The upcoming Grocery Code of Conduct has been presented to consumers as a way to improve price stability, but it will have limited capacity to affect the most volatile segment of the grocery market.

The proposed code has been endorsed by all the major Canadian retailers and is expected to come into effect in the summer of 2025. The code attempts to establish better ground rules for the relationship between grocery retailers and suppliers. One of four listed objectives is to “provide for an effective, equitable mechanism for resolving commercial disputes.”

The Fruit and Vegetable Dispute Resolution Corporation (DRC) has helped resolve disputes between produce buyers and sellers since 2000, and its established role was recognized in the development of the new grocery code.

In the most recent draft code covering commercial agreements, Section 2.3 defers to the existing DRC “unless the parties have specifically chose to adopt the Code.” This was not a ‘late addition’ to the code; similar language appears in earlier drafts.

The deferential nature of this clause would suggest that the new code is unlikely to provide a large scale change to the way in which produce-related disputes are resolved, and so, Canadian consumers are unlikely to see major changes in produce price volatility as a result of the code.

Fruits and vegetable prices are more volatile – that is, there are typically larger swings in these prices offered to Canadian shoppers than for other grocery categories. Data included in Statistics Canada’s Food Price Index shows that, relative to other products of the ‘outer aisle’ (dairy, meat, baked goods), fruit and vegetable prices have been more erratic, perhaps reflecting the seasonality of growing, and transportation costs. Prices for fruits and vegetables have been the most volatile among the Statistics Canada data on average monthly food prices since the COVID-19 pandemic.

Luc Mougeot, president and CEO of the DRC said the four most common issues his group must adjudicate are establishing a fair price, quality, a breach of contract and outstanding payments. The DRC has a staff of nine, and completes about 300 to 500 ‘consultations’ and about 50 cases each year. Arbitrations have decreased over time, as participants have come to better understand the trading standards. However, the recent disputes tend to be “bigger and more complex arbitrations because of the evolving nature of the industry,” Mougeot said.

Both the DRC and new grocery code aim to promote fairness and transparency, and there may be some instances in which the new code takes priority because the specific issues are not part of the DRC. The new code is more broad, and addresses issues such as fair distribution during shortages, penalties on suppliers for late deliveries and slotting fees (payment for shelf space).