Pressure on for Walmart, Costco to sign grocery code: minister | Power & Politics

we begin with an update on the long- awaited grocery code of conduct after months of negotiations lbl said Thursday it's ready to sign on the plan looks to level the playing field between big Grocers and their suppliers BL BLS is now on board uh means that there's a a lot more chances uh that it's going to move forward which is what this government has been pushing for for a long time seeing the groceries sign on to good responsible behavior towards Canadians that they profit from every single year uh that's a big step the right direction but lbla says it will only sign on if the other Big Industry players do as well so far Metro and soes have signal support for the plan but Walmart and Costco have not yet agreed Francois Philip champag is the federal minister of innovation Science and Industry and he joins me now Minister welcome back to the show it's great to be with you from Quebec City this time I'd like to start if I could minister with the latest developments on the grocery code of conduct with L laws now saying it's willing to sign on if all of its competitors do uh including companies like Walmart which has still not agreed to sign onto this what's your reaction to to this move by L Bloss well first of all it's it's welcome news I mean we've been pushing in the background and I want to acknowledge the work done by Minister mol Minister L Quebec all the industry you know when I met with the independent grossers of Canada they said that the grocery Cod of conct would be essential to bring more more transparency and more fairness in into the balance of power between the different actors especially protecting the small guys not that La Blas have done that the full pressure is on Walmart and Costco now uh because uh that's what Canadian consumer expect that's what we want as a government and you can expect that we've already been in contact with them uh to put the pressure to say they need not to sign up to the code of conduct we have the three largest uh groc stes in the country with Metro sobas and LS and and certainly uh we're going to be pushing them uh to make sure that we have both Walmart and Costco now part also of that that scheme that we want to see in Canada like like we've seen in other countries and and this is going to help you know to to to stabilize pric it's one of the five things we said we would do to help Canadians at a time of need and certainly the pressure is going to be full on now on wmart and Costco and I hope they're watching uh because we're going to be pushing them on behalf of consumers to make sure they join the code of conduct but you know Minister I'm not saying it's an easy position for L laws to take but they haven't signed on yet they've only said they'll do it if everybody else does it first so they're kind of giving Walmart and Costco a veto on lbl participation in this so how meaningful could this be if if you if you don't get those other two and that means Walmart doesn't get involved no I'm confident you know the pressure of consumer David is more than anything else so you know when when we talk we talk on behalf of 40 million people uh 40 million people are saying we want a grocery code of contact in this country we want everyone to be in and I would say it would be an untenable position for cost and Walmart to disregard the the demand of the federal government but also of Canadian consumers uh because we know that this has been wanted like I said we we've heard some practices in the industry that were really concerning we've seen what happened in the United Kingdom and other jurisdiction a a gross Rec code of KAG is really uh bringing like I said this fairness and balance we need in the system and trust me uh we've been pushing in the background La BLS we're going to keep pushing on Walmart and Costco and and I'm I'm very confident that we will reach uh the outcome that we want so that there will be a code of conduct uh in Canada a grocery code of conduct but Minister it's really about you know leveling the playing field between suppliers and retailers at least that's sort of the the big bits of the code of conduct so you can understand how that would help A supplier deal with a retailer if there was a dispute over delivery times or or this sort of a thing but what is the value of this to Consumers the people who buy the groceries I mean you say stabilize prices it's not about lowering prices at all it seems no no but you said it right it's it it's part of these things that we're doing to stabilize price I think when you have more fairness in the system when the smaller producers can have uh you know they're saying how things are going that's what the industry they've been working almost two years on that so this is a very meaningful step like I said it's part of this larger uh Endeavor we've done to help consumers the other thing I'm trying to do is to bring a foreign a grosser uh the reform of competition we have been doing which is the biggest one since uh there's been a competition act in the country all of these things are going to help it's not one single thing but all of that is helping and to be honest uh when when you talk about the 4,900 smaller ones and the smaller producer this is about helping the smaller guys to deal with the Giants we have in Canada um so it's certainly going to help to stabilize prices and it's very welcome in the sector in Canada we've seen that in other jurisdiction and it's a positive state in the right direction for consumers for more on this announcement I'm joined by Michael Von masso he's a food Economist from the University of gal Michael it's good to see you again thanks for joining us today well thanks for having me so lbla says it's in if Walmart and Costco are in on the grocery code of conduct how how should we interpret this move its significance well I think I think it's a good thing if we want to see a a grocery code of conduct I think lbla is the big player so getting the big players on side was critical for it to have any effect at all and I think this will put significant pressure on both Walmart and Costco to to join and if they don't uh I think we'll also see the potential for the government to step in because they've always said if you can't come up with an agreement we we'll impose one so I think that this was a very important step forward for the grocery code of conduct so The Optimist would see that it would put uh pressure on Costco and Walmart the cynic might look at it and say hey this gives lbls an out clause I mean what how do you weigh the odds of it going in each Direction well David I probably tend a little more to the cynical uh I think I think that that lbls has been feeling pressure whether the boycott is affecting their business or not the the the news cycle hasn't been very kind to them the last two or three weeks and and this is a way to to change the narrative a little bit I also think that there's been some time passed and lbl said well we've gotten some of the things we want out of this my expectation is they've taken some of the they've negotiated so it's a little more palatable to them so it's not the same agreement it was two or three weeks ago and so it's easier for them to accept and frankly I think food prices are coming down and if they are starting to lose some margin because they've got to treat the suppliers better it's easier to hide uh price increases or sort of it's easier to hide margin main maintenance