and retailers of all sizes and most importantly consumers. To achieve these aims, the Code would require written supply agreements; prevent unilateral or retroactive changes to terms; and establish efficient, equitable mechanisms to resolve disputes.
International experience gives confidence that FHCP and Empire’s proposed Code will strengthen our essential supply chains and lead to greater choice, innovation, price stability.
The UK’s Code increased transparency, predictability, and efficiency, freeing up time and resources to focus on value and innovation rather than unnecessary friction. Code-related complaints in the UK fell by more than half from 2014 to 2020, with just over one-third of suppliers reporting Code-related issues in 2020, compared to nearly 80% in 2014.
There is no evidence that the UK Code is associated with increased price inflation - the food inflation rate in the UK has declined since 2009 and is lower than Canada’s. The UK grocery retail sector has also become more competitive since the introduction of the Code, with three additional retailers exceeding annual turnover of 1 billion pounds.
Like the UK Code, FHCP and Empire’s proposed Code does not apply to small grocers, but they too can expect to benefit from its provisions. The more fair competition and efficiency fostered by the Code will ensure suppliers have the flexibility needed to ensure equitable operations and are not hamstrung by large retailers’ demands to redirect product away from independent grocers.
FHCP and Empire look forward to discussing the principles and benefits of our proposed Code with all governments and stakeholders in the coming weeks. This is a watershed moment for the industry and a critical opportunity to act. We believe our tangible, collaborative proposal presents a clear framework for success, and we invite all retailers, suppliers, and governments to join us in strengthening Canada’s essential food and grocery supply chains.
When we all work together, there’s a better deal in store for everyone.