AGRI Committee Meeting

     I call the meeting to order.

    Welcome to meeting number 15 of the House of Commons Standing Committee on Agriculture and Agri-Food.

    Today's meeting is taking place in a hybrid format, pursuant to the Standing Orders. Members are attending in person in the room, and I believe we may have some folks online.

    Before we continue, I'd like to ask all in-person participants to consult the guidelines written on the back of the cards on the table. These measures are in place to prevent audio feedback incidents and protect the health and safety of all participants, including our interpreters. You'll also notice a QR code on the cards, which links to a short awareness video.

    I'd like to make a few comments for the benefit of our witnesses and members.

    Please wait until I recognize you by name before speaking or until you are asked a question directly by a member. For those participating by video conference, click on the microphone icon to activate your mic, and please mute yourself when you are not speaking.

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    As a reminder, all comments should be addressed through the chair.

    For members in the room, if you wish to speak, please raise your hand. For members on Zoom, please use the “raise hand” function. The clerk and I will manage the speaking order to the best of our ability, and we appreciate your patience and understanding in this regard.

    Pursuant to Standing Order 108(2) and the motion adopted by the committee on Thursday, September 18, the committee is resuming its study on the update on the implementation of the grocery code of conduct.

    I'd like to welcome our guests who are joining us here today.

    From Costco Wholesale Canada Limited, we have Pietro Nenci, senior vice-president of Canada merchandising. From Empire Company Limited, we have Rob Allsop. From Wal-Mart Canada Corp., we have Rhonda Maines-Corrado, who is the senior vice-president.

    Thank you for joining us here today. We appreciate you for taking time from your busy schedule.

    Everyone will have five minutes, and then we'll go to our first round of questions. We'll start in here, with our witness who's in the room.

    Mr. Nenci, you have five minutes.

    Good afternoon, Mr. Chair and members of the committee. Thank you for inviting Costco to appear before the committee today to discuss the Canadian grocery code of conduct.

    My name is Pietro Nenci. I'm the senior vice-president of merchandising for Costco in Canada. I have been involved in conversations relating to the grocery code of conduct, through the Retail Council of Canada, since early discussions. Costco has been actively involved with the industry-wide stakeholder working group on the dispute resolution process and other governance documents since the spring of 2024.

    As you know, Costco is a membership club. Our mission is to offer our members the best quality goods and services at the best possible prices through our unique retail business model. We offer limited skus, focus on sales and strive to keep our costs low.

     We cannot repeat this message too often. We live by our code of ethics of obeying the law, taking care of our members and employees, respecting our suppliers and rewarding our shareholders.

     We echo the message that for Costco to thrive, our suppliers have to thrive. We rely on each other. Canadian suppliers represent 65% of Costco's private label Kirkland Signature sales in Canada. Buying local when we can and where it makes sense is our priority.

    We support the principles of the code: transparency, certainty and fair dealing. These principles align with our code of ethics. We continue to work diligently through the working group to finalize the governance rules that will apply to the operation of the grocery code. In particular, there has been a lot of work done by all stakeholders on the dispute resolution process, which is a very important element of the code for Costco. We are optimistic that the stakeholders, working together and through compromise, will shortly find agreement on a few outstanding points.

     You asked, will the code of conduct have the effect of decreasing food prices for the consumer? We do not believe it will. It was not designed with that purpose in mind. However, if there is broad industry participation, including retailers, suppliers and wholesalers, large and small, we believe it can succeed in its goal to contribute to a thriving and competitive grocery industry.

    We support the principles of the grocery code of conduct and plan to sign on once there is a mutual agreement on the details of its governance.

    Thank you.

     Thank you very much. We appreciate that.

     Next, we'll go to Empire Company Limited, online.

    Mr. Allsop, please go ahead.

     Thank you and good afternoon, Mr. Chair and members of the committee. Thank you for allowing me the opportunity to be here today.

    I'm Rob Allsop, vice-president of national sourcing and supplier engagement at Sobeys Inc.

     As a bit of background, I began working at Sobeys 35 years ago as a student, literally pushing carts down the aisle. I've worked in various roles across the organization, with increasing responsibility. I've been very proud to be a part of Sobeys' Canadian family for all these years.

     In my current role, I work with our supplier partners every day. I've been closely involved with preparation for the code implementation. Along this path, we've employed a cross-functional team that represents stakeholders across the organization to ensure that all facets of engagement with supplier partners reflect our commitment to fairness and transparency.

     Since the beginning of this journey, Sobeys has been a leading voice for the concept, the adoption, and the upcoming implementation of the code. From 2020, when Michael Medline, our then CEO, spoke about the challenging supplier-grocer relationship and called for a code, to the creation of the draft Grocery Supply Code of Practice for Canada, which was launched in 2021, to the present-day grocery code of conduct, we played a leadership role every step of the way. To be clear, we're very proud to have been the first major retailer to sign on this past July.

     As we move forward, we're also fortunate, if you heard the latest news, to have our new CEO, Pierre St.-Laurent, now formally announced. He is a veteran of the grocery industry of 30-plus years and is very supportive and committed to the code.

    Conducting business fairly, collaboratively and consistently has always been a part of our culture since this company was founded over 100 years ago. The code isn't just a framework; it's a commitment to a stronger, more transparent industry, one where suppliers, retailers and consumers can all thrive together.

     We continually work to foster a collaborative relationship with all our supplier partners at Sobeys. It's always been a heightened priority also to invest in our local Canadian suppliers, helping to facilitate their expansion into the larger grocery market.

     The pathway to the code implementation has provided an excellent opportunity for us to closely review our policies and ways of working to ensure we're upholding the standards we have for ourselves and also the code.

