Evidence of meeting #40 for Agriculture and Agri-Food in the 45th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was code.
A video is available from Parliament.
Bloc
Sébastien Lemire Bloc Abitibi—Témiscamingue, QC
Thank you, Mr. Chair.
Ms. Proud, your code of conduct is in effect: What impact is it currently having on relations between retailers and producers?
President and Adjudicator, Office of the Grocery Sector Code of Conduct
The code of conduct launched on January 1 with full implementation. The impact on retailers, suppliers and producers is really for those that have joined the code. We have 200 members.
The code sets out a framework of trade rules for how retailers and suppliers are to interact in certain areas and certain aspects. We are in very early days. What I have found over the last six months is a great willingness to discuss the code and issues related to the code, and an openness and a commitment to the principles and objectives of the code. That's all very positive, but time will tell if that willingness translates into a willingness to change practices. That's really what the code is about. I'm optimistic, based on the conversations I've had. Certainly, those who have been able to use the code in conversations have been effective.
Bloc
Sébastien Lemire Bloc Abitibi—Témiscamingue, QC
You mentioned around 200 members, about 38 of which are in Quebec. Why do you think so few companies are signing up in Quebec?
President and Adjudicator, Office of the Grocery Sector Code of Conduct
I think it has a lot to do with awareness building. Again, we're still in very early days with the code. My office is trying to do everything we can to raise awareness about the fact that the code exists, the importance of the code and the tools that people have available to them.
We launched something earlier in the year called “Code on the Road”. We are trying to meet people where they are to raise awareness about the importance of the code. I think over time we're going to get those numbers up. There's still some skepticism about how this code is going to play out, and we need to address that and make sure that those who should be part of the code and who will benefit from it become members.
Bloc
Sébastien Lemire Bloc Abitibi—Témiscamingue, QC
I'm among those who have high hopes in the code's ability to bring prices down. However, last week, the Competition Bureau pointed out to the committee that it could not address the imbalance in bargaining power between grocery stores and suppliers.
Have you already managed to make any progress on that? Do you feel that the power is now more balanced thanks to the code?
President and Adjudicator, Office of the Grocery Sector Code of Conduct
I'm very hopeful about the code generally, but the code does not address prices. That's a very important clarification.
I think the code helps businesses of all sizes get a level playing field when it comes to raising issues and having disputes addressed. That's very important. A company of any size can come to the office and deal with that without having lawyers or a big administrative burden. We can listen to their issues and try to address them. That's really where the code helps to level the playing field: People can access the office and the strength of the office to try to address the issues.
We will not fix the dynamic of difficult negotiations between very large players and very small players, but the provisions within the code try to at least create a fair framework in which those conversations can happen.
Bloc
Sébastien Lemire Bloc Abitibi—Témiscamingue, QC
It has been brought to my attention that horticultural associations have tried to use the code of conduct to meet with a retailer and discuss systematic problems affecting their sector. While we can understand that your job is precisely to mediate, your office did not accept that request. Why not?
Isn't part of your role to help mediate between retailers and associations such as horticultural associations?
President and Adjudicator, Office of the Grocery Sector Code of Conduct
We are not mediators. If a horticultural association, for example, has systemic issues they want to address that relate to the code, we welcome them to bring those issues to us. We will try to have conversations with retailers or others based on those issues. We do not bring parties together and mediate between them.
As part of the principles of the code, those in the industry are supposed to try to work things out among themselves. If those discussions aren't successful and there are code-related issues that our office can have our own conversations on and try to push in our own way using the tools we have, that's how the office operates. We are not a third party mediator.
Bloc
Sébastien Lemire Bloc Abitibi—Témiscamingue, QC
Why do you think it's still so difficult for small local producers in a remote region, such as mine, to get their products into grocery stores?
Why is it possible to find local products in some of the smaller stores but not in the major chains? What's the rationale?
President and Adjudicator, Office of the Grocery Sector Code of Conduct
That question falls a little outside of my area of expertise. I know that some of the large retailers have put programs in place to try to encourage and make it easier for local organizations and small companies to do business, but I can't comment professionally on why that continues to be difficult.
Bloc
Sébastien Lemire Bloc Abitibi—Témiscamingue, QC
That was a hope I had.
This is my last question: Since the beginning of your mandate, have you found any breaches of the code? If so, which companies have accumulated the most so far?
President and Adjudicator, Office of the Grocery Sector Code of Conduct
We've received complaints and we've looked into complaints, but the complaint system we have is highly confidential.
