February 26th, 2024

All grocers need to sign code of conduct if it is to succeed, Metro CEO tells MPs

By Rosa Saba, The Canadian Press on December 11, 2023.

People shop in a grocery store in Montreal, Wednesday, November 16, 2022. THE CANADIAN PRESS/Graham Hughes

All major industry players need to sign on to the grocery code of conduct in order for it to be successful, said Metro Inc. president and CEO Eric La Flèche.

La Flèche told MPs at a House of Commons agriculture committee meeting on stabilizing food prices that Metro is willing to sign the code of conduct as it’s currently drafted.

Last week, executives from Walmart Canada and Loblaw Cos. Ltd. told the committee that they can’t sign the code in its current form because they’re concerned the code will raise prices for consumers.

On Thursday, federal Agriculture Minister Lawrence MacAulay and Quebec Agriculture Minister Andre Lamontagne called on all the major grocers to sign the code.

New research released Monday by the Centre for Future Work found that profits in the Canadian grocery sector will likely exceed $6 billion this year, setting a new record.

A report by the progressive research institute found that food retailers are now earning more than twice as much profit as they did pre-pandemic.

The report was released Monday morning, ahead of a presentation of the findings to the committee by Jim Stanford, economist and director of the left-leaning Centre for Future Work.

Citing Statistics Canada data, the report said the net income margin on food and beverage retailing has consistently exceeded three per cent of total revenues since mid-2021, more than double the average margin between 2015 and 2019.

The data shows retailers took advantage of the pandemic and its aftermath to increase their profits, Stanford argued in a news release.

“An industry can’t double its profits, if it is merely passing on higher expenses,” he said.

The major grocers have been under pressure from the government to enact plans that will help stabilize food prices for Canadians. Earlier this fall, the heads of the five biggest grocery companies were summoned by the government to present their plans.

In previous appearances before the committee, the grocers pushed back against the idea they have unduly profited from inflation.

Meanwhile, they have also faced pressure to sign on to a grocery code of conduct that’s nearing completion, which proponents say will help level the playing field between suppliers and large retailers.

On Thursday, federal Agriculture Minister Lawrence MacAulay said he and his provincial counterparts, along with federal Industry Minister François-Philippe Champagne, will be meeting to discuss options for both provincial and federal governments if the major grocers don’t sign the code.

Loblaw chairman Galen Weston told MPs last week that the company is concerned certain provisions in the code will raise grocery prices for Canadians as it gives too much negotiating power to large multinational manufacturers.

He said the grocer will sign the code, but not in its current form.

Walmart Canada CEO Gonzalo Gebara told MPs the company is “not in a position at this time to commit” to the code. He said the current version includes provisions that “create bureaucracy and cost, cost that will inevitably end up on shelf prices.”

This report by The Canadian Press was first published Dec. 11, 2023.

Companies in this story: (TSX:MRU, TSX:L, TSX:EMP.A)

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