    I have a few notables to share. We assessed and updated our policies where we found improvement opportunities. We created a master framework agreement that serves as the foundation for our partnerships with suppliers. We've developed new resources for suppliers, such as a clean glossary of terms that explains in plain language a lot of the technical terms we use internally every day. We've developed a new supplier resource centre, which houses all our policies in one centralized portal. This web-based platform is a one-stop shop for everything a supplier needs to know about working with us. It will also simplify onboarding for new suppliers. This portal will continue to enhance engagement while also reinforcing the core principles of transparency, predictability and openness.

     We've also rolled out a full training and communication refresh plan to ensure that all internal teammates are well equipped as we move forward into January. In addition, we maintain a graduated model for how we work with our local, small, mid-sized, national and global partners. That model allows for local and small suppliers to build their business with us in a simplified way, from Meadow Creek Sausage and Meat in Alberta to the Great Lakes Food Company in Ontario, Une Touche d’Ail in Quebec, and Paradise Bakery in Newfoundland.

     We've helped foster growth among our supplier partners, from hyperlocal to national status. We're proud to say that we have over 2,500 local suppliers right here in Canada, and that number continues to grow.

     In summary, we'll ensure that the code's best practices continue to be upheld within our organization. We look forward to the ongoing collaboration with the new adjudicator, Karen Proud, and her team. We know the code will provide stability. It's going to create efficiencies, and it will promote investment in the Canadian food industry. That will lead to a stronger supply chain here at home in the months and years to come.

    Finally, I'll say again, we're proud to have championed the code from the beginning. We're confident that our current ways of working with suppliers personify the spirit of the code. That said, we're also confident that we will address any issues through engagement, collaboration and a fair and consistent mindset, together with our partners, as we always do.

     Thank you for the opportunity to be here today, Mr. Chair and members of the committee.

    Thank you very much.

    We will now go to Walmart for five minutes.

     Good afternoon, Mr. Chair and honourable members of the committee.

     Thank you for the opportunity to contribute on behalf of Walmart Canada to your important study on the implementation of the grocery code of conduct.

     My name is Rhonda Maines-Corrado, and I am the SVP general counsel at Walmart Canada. At Walmart, our mission is straightforward: to help Canadians save money and live better. While this is always important, it becomes even more significant during challenging economic times. Lowering prices for our customers is in our DNA.

    This is the mission around which our teams have been coming together for over 30 years. We have over 400 stores serving Canadian families and communities across the country.

     This year, Walmart Canada announced a new $6.5-billion investment over the next five years to expand our stores and supply chain, following a $3.5-billion investment announced in 2020. We also support our local communities, and we have raised and donated over $850 million to Canadian charities since 1994, including $83 million in 2024 alone. From coast to coast, our team of about 100,000 associates serves millions of customers every week, delivering on the everyday low prices our customers deserve.

    Everyday low prices—or EDLP, as we call them at Walmart—are at the core of everything we do. EDLP are not just a pricing strategy, and they're not a reaction to the times. For Canadian consumers, they mean reliable, consistent access to affordable groceries without needing to wait for a promotion or a sale.

     Part of how we deliver these everyday low prices is through collaboration with our suppliers. Walmart Canada has great working relationships with our suppliers, whom we hold in the highest regard. Since 1994, we've purchased billions of dollars' worth of goods from many Canadian suppliers. We work closely with them to help nurture and support their businesses, with the goal of growing together.

     Just this summer, we hosted our first Walmart Canada Growth Summit, inviting 120 local suppliers to pitch their products directly to our merchants for a chance to be listed with us. All of these suppliers were invited to list on our online marketplace, and about half of these suppliers are now working closely with us to put their products on our shelves, with the first arriving early next year.

    Fairness, transparency and predictability, the same principles that the code seeks to establish, have defined our supplier relationships for the past 30 years.

     With regard to the code, let me be clear. Walmart Canada intends to sign on to the code once all outstanding documents have been finalized. We have been actively engaged in the development of these documents, including participating constructively in the industry working group.

    At Walmart Canada, our core values set the expectations of how our associates work, in a way that is fair, honest and transparent, to earn the trust of our customers, suppliers and communities.

     In conclusion, Walmart Canada is committed to working with this committee, the grocery code office and our supplier partners to ensure that the code achieves its intended objectives. We will continue investing in Canada, supporting local producers and businesses, and delivering value to our customers through everyday low prices. We stand ready to collaborate with policy-makers and industry partners to prioritize affordability and accessibility for Canadians.

     Thank you for the opportunity to appear before the committee today. I welcome your questions.

     Thank you very much.

    Before we begin our first round of six minutes, I want to note that filling in for Mr. Bragdon is Mr. Kuruc.

     Thank you for being here and joining the committee.

     We'll start with the Conservatives for six minutes.

     Mr. Barlow.

    Thanks, Mr. Chair.

     I appreciate all of our witnesses for being here and walking us through, hopefully, what are the final steps of the grocery code of conduct's coming into force.

    I have to say, Mr. Nenci, that I'm really surprised at your testimony saying that the grocery code of conduct will not lower grocery prices.

     About two years ago at this very time, the now finance minister made a very grand announcement to the press gallery that he was committed to lowering grocery prices by Thanksgiving at that time—Thanksgiving 2023—with five very poignant initiatives. One of those five was the grocery code of conduct, which he promised Canadians would lower food prices.

    In fact, we're two years later, and food inflation in Canada is 40% higher than in the United States. We are the only G7 country where food inflation has increased for four straight months, and we have food inflation now 50% higher than the target. I am surprised that the finance minister would make such a claim—that the grocery code of conduct is going to lower food prices—when, clearly, based on your testimony and testimony from other stakeholders, that just isn't the case.

