Grocer code of conduct could fuel food inflation, Loblaw argues

In a statement, Loblaw said the draft grocery code of conduct has 'a number of challenges,' which the grocer believes could risk product availability and increasing food prices.

As the grocery code of conduct nears completion, the Canadian industry’s biggest player is raising concerns the guidelines could add fuel to the food inflation fire.

Loblaw Companies Ltd. said it’s worried the code could “raise food prices for Canadians by more than $1 billion” in a letter sent to members of both the steering committee developing the code and the industry sub-committee on Nov. 1, and obtained by The Canadian Press.

The grocer cannot endorse the code in its current form, wrote chief financial officer Richard Dufresne in the letter, requesting a special meeting of the industry sub-committee to address Loblaw’s concerns.

In a statement, Loblaw spokeswoman Catherine Thomas said the draft code has “a number of challenges,” which the grocer believes could risk product availability and increasing food prices. The Loblaw statement also mentioned the potential “$1 billion in costs,” which Thomas said refers to extra costs for Loblaw customers.

Loblaw isn’t the only grocer to express concern about the code. Walmart Canada spokeswoman Sarah Kennedy said in an email in late October that the company supports initiatives benefitting customers but it’s “conscious of adding unnecessary burdens that could increase the cost of food for Canadians, especially during inflationary times.”

Grocers have been under pressure from the federal government to stabilize food prices after a run of high inflation and a series of interest rate hikes have eaten into household budgets.

Michael Graydon, CEO of the Food, Health & Consumer Products of Canada association and co-chair of the steering committee developing the code, urged the two companies to give the code a chance. Without them on board, the code will be less effective, he said.

“Sign on, be active participants, be engaged,” Graydon said, noting the code will be reviewed after its launch.