Volume chews up funding hike for Nutrition North
But brings more savings to the consumer than Food Mail, says North West Company
Michele LeTourneau
Northern News Services
Published Monday, December 15, 2014
IQALUIT
An additional $11.3 million in funding for 2014-2015 for the Nutrition North Canada program announced Nov. 21 will address already existing volume increases in the program but not actual subsidy rates, said Derek Reimer, director of business development for The North West Company.
"If there's no change in subsidy rates, the consumer will not see the impact on retail prices," said Reimer.
The volume Reimer speaks of relates to the reported 25 per cent increase in healthy foods going to 103 eligible communities, including many in Nunavut, since Nutrition North began in 2011.
"You've had volume increase, you've had inflation in a number of different areas, but you haven't seen overall subsidy rates change. Our recommendation is we need to see a significant increase in funding levels.
"If you do look at the program overall, under Food Mail, the program was increasing, we estimate, at a rate in excess of 11 per cent annually from 2000 to 2008. Since that time, the amount of funding has increased by a rate of around three per cent – a little less than that."
As for criticisms regarding the transparency of the program, which have been aimed at The North West Company in the weeks since the report by the auditor general was released, Reimer argues that Nutrition North is superior to the old Food Mail program.
"In terms of what we have seen, what our data supports, is that we have seen a decline of eight per cent (in food cost for eligible items) since the program launched in April 2011. Adjusted for inflation, the decrease is in excess of 15 per cent.
"We've also seen a considerable volume increase, close to 25 per cent. If you look at those items, compared to what you would have paid under Food Mail, they've come down by the eight per cent."
He says the best way to measure whether the program has been more effective is to look at the retail price before and after.
Part of the answer into perceived lack of transparency, he notes, is that there "needs to be more communication and more information and I think that will help address some of the concerns that people have.
"We already do a lot of communication in our stores and if there are additional requirements, we will certainly comply with those."
Reimer notes The North West Company is answerable to the Nutrition North program, administered by Aboriginal Affairs and Northern Development Canada, and not the Office of the Auditor General.
Reduced costs are also a result of chartered planes, says Reimer.
"We try to work with reliable carriers that offer competitive rates as this will ultimately benefit the consumer," said Reimer. "Lower freight rates translate into lower prices, which is good for consumers. For example, when we signed a new deal with First Air in 2012, we announced that we are able to save over $600,000 on shipping costs into Baffin Island (from Winnipeg) and we passed every dollar of these savings onto consumers."
But Reimer adds the company still relies heavily on commercial flights with Calm Air and First Air.
First Air responded to questions about the repercussions of switching from Food Mail to the Nutrition North Program.
"Airlines around the world prefer to receive cash subsidies directly," said Alethea Arnaquq-Baril, spokesperson for First Air. "When the Food Mail program ended, it was replaced by Nutrition North, which provides subsidies directly to retailers. Retailers, however, contract airlines who ship cargo on their behalf. First Air's largest cargo customer is The North West Company, and we have a positive and long-standing relationship with them. In short, First Air still benefits from Nutrition North."
Reimer says that's the type of information the company does want people to know, "that we do invest in the North, that we are a large supporter.
"We have contributed a substantial amount of capital and we do make local investments."
The North West Company has a long list of its contributions to communities, ranging from financial support to local causes, activities and organizations, employing more than 500 people and participation in breakfast programs and other meal programs, including lower rates for food banks.
"We are the largest private sector employer of Inuit and First Nation people in Canada," said Reimer. "Over the next three years we plan to invest over $150 million in our markets and that will make us one of the largest private investors in the region over this period.
"Keep in mind that the large southern retailers will not invest one dollar or employ one person in the North over this period."
The North West Company has itself provided recommendations to enhance the Nutrition North Program since its inception.
"Part of that, we believe, would be increased subsidies and the expansion of communities who can participate, as well as some modifications to product eligibility," said Reimer.
Calls for comment to the other major cargo-carrying airline in Nunavut, Canadian North, were not returned.