     I want you to explain why the government would make a claim that this is going to lower food prices, when it was never intended to do that. There certainly seems to be some disconnect between what the code is and what the government is claiming it will do.

    The code was made for better practices through different vendor suppliers across Canada. It was never meant to negotiate pricing or talk about pricing. A lot goes beyond price: commodity, labour, freight, tariffs, exchange rates. For us, the code was not meant to be.... It was just to make a level playing field for everybody who works in that industry.

     I appreciate that comment. It leads me to my next question, which is for Ms. Maines-Corrado at Walmart.

    Ms. Maines-Corrado, I know you weren't here two years ago, but we had the president and CEO of Walmart at that time say there are elements of the grocery code of conduct that could make the playing field unlevel and increase costs on retailers, which would then increase costs on consumers. Would you share Mr. Nenci's opinion that there are no elements of the grocery code of conduct that will lower prices for consumers?

    I agree that the code as it's drafted in final form was not intended to, nor does this setup support impact on pricing. Yes, I agree. It will not impact pricing.

    Ms. Maines-Corrado, does Walmart still have concerns? Is one of the reasons you haven't signed on to the grocery code of conduct that there are still concerns that there could be elements of the code that would increase prices on food for consumers, or have those concerns been alleviated in the interim?

    Our concerns were alleviated in the principles of the code, which we agreed to last year. With respect to the remaining documentation, it was the governance and dispute resolution model. We are not of the view, at this stage, that the code will impact pricing. It relates to fairness, transparency and principles about the interactions between suppliers and retailers, not to pricing.

    Thank you.

    Mr. Allsop, I want to thank you and Empire for signing on to the code, but I also want to ask you the same question.

    Would you agree with the assessment of your colleagues that there are no specific elements of the grocery code of conduct that will ensure, in one lever or another, that retailers will be lowering food prices for consumers?

    I do agree with the statements made. Transparency and predictability support a more efficient supply chain. When there are fewer disputes, clearer terms and more stable relationships, that reduces frictional costs over time. It creates a more resilient system that can better manage volatility and keep food moving efficiently. To Canadians, that's the benefit. I agree, there is no direct impact on price.

    Thank you.

    I'll ask you to build on that a bit, Mr. Nenci, for example.

    Once Canadians hear that the grocery code of conduct has been enacted later in January as a result of the communications from the Liberal government, as misleading as they are, that all of a sudden grocery prices are going to start to go down.... Are you concerned as a retailer that, when that doesn't happen in February, March and April, the retailers will be facing the blame as a result of the Liberal government's saying that once the grocery code of conduct was in, you were going to see grocery prices go down?

    Who do you think is going to be blamed when that doesn't happen? Even though it is no doing of your own, it is misleading communications directly by the Liberal government.

    We'll continue to do what we do best every day, try to bring the best possible value and price to our members. What we know about the code—I'm repeating myself—is that it's more about fair play, a level playing field to be fair with everybody and make a more robust industry. At Costco, we strive every day to give the best value to our members. That wholesale club concept works well for us. We believe that trust is still there.

    I appreciate that. I think all of us agree that the grocery code of conduct is an important tool.

    Clearly, there needs to be some communication and outreach by the Liberal government to inform Canadians that, truly, the grocery code of conduct is not going to lower food prices for consumers; they should come clean with consumers. That's not what this was intended for, and that's not the result they should be seeing, despite the claims by the finance minister.

    Thank you.

    Thank you very much.

    Next, we'll go to the Liberals for six minutes.

    MP Dandurand, you have the floor.

    Thank you, Mr. Chair.

    It was so interesting to hear those comments about how people should communicate in order to not misinform the population. On that topic, I'd like to have the perspective of some of you about what is driving up—and I know this is probably not your specialty—the price of food in Canada. We've heard many members of the Conservative Party saying that there are hidden taxes that are the major driver of food inflation. I'd like to hear each of your perspectives on that.

     I want to talk about that, because it's what I did every day for many decades. What drives the price of food? There are a lot of factors.

    The first one is the commodity itself: what the product is and how it's grown. Mother Nature changes every year. That's probably the first aspect of the cost of a product.

    The second is that there are variables. There's our Canadian dollar. Often we have to buy those commodities in another currency. That also has an effect on the cost of goods. There's the price of transportation and the price of labour—we saw high inflation in the price of labour. When you add all of these things up, it's a big part of the inflation that you've seen lately.

    However, there's also deflation in some categories. I'll give you some examples, if these may be pertinent to the committee. Two years ago, we saw the price of olive oil skyrocket, and this year it's plummeting. It's the same thing with canola oil. With a bad crop, the price goes up. With a good crop, the price comes down. It has nothing to do with any committee. It's just that, sometimes, Mother Nature just does its work.

    Look at the price of chocolate. When you go to shop for chocolate this fall, you're going to see that it's more expensive than last year. It has nothing to do with any policies: It's just a bad crop in the country producing the cocoa bean. The price of coffee is through the roof these days. The price will come down eventually, but that's a lot of...the aspect of pricing in our food world. I could talk also about small producers. For a good crop, there's pressure on pricing—it goes down—and for a bad crop, prices go up. There are a lot of variables. Mother Nature plays a certain role.

    Also, in prepared or processed foods, sugar, flour and all of those ingredients come into play. More than policies, more than everything, I think the commodity market itself.... That's why, every day, we follow those prices very closely, up or down.

    Thank you very much, Mr. Nenci. Your position probably mirrors that of your colleagues and other grocers. I have limited time, but I would like to thank you for your commitment to the code of conduct. We hear so much about how well you treat your employees. I get the impression that you also have a good relationship with your suppliers.