Liberal
The Chair Liberal Michael Coteau
Thank you very much.
We'll go for another eight or nine minutes. Why don't we do three, three and two? Is that fair?
Conservative
Richard Bragdon Conservative Tobique—Mactaquac, NB
Thank you, Mr. Chair.
I have a couple of quick questions.
The first question is for you, Ms. Proud.
We heard the finance minister a few years ago, when he was the industry minister, make the statement that the code would lower food prices. In your opening statement, you said that the code is not meant to lower food prices. I take it his statement was inaccurate. It really doesn't lower food prices, because I think Canadians would testify that prices are going up as they relate to food.
President and Adjudicator, Office of the Grocery Sector Code of Conduct
The purpose of the code is not to lower food prices. If there's something that happens in the end because of better business relationships, then perhaps, but that is not the purpose of the code.
Conservative
Richard Bragdon Conservative Tobique—Mactaquac, NB
Thank you for that clarification.
Mr. Graydon, Canada and the United States share one of the most deeply integrated agricultural and food systems in the world. It's been that way for literally hundreds of years now—back and forth across the border. It's so vital to our producers and farmers.
Right now, at a time when food security should be paramount when on the minds of every government in Canada, do you feel enough is being done to make sure this relationship is sound? Is all that can be done to mitigate areas of friction being done? Are the proper steps being put in place to keep Canada's producers and farmers in the best possible competitive position they can be in? We know they make good products and grow great food, but the challenge is, of course, the regulatory and tax burdens they're under.
Can you speak to that, Mr. Graydon?
Chief Executive Officer, Food, Health and Consumer Products of Canada
As far as the discussions on free trade with the United States and that relationship go, things are moving along. The fact that the CUSMA-compliant parts of our business have been carved out and that we have no tariffs on the majority of our business is very good.
This is an opportunity for Canada to open its eyes and focus a little more on self-sufficiency and a little less on reliance. While the trade component is very important, we've allowed a lot of manufacturing capacity to evaporate from this country and free trade to take some of the energy out of the productivity of this country. There needs to be a better balance.
We need to trade with the United States. It's a tremendous opportunity to grow and scale our businesses. At the same time, we can't have ultimate dependency. Unfortunately, there's an element of dependency that's crept in that we need to resolve.
Conservative
Richard Bragdon Conservative Tobique—Mactaquac, NB
In your estimation, Mr. Graydon, what things should the government be prioritizing or doing to make the atmosphere much more conducive to competitiveness for our producers so they can have a more sure and level footing for doing what they do so well?
Chief Executive Officer, Food, Health and Consumer Products of Canada
The regulatory environment here needs to modernize and be better aligned with today's manufacturing. Some of the Food and Drugs Act, for instance, is 70 years old. Things have changed. That modernization is required. Red tape reduction is required. There needs to—
Liberal
The Chair Liberal Michael Coteau
Thank you very much, sir.
I'm going to MP Harrison for three minutes.
Liberal
Emma Harrison Liberal Peterborough, ON
Thank you, Mr. Chair.
I'm going to jump right in.
Mr. Graydon, you wrote an op-ed after you were here in December, and I completely agree with you. You said, “Canada's productivity problem is a depth problem, not a talent problem”. You went on to talk about the grocery store aisles and how most of the products we find in the centre aisles were once manufactured here but are now almost all imported. In your opening statement, you said that part of this is a trade corridor problem.
Would you be able to elaborate specifically on the issues we have due to trade corridor inefficiencies in Canada?
Chief Executive Officer, Food, Health and Consumer Products of Canada
To a certain extent, many of the companies that do a good portion of the volume in this country are multinationals. It's the 80-20 rule: 20% of the manufacturers do 80% of the volume. That's a global issue. It's not just a North American issue.
This North American relationship of free trade has its values, but it has also created an environment where we're not as resilient as we should be and not as self-sufficient. We're not utilizing the opportunity of this agri-food superpower we have. Many of the agricultural products leave this country, are sent to the United States, are processed into ingredients and come back into this country with inflated costs that are applied to the operating costs or the input costs of the finished products.
Taking a better approach to getting a better balance among trade, resiliency and self-sufficiency in Canada needs to be done. We need to stimulate capital investment. We need to make it easier for these organizations. Many of them are foreign entities that have bet on Canada. We should be embracing them and finding opportunities to welcome even more manufacturing in order to continue to grow and to create the jobs that come with this.