when prices are going down they might just go down a bit slower so yeah I I I think it's a good thing that lbls is doing but I'm I'm guessing it's not completely altruistic right so it's easier for a lbls to sort of agree to a change of things not at not at the peak of the price cycle at the peak of the cost cycle and they can sort of work it into their operations a little bit better but I just you mentioned the boycott I can't tell if this is just online noise or an actual thing thing that's hurting their bottom line I I mean how do you assess the the impact this boycott has had on this decision and maybe having on on LA's business operations my guess is that the that the real impact of the boycott is relatively small that both not very many people have participated relative to the entire population their entire customer base and my guess is also that it's been relatively shortlived that it hasn't lasted for the month proof will be in the pudding we'll see it h we'll see it in their next financial reporting but I it's it's just not good to be in the negative press that for for for that long so perhaps we should interpret that they're feeling it a little bit because they've taken some action but I but my guess is it hasn't been cataclysmic by any stretch okay so let's try to assess the meaning of this action like the they're closer to a grocery code of conduct with laas making this move the goal is to have it in place and up and running by the middle of of 2025 it aims to initially improve the relationship between the retailers and the suppliers the grocery stores and the people who provide them with food but what what would this even mean for me and you when we go to fill up our our our our grocery cart this isn't going to mean a lot for you and I as we as we go to fill up our grocery cart a year from now we we need to think about it we've heard a lot of people talk about the grocery code of conduct is going to reduce food prices but but think a little bit for a second the grocery code of conduct is going to set parameters around the relationship between grocery stores and their suppliers grocery stores like blw blahs have significant market share and they say to those manufacturers if you'd like to be on our shelves this is what we're going to require this pricing uh these listing fees these other fees these payment terms and other things if that gets reduced which is what the grocery code of conduct does it means that profits at L laws will go down if product profits at lbls go down there are two things that can happen the first is they just accept lower profits and H and and drive on that's unlikely to happen the other one is that they'll increase their prices it's unlikely that they'll say okay it's costing us more at at the cost of goods sold end so we're going to lower prices so that we even further decrease our profits I think this is a good thing to do it levels the playing field for for the smaller particularly Independent Grocers but I don't think I'm not optimistic that it will give us much relief from uh from high food prices now we're seeing food prices go down and we'll probably all say Oh look The Grocery code of conduct is working but it's not coming in for a year and and and just the mechanism of the grocery code of conduct I'm not optimistic it will bring prices down further okay that's an important point because as we've talked before when prices were going up it's really a serious of global Global factors from grain disruption in Ukraine to Avan flu to climate change to drought and really it's Global food prices that's at domestic food prices kind of no matter what is happening here so you you say you don't see this going down I spoke to minister champagne earlier in the show he sees this a as something that will help stabilize prices does it do that or is it just kind of price neutral for for people when when they buy things off the shelf I I think it's relatively price neutral I think it's good for competition it will help some of those uh smaller Independent Grocers or the or the regional chains but we know that those are the least profitable businesses anyway so it's going to be difficult for them for them to lower prices so it we're going to see prices coming down we've started to see prices coming down at in the last few months I think that's going to continue and I think conditions are such that that we're optimistic depending on extreme weather events and things like that that that that prices will continue to come down and lots of people will say look the grocery code of conduct is working it'll be in spite of the grocery code of conduct not because of the grocery code of conduct so what about prices going up because llas has warned that this could be a potential consequence of this uh they're willingness to sign on I don't know if that suggests that they found a way to navigate this because of the other factors you've outlined the declining Global food prices that are having food inflation decelerate or decrease in some cases I mean is it a chance that all of this could lead to prices going up if if you start to give suppliers leverage over the uh the groceries well I think we're not giving suppliers leverage over the groceries we're giving the Grocers less leverage over the suppliers this isn't going to be this isn't going to be perfect here by any stretch my guess is as I said before David that that part of the reason L Blas is more certain and they've said they don't believe this will be inflation anymore uh inflationary anymore is they they narrowed the scope of the grocery code of conduct to something that they're that they're comfortable with and I said before if grocery prices continue to come down that really provides them cover to lower them less quickly than might be merited to maintain some of their margins so uh yeah I think I think we'll see continue to see price decreases again in spite of but not because of the code of conduct right so they can keep their profits while sustaining the prices and uh and make it all work so I guess one last question for you Walmart and Costco you say this move by BL BLS could put pressure on them to sign on what if they don't what if they just ignore it does where does that leave things well I think I think there's some benefit in having at least one of the big players H in in play and and getting there it would be ideal if all of the big players are in there and Walmart isn't the biggest in Canada but they are the biggest in North America so they have some leverage my guess is that this will bring them on side and if not I would expect that the government might step in and say look you most of you have negotiated this we're going to impose it from a regulatory perspective and everyone will come in so my prediction is within the next week or 10 days that we'll see Walmart and Costco say yes we can accept it uh we think this will like L BLS we think this won't be inflationary and we play the game and part of the reason will be fear that something more severe will be imposed okay you just predicted a timeline on National Television so we're going to hold you to that and start a countdown clock this sort of thing Michael Von massel always appreciate the time thanks for coming on today well thanks for having me have a great day

Channel: CBC News

Views: 25,383

Keywords: cbc, cbc news, grocery, business, retail, competition, code of conduct, food prices, inflation

Id: yA5QRzyIXGc

Length: 14min 5sec (845 seconds)

Published: Fri May 17 2024