    Mr. Allsop, I'd like to thank Empire for being the first retailer to sign the code of conduct. In fact, it is still the only retailer to have done so to date.

    That brings me back to Walmart. Walmart is kind of the source of the code of conduct. A few years ago, IT system problems caused cost increases that would ultimately be passed on to producers. That's what sparked the desire to create a voluntary code of conduct.

    Can you tell us where you stand on your commitment to the code of conduct? How close is Walmart to signing on to the code of conduct?

     As I mentioned, Walmart intends to sign onto the code when the documents are finalized. Those documents are now working their way through the approval process, and the final drafts are ones that, I'm confident to say, on January 1 should be very feasible documents for completion.

    Currently, what kind of costs are shared with producers? What are the fees that Walmart imposes on producers who sell products?

    To be a little clearer, I'll go back to the example of IT systems. Are there any other fees that Walmart imposes on agricultural producers in its agreements?

    I'm sorry, but I'm not sure I understand the question.

    In some instances, there are some fees that grocery stores, generally speaking, maybe not only Walmart.... What types of fees, other than just buying the product, should producers pay to groceries or grocers?

    Fees are part of a commercial negotiation between two parties, and the nature of the fees is going to vary, depending on a number of factors, including the product and the categories involved.

    At Walmart, our fee structure is both designed and implemented in a fair and transparent manner. It is done with reasonable notice and, as I mentioned, is part of the ongoing commercial negotiation, similar to how suppliers have cost increases that enter into the negotiation.

     Thank you very much.

     Monsieur Perron, you have six minutes.

    Thank you very much, Mr. Chair.

    Thank you to the witnesses for making themselves available. We appreciate their being here. It's always very important to be able to consult everyone. In fact, we had already met with a few grocers, and I suggested that we invite them, because we really wanted to cover all grocers.

    Mr. Allsop, I'm going to repeat what my colleague Ms. Dandurand said, but I tip my hat to Empire for having already agreed to sign the code of conduct. It's very important for us that the major chains sign it. You will understand that this is fundamental. If we don't have everyone's participation, it won't work, obviously. So we thank you.

    I would like you to tell me, Mr. Allsop, what motivated Empire to sign the code of conduct now, even though the latest negotiations are not quite finalized.

    In my opening statement, I walked back just how long we've been very motivated to bring this to the industry. We feel that this is the way of working that has been embedded in our culture since the beginning, quite frankly. We were happy with the direction of the working group and the path they were on as the code went through its various iterations, and we were quite confident that it was heading in the right direction to come to its formal implementation this January.

     We have no reason to hold up the process. We know this—

    Thank you, Mr. Allsop. I'd like to clarify one thing.

    We've heard others say that they're waiting for the final documents before signing the code of conduct. They'll sign it, but they're still waiting for those documents. I'd like to know what motivated Empire to sign it right away. Then I'll ask the other retailers why they haven't signed it yet. As you've said, we know it will be satisfactory.

    Absolutely, and that's why we have no concerns about the direction we're going in. We were confident to sign, knowing that our ways of working align with the principles of the code.

    Thank you very much, Mr. Allsop.

    Ms. Maines‑Corrado, thank you very much for joining us. As you've just heard, Empire has already signed the code of conduct. You say you'll sign it once the final documents are ready. I understand. Today's meeting is being held in public, which makes your commitment official. Something pretty serious would have to happen for you not to sign the code of conduct, since you're committed to the process. I'd like to hear your thoughts on that.

    I'd also like to hear about Walmart's involvement in the negotiations regarding the code's implementation. I don't get the feeling that Walmart is participating very actively. Could you give us a little more information on that?

    Walmart has been actively engaged in the industry working group, working collaboratively alongside the other members, including large grocers, in developing the dispute resolution model to ensure that the principles of the code, which are, as you know, high-level and principle-based, come to life and are implemented appropriately through the more process-driven dispute resolution process.

     I'm very comfortable that we have had a robust dialogue wherein all parties have been working very positively and collaboratively together. We are at the final draft stage. I see no material issues at this stage and fully anticipate having the DRMP in place for January 1.

    Thank you very much. That's reassuring.

    I'd like to remind everyone that, during previous processes, two chains, including Walmart, refused to sign the code of conduct. At the time, Walmart was invited to appear before the committee. In the end, you decided to sign the code of conduct. We're happy that you joined us today. Thank you. What I'm hearing is that it's almost official that you'll sign the code of conduct. Thank you. That's reassuring for the industry.

    I'd like to turn to Mr. Nenci now.

    Thank you for being here in person.

    We said before that conducting all these studies gave the committee three opportunities to meet with representatives from the large chains. We've been able to get to know you better and to better understand your relationships with your suppliers. I agree with my colleague opposite that it sounds almost official that Costco will also sign the code of conduct.

    What's stopping Costco from signing it now?

    We've received the last draft, and from what I've seen and heard, Costco is ready to sign the agreement. It will be submitted to the board of directors for approval, and if the board approves it, we'll sign it.

    Excellent.

    I'd like to share an idea, and see what you think. I'll start with you, Mr. Nenci, because I think you'll be the most open to this.

    During our studies, there was talk of creating an oversight body for price fixing. It's important to know what the ratios and profit margins are. I understand how you work, but we learned from other witnesses how other companies work. Profit margins are a lot higher for produce growers and organic producers, for example, so there's a lack of transparency there.

    If the government put in place a price monitoring system, one that would obviously protect your confidential information, would you be okay with that?

    Our business model is different from our competitors'. Costco is a club store. The annual membership fees we charge allow us to offer lower prices. Part of our revenue comes from membership cards. Regarding—

    What are your thoughts on an oversight body for price fixing? Wouldn't that be to your advantage?

