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SOMBA K'E/YELLOWKNIFE - One operator of a Northern grocery retailer is supporting recommendations to overhaul the federal government's food mail program.

Earlier this month the government released two reports on the program, both advising drastic change is needed to enhance the $64.5-million program, including a government partnership with Northern retailers, something retailers agree would benefit everyone.

Michael McMullen, executive vice-president of Northern Canada Retail Division for the North West Company which owns NorthMart and Northern Store retailers, said he wants to see improvements to the program in all areas.

"It's in our best interest to have the lowest cost structure in the North so our business remains viable," he said, adding competition is healthy in the marketplace, but lower costs in the stores will stop competition from setting up shop in the North. "Our customer deserves our due diligence to keep costs in line. Are prices high compared to the south? Of course they are. Are we making a lot of efforts to keep costs down? Yes. Are we satisfied with our efforts? No."

The 45-page report completed by Graeme Dargo, a special representative to Indian and Northern Affairs Minister Chuck Strahl, offers a critical review of the program based on input from retailers and community stakeholders. Dargo says "that partnership agreements with retailers will ensure that the Program is delivered to intended recipients in a more direct, effective and efficient manner.

"It is my opinion that if the program is managed by retailers based on a legal agreement it will result in improved program transparency, accountability and recognition of Canada's investment."

The report also says the goal of retailers and Canada Post, who receives the subsidy and is the middleman in shipping product to the North, is conflicting.

"I believe that Canada and the retailers share an interest in the success of the program, whereas the Canada Post Corporation's (CPC) interests are limited to the business benefits," Dargo said in the report.

"The partnership with retailers will improve delivery times of fresh goods and eliminate current CPC administrative and freight handling costs," the report reads.

McMullen said cheaper distribution is also in the best interest of the North West Company.

"We're looking at changing our distribution mode. We want to figure out a way to make this more cost effective and how we can do it better. Our goal is to lower prices. If we can lower them we're going to get more market share."

Dargo states in the report the subsidy is unknown to many people and the perception is the stores mark up product to increase their profits, something McMullen said is far from the truth, something transparency would eliminate.

"The retailer does not see the subsidy directly, they see the lower costs that are passed on from Canada Post and the freight companies. We take our costs and apply the mark up," he said. "There is no extra profit taking. The problem is it's not transparent," said McMullen.

He added the company is willing to work with INAC to show how the subsidy is passed on to the consumer directly.

"Whatever comes out of this review it's to make the whole system as cost-efficient and transparent as possible, that's where we are adamant," he said. "We want people to see that. We might have to make changes to do that, but from day one, we want that transparency. It's the number one goal as a retailer."

Dargo wrote, until that transparency is achieved it won't matter how effective the program is.

"Individuals and organizations that are aware of the Food Mail Program express strongly held perceptions that the subsidy is not being passed on by their local retailer," the report reads.

However, Dargo's report insists without the program, prices would - in some cases - more than triple. An example provided in the report is, "if the Program was eliminated, a 10lb bag of potatoes would increase from $18.29 to $64.49 in Pond Inlet."

The INAC Interim Report on the Food Mail Program, the other report released with the Dargo report, provides a synopsis of research findings to date on issues related to the existing program, including current challenges and alternative options.

A spokesperson from Arctic Co-ops did not return calls before press time.