    Regarding our margins—

     We've gone past the six minutes. I'm going to stop you guys there. I'm sorry about that.

    I'm sorry, Mr. Perron.

    Next, we'll go to Mr. Epp for five minutes.

    Thank you, Mr. Chair.

    Thank you to the witnesses for being here.

    I'll begin with Mr. Allsop.

    First, I will say thank you to Empire for leading, from the retail sector, in pushing for the code initially, or agreeing to the push for the code—I'm not sure what the proper phraseology is there—and again, for your leadership now.

    Since July of last year, when there was agreement from all retailers to sign on to the principles, and now, in your annual process of renegotiating for the upcoming season and for the upcoming year, have you changed any practices? You mentioned in your opening testimony that you've reviewed some of the terms and you've clarified them, but from an overall perspective, have you changed your practices in dealing with your vendors?

    Yes, we are continuously assessing, monitoring and reviewing. It's similar to how we all can manage our expenses in life. We're constantly reviewing emerging expenses and changes in the environment and the industry, and we're constantly calibrating.

    You asked if anything changed this year, and things change every year, but they were done with fairness and under the principles by which we work with our suppliers, which are also reflected in the code.

     Mr. Nenci, I'll ask you the same question.

    Have you changed any of your annual cycle with your suppliers?

    We, in our code of ethics, respect our suppliers. It has been there for decades, since the inception of our company, and we strive to do that. Our buying teams are brought up from within, so they start at the hourly level, and then they get promoted within. That practice of respecting our suppliers and doing the right thing every day with our business community is imperative to our business model.

    Thank you.

    I have had discussions with vendors, and neither Empire nor Costco has come up as having made a major change, particularly in cyclical timing, in the annual process.

    I'm going to go to Walmart. I'll be direct here: I don't want my comments or questions to be construed as my being negative about this code coming to the finish line, because I'm not; it's the opposite. However, I am concerned by reports that some retailers are actually changing the timing of the renegotiation to get out ahead of January 1.

     I'm going to ask you to comment not only about changes to the timing but also about actually being far more aggressive this year compared to other years in your asks of vendors as they move. I'll ask, Madam Maines-Corrado, if you could respond on behalf of Walmart.

    Has Walmart changed its timing? That is what I have heard, and Walmart is not the only retailer.

    Fairness, transparency and honesty are part of the core values of Walmart. That hasn't changed in the past year, and it will continue on in the future.

    I'm not aware that those allegations were directed at Walmart. We've continued to operate, as we did last year and will next year, in the spirit of fairness and transparency.

     My question is more specifically on the timing of an annual renewal process.

     I'm not aware of any specific change to that timing.

    Okay.

    One of the triggers that really brought this whole issue to the fore was capital investments made by retailers and then the process of pushing them back on the value chain several years ago. Walmart was one of them.

    In your opening comments, you referred to a $6.5-billion investment that you're looking at, and I think if that brings lower prices for consumers and greater transparency, we're all in favour of that.

    Who's going to pay for that?

    Walmart is investing $6.5 billion in Canada as part of our growth.

    Would that come up in your discussions with vendors?

     To the extent that there are any fees, they're all designed and implemented in a way that is fair and transparent. There would be reasonable notice, and any fees would be part of an ongoing commercial negotiation with our suppliers.

     I'll dig down just a little further, then. From a practices' perspective, on the development of the code, have you found it advantageous, at Walmart, to both maintain your commitment to keeping prices low for consumers and increase transparency and fairness with your relationships with vendors?

     Again, I don't believe the code goes to pricing. Relationships and the principles of fairness and transparency that are key to the code are likewise key to our core values as a company and therefore are very much complementary.

     Great. Thank you.

    You did mention, in response to my earlier question, that you were not aware of any change in the timing of Walmart's annual cycle. I will ask you to go back and check that with your colleagues, because I believe your position is general counsel. Could you table a response with the committee if you become aware that Walmart has changed its timing with vendors and their applications?

    Please do not misconstrue my comments as any kind of negative feedback on the development of this code. I fully support the code, and I look forward to its implementation from all parties throughout the whole value chain.

    Thank you, Mr. Chair.

    We'll go to Mr. Connors next. You have five minutes.

     Thank you. Thank you, everyone, for coming out today.

    I'm going to start with our representative from Sobeys. We had the Canadian Federation of Independent Grocers here a while ago, and they explained that not only is Sobeys a grocery store, but they also supply to independent stores as well. Is there any extent to which the code of conduct would change how Sobeys does business as a supplier to the independent grocery stores?

     A simple answer is no. Our ways of working with our suppliers will be unchanged other than some of the enhancements we talked about in the opening comments.

    That's a good answer.

    I'll give you an opportunity for just a few minutes to talk about food inflation, because you never had a chance. What's the cause of food inflation, and are there any hidden taxes or anything like that?

     Yes. I'm equipped here today to speak to the code, of course, which we've established does not necessarily directly connect to price. My peer in the industry, the gentleman from Costco, covered all the things I would list to you. I don't think I need to repeat them. They're all the factors driving inflation that we manage every day. This is what we do.

     Okay. Thank you very much.

    The lady from Walmart mentioned earlier that her president was here back in 2023 and talked about an unlevel playing field between suppliers and retailers, and this is how, I guess, the dispute resolution came about. Would you have any thoughts on how you feel a dispute between suppliers and retailers over possible violations of the code should be addressed?

    As part of the working group collaboratively developing the DRMP, I'm comfortable that the process that has been arrived at in the final drafts is an appropriate one that is fair and consistent with the principles of the code.

    Okay.

     What do you see would be the benefit of having the code of conduct for someone like me going to Costco as an individual consumer? If you had to sell it, what would be your sell to the individual consumer?

     I would say that in the short term, it would be not that much. In the mid to long term, let's call it, there will probably be more productivity and innovation.... If the industry is more well balanced and there's fair play, I think investments will be greater, and producers will take more chances to launch new items.

     Okay.

    Sobeys, do you have anything to add to that?

    I'm sorry, but I'm going to have to ask you to repeat the question, if you don't mind. Thank you.

    If you had to sell the code of conduct that you're participating in—it's a voluntary program, and you were one of the first people to sign on—what do you see would be the benefits to a consumer for that?

     We've learned through the last several years just how fragile the food industry can be, particularly when we think about the geopolitical impacts and all of the things around us that we manage on any given day. The resiliency of our food chain is, to me, one of the primary benefits—a consumer would gain confidence in the consistency of the food supply in Canada.

    Okay.

     Walmart, I'll give you a chance to answer that as well.

     I would also add that the relationships between suppliers and retailers working well will ultimately benefit customers more, I agree, in the long term. The principles of fairness and transparency can only help those relationships, and we at Walmart know that when our suppliers are doing well, we do well, and we're better able to deliver on low prices for Canadians together, but that's a long-term, indirect result of strong relationships.

    Thank you very much.

    Mr. Perron, you have two and a half minutes.

    Thank you, Mr. Chair.

    I'll repeat the question I asked Mr. Nenci earlier.

    Mr. Allsop, would you be open to the government's putting in place an oversight body for price fixing, or a verification process, if it protected your confidential, strategic information? Would that be a good thing for the industry?

    I think it would be dangerous in the sense that it could slow things down. In our industry, we have to be careful. Things move at a fast pace, and we have to make quick decisions. As long as we are all abiding by the principles that are set forth in the code, we can move with velocity and continue the strong food supply that our customers expect.

    As soon as we add layers of complexity and oversight committees with escalation processes that may be unnecessary, it could technically slow us down, and that worries me a bit because we have to adapt quickly to the changing environment of the industry we're in.

    It would be an independent body, so it wouldn't impact your daily operations.

    Don't you think it would be worthwhile for produce growers who, for example, sell their heads of lettuce at a certain price to a grocery store that then sells them at a price four or five times higher? Sometimes, those heads of lettuce are recalled and replaced by lettuce from Mexico, but the prices don't go back down. There are also organic products. They're a lot more expensive than similar products, and when you look at their production costs, you realize that the profit margins must be much higher. Maybe it has to do with the fact that they're associated with being more high-end products. I think it could only be beneficial to make that information public.

    I'd like to know your thoughts on that, Ms. Maines‑Corrado.

     It's challenging to give an opinion of or thoughts on an oversight body without further details and a better understanding of what that would look like.

    With the current structure that we've been working on for a voluntary code, as it has been mentioned, a lot of work has been put in over the past few years on a collaborative effort throughout the industry to develop it. While it is not necessarily clear how it will work out, it will be important—

    It wouldn't be in the code, Ms. Maines‑Corrado. It would be a separate thing, parallel or complementary to the code. It could bring more transparency to the industry and protect suppliers.

    This would be separate from the code. The code itself is about principles of fairness and transparency, so the voluntary code should be given an opportunity, I believe, to be put into practice to see how it plays out once it's implemented.

    Thank you very much.

    Thank you, Mr. Perron.

     I'd like to say thank you to all of our witnesses for joining us here today. We're going to stop now. We appreciate your time.

    To the committee, we're just going to take a small break to prepare for our next witness. If you can stay in the room, we'll try to do this as quickly as possible.

    Thank you.

    I call the meeting back to order.

    For the next 20 minutes, we have Ms. Proud joining us. Thank you for coming.

    I'll skip the speech I usually give at the beginning, because you've been here many times. You know what those recommendations are. We'll go right into it.

     You have up to five minutes to present, and then we'll open it up for five minutes each from each of the respective parties.

     Thank you, Mr. Chair and members of the committee, for inviting me back as part of your study on the grocery sector code of conduct. I'm starting to feel quite at home here these days.

    Since I last appeared, the office has made substantive progress on the dispute resolution management process. We now have a very solid final draft that reflects extensive input from across the sector and is currently moving through the approval process. With this progress, we remain on track for full implementation on January 1, and we hope to be in a position to launch our formal recruitment early in December.

     I have listened intently to the testimony before this committee, and one message that has come through very clearly relates to concerns about confidentiality when raising issues with the office. The imbalance of power in parts of the supply chain is very real, especially for farmers. We count on them to grow the food that feeds this nation, yet they often operate with limited commercial leverage. Ensuring they have a trusted avenue to bring forward concerns is critical to the effective functioning of the code, and we have taken these concerns very seriously.

    Although the DRMP plays an important role, it is designed, much like the formal arbitration system in the United Kingdom, to be used only when the other earlier avenues cannot resolve an issue. By design, it is a bilateral process between two parties to a specific commercial relationship and cannot accommodate class action-style complaints. It is also not confidential between parties, which may make it challenging for some producers to pursue this.

    For these and other reasons, it is important to highlight that the DRMP is not meant to be the starting point for most issues. That is precisely why the office has created additional mechanisms that are intended to be used when code-related issues first arise. These confidential and systemic pathways allow members and their associations to raise concerns confidentially, and they allow the office to engage directly with companies to clarify issues, promote understanding and support voluntary alignment with the code. This reflects the U.K. experience, where the vast majority of concerns are resolved through confidential engagement, not through formal arbitration.

    We recognize the need for stronger engagement with primary producers, and we have begun exploring options to enhance our interactions with producers and their associations within the legal constraints that we must respect. These approaches are aimed at improving dialogue, strengthening trust and ensuring that producers have effective and trusted avenues to surface their concerns. We will be consulting directly with producers and their associations as this work progresses, and we will report in our annual reports on what is working well and what may need adjustments as we gain experience with the code and the systems we have put in place to support its implementation.

     Our model remains closely aligned with international best practices. The emphasis on confidential early engagement, systemic issue tracking and transparent follow-up reflects the U.K. experience, where these tools have helped improve commercial conduct and build supplier confidence over time.

    I want to thank this committee for its sustained focus on the agriculture sector and the realities facing farmers. Your attention matters. For a voluntary code such as ours, parliamentary oversight reinforces the importance of fairness, transparency and accountability across the supply chain.

     As implementation moves ahead, I would encourage the committee to continue to monitor our progress, and I would welcome the opportunity to return once again, once the code has been in place for some time, to report back on how it is functioning in practice.

    Thank you. I look forward to your questions.

    Thank you very much.

    I will start with Mr. Barlow from the Conservatives for five minutes.

     Thanks, Mr. Chair. I have just one question, and then I'm going to cede my time to my colleague, Mr. Epp.

    Ms. Proud, thanks again for all the work that you've done on shepherding this to where you have, but I do think it's a legitimate concern with the grocery code of conduct that two years ago, the now Minister of Finance said he had five distinct tools he was going to be using to lower food prices, and that if food prices weren't lowered, he was going to take additional action. Those were his words.

    One of those tools was to tell Canadians that once the grocery code of conduct was implemented, food prices would be lowered. We've heard from every single stakeholder, including you, that this is not the case. I'm worried that this is going to erode confidence in the grocery code of conduct when it's implemented—that Canadians are going to be expecting to see lower food prices, and it's just not going to happen.

    Have you had conversations with the government to communicate this fact to Canadians—that this is not what the grocery code of conduct was intended to be—to ensure that there is confidence in the code, not only from your members but also from consumers?

     One of the key roles of the office is to ensure that people are aware of what the code is and what it isn't. We in the office have been communicating as much as we can about the code through the media and through other means, including our website. We have government officials who sit on our board of directors as observers.

    I think that a lot of clarifications are needed with regard to the code—not just about whether it impacts food pricing, but how the code works generally.

    I'll pass my time to Mr. Epp.

    Thanks. It's good to see you again.

    I want to pick up on the point from your testimony around confidentiality. The need for confidentiality, obviously, comes from the risk of intimidation and things like that.

    Just for the record, I know that the vendors I communicate with are not just smaller producers with a size difference; a number of these vendors are actually dealing in nine figures of sales volume.

    Would you agree that this is a factor even for companies that deal in the hundreds of millions of dollars?

    Absolutely. I have heard concerns about confidentiality from virtually every company that I have met with. It was the same situation in the U.K. Nobody spoke to the adjudicator in her first six months to a year in office when they started the code, because they were concerned about confidentiality.

    That is why we have put in place in the office processes by which people can report issues to us in confidence. Their names will never be released, but we can still do our job and work with companies to address issues related to the code.

     I'm going to go back to an issue I raised in the earlier round of testimony.

    I have had conversations with vendors right now. I'm so glad to see that finishing line so close, but I have had allegations of the intensity of negotiations and changes in timing from multiple retailers because of the January 1 deadline.

    Is any of that coming into your office?

    I've heard, anecdotally, concerns within the sector with behaviours that may not be code-compliant.

    We take all that information in—whether companies are members or not—to see what's going on in the environment. When we have members that come on board, part of our job in the office is to talk to them about how they are adapting their processes around the code, similar to questions that they've had today. I will do the same thing.

    The avenue, let's say, if some of those came into the office on behalf of either producers or food manufacturers.... If I understand correctly, step number one is education. Would you go back to the individual retailers, or would you work through the RCC, the Retail Council of Canada?

    What would be your thought process in addressing allegations that may be affecting more than one retailer?

    With our process, if the office is hearing from an individual or an association that is bringing an issue of concern related to the code to us, the first thing we do is see if we can verify whether that's a code-related issue, because there are lots of things, like pricing, that don't fall under the code.

    We would gather as much information as we could on what exactly the issue is. Then our job—and this is my day job—is to really work with the company in question to talk to them about behaviours, processes or policies where we feel there might be a concern with regard to the code.

    At that stage, we're not opining as to whether there's a code violation or no code violation. It's really about education to see if companies are aware of what's going on, if they have a good rationale for that, and whether there's a code-related issue. Then we start building the narrative and the discussion to try to then effect change if it really is a code issue.

    Thank you very much.

     Next, we'll go to MP Chatel for five minutes.

    Thank you very much, Mr. Chair.

    I will share my time with my colleague, Ms. Dandurand.

    I have a question for you, Ms. Proud. Could small producers have their association represent them and get help from your office, if they wanted to file a complaint regarding a systemic issue but didn't want to go through the dispute resolution process?

    Thank you. My headset was not working, but I believe I understood your question.

    There are really two pathways for a producer to access the support of the office without having to go through the formal dispute resolution process. They can go through our confidential portal, where they can input all of their information by themselves and report their issues to us, or they can go to their industry trade association, which can bring the issue to us, also in confidence. There are ways they can work with their association.

    The importance of the associations is that they can get information from many of their members. They can really highlight for the office those big, systemic issues—not the one-offs, but the things that are affecting their entire industry.

    We encourage our members and the producers to go through their association, so their association can bring it to us. We would operate in the same way. If we received information from an association, we would verify—we'd go through a process of trying to get more information—and then we would take the issue to the other party to see if we can resolve it outside of a formal dispute.

    Thank you very much.

    I'll leave the floor to my colleague.

    Thank you.

    Is the resolution process for systemic issues you're talking about already in the code? Is that written somewhere, or is it a project you're working on?

     This process of systemic issues is our day job. As for the dispute resolution, the formal process, we had to create a process, a procedure for how we deal with it.

    The systemic issues are how we operate on a day-to-day basis. We don't have a specific process laid out, because these could be many different issues requiring different approaches and different discussions. We have principles laid out in a draft, but they don't require the same level of governance as formal disputes.

     That's in a draft, so it's not sure yet. There's no certainty around it, from my understanding.

    I'd like to talk about the bylaws relating generally to the conduct of the affairs of the Office of the Grocery Sector Code of Conduct.

    Section 2.01(b) on membership states the following: “Membership in the Corporation shall be available to corporations, associations and partnerships as set out below…”. According to the code of conduct, associations can be members. Is that correct? Can associations join the code of conduct?

    No, that's not correct. I'm not sure which document you're looking at.

    Our bylaws are very clear that associations cannot be members of the office. They're currently interim members, because they've been tasked to set up the office and go through the governance, but associations cannot be members of the office. The code has been designed to operate between retailers and their suppliers, not between retailers, suppliers and associations.

    I have the bylaw right here, and it clearly says, “Membership in the Corporation shall be available to corporations, associations and partnerships as set out below…”. I'm surprised to hear you say that associations can't be members.

    Speaking of associations and the fact that they can't join, I'd like to point out that entities such as Peak of the Market and the Canadian Independent Grocery Buyers Alliance are members. Are those associations?

    That's not my understanding. When we get member requests come into the office, we don't know who all these entities are. We submit those to our membership to verify that these individuals who apply for membership qualify within one of the classes of our membership.

    It's possible that someone slips in who shouldn't be a member. We would rectify that and remove their membership if it was brought to our attention in that way.

    Thank you very much.

    Mr. Perron, you have five minutes.

    Thank you, Mr. Chair.

    I'd like to stay on that topic, Ms. Proud.

    You said that an entity's membership would be revoked if they weren't entitled to that membership. Section 2.01(b) of the bylaws, which Ms. Dandurand just quoted, really says that associations can join, unless I'm misunderstanding what's written there.

    I wonder why membership wouldn't be available to associations. My position on this won't surprise anyone, since we've already talked about it. We feel this poses a major risk to small farmers. You said so yourself, when you gave the United Kingdom as an example. In the first few months, no one talked to the adjudicator, because they feared a lack of confidentiality and security.

    Now you're saying associations can't join the code, that they can't defend their own members, when we know these members don't have any legal experts or lawyers on the payroll, unlike large retailers.

    Moreover, if I understand you correctly, you're saying that the informal process for systemic issues hasn't been fleshed out and that it doesn't need to be.

    Then, how can farmers trust the code? It doesn't even exist yet. Sure, they might trust it in a year, but at the moment, very few of the hundred or so members who have joined the code are farmers, and that worries me a lot. Confidence is essential.

     I don't disagree that it is challenging for those who don't want to bring forward complaints because of concerns about confidentiality. We are trying very hard to make the processes such that people feel comfortable bringing issues.

    I did not make the decision that associations cannot be members of the code. In the way the code is written, it is very clear that the code applies to retailers and their suppliers. It doesn't apply to associations.

    The bylaws, as they are written, are also very clear that associations may be interim members, but as soon as we move to finalize things, they will no longer be members. That's the way the governance was developed before my office was created.

    To your point, we are trying to make the system as simple as possible, so that producers, suppliers and others can access it without the requirements of legal counsel. It's not meant to be an onerous, legal process with lots of red tape. Those who designed the process wanted it to be very similar to what they have in the U.K., which is a light-touch approach. The approach in the U.K. is exactly the same as the approach as the one we're using here.

    I get what you're saying, Ms. Proud, but I don't understand why it's like that.

    I urge you to go look at the bylaw. Maybe I'm the one who doesn't get it. You could send us a written explanation of section 2.01(b), which states that associations can join. It's on the Canada grocery code website, and yet, you say that's not true, that your bylaws are clear. Maybe I got my information from the wrong place, but I urge you to go look at that section and send us a written explanation. It really says “associations”.

    I don't understand how the process could be negatively impacted if associations were allowed to join. Did the large retailers refuse to let associations join? Associations will act in good faith, just like all other code members. I don't see the logic.

     I don't know how the decision came about as to who was or wasn't in the code. I wasn't part of the conversation at the time. The associations still have a very important role to play, and they can still represent their members to the office. I'm not sure what membership would provide to an association that doesn't currently exist in the structure we've created.

    I'm not trying to put you in a difficult position, Ms. Proud, but you know how important confidence and independence are. I like you and I trust you, and I think the other committee members do as well. That's important.

    That said, a few small producers told me separately they'd received an email from your office that went to both them and distributors. They got worried and started questioning whether you really were impartial. I hope you'll say you are. I think you are.

    First, could you tell us about that email?

    Second, have you established a process that would allow for positions or processes to be adjusted?

    Our office is completely impartial. I'm aware of the email that you were referring to. I believe that's been misconstrued. I had asked one of the associations to put me in touch with some of their members who represented the grower communities, because, as I said in my opening, we want to consult with them. That association took it upon themselves to send my email out and copy me. It wasn't my direct request, but I was happy that they were engaging with their members to try to get me more associations to speak to. I think the intent behind that was misconstrued.

    Thank you so much for joining us today. We look forward to seeing you again in the future.

    We're going to suspend now for a few minutes while we change the panel. We will be going in camera, so please, everyone besides staff or MPs will have to leave the room.

    [Proceedings continue in camera]