NUNAVUT
Tara Tootoo-Fotheringham, owner of Arctic Buying Company Inc. (ABC), considers herself a "social entrepreneur," which is basically equivalent to a business owner with morals.

Tara Tootoo-Fotheringham, owner of Arctic Buying Company Inc., reports her sales to the Nutrition North Program in such a way that there is no question her customers received the subsidy. She wonders why the reporting requirements are different for the North West Company and Arctic Co-op. - photo courtesy of Tara Tootoo-Fotheringham

ABC ships food and other goods at what are advertised as affordable prices to Nunavut communities from Winnipeg.

When viewing compliance reports for the Nutrition North Program on the Aboriginal Affairs and Northern Development Canada (AANDC) website, it quickly becomes evident that Tootoo-Fotheringham's reporting is far more detailed. She shows her customers how much they benefit from the subsidy, as opposed to how the North West Company or Arctic Co-Operatives Ltd. report how the Nutrition North subsidy is applied, for example.

She laughs when that's pointed out to her.

"Yes."

Tootoo-Fotheringham, from Rankin Inlet, offers a history lesson.

People in the Kivalliq region, she says, didn't really use Food Mail. As they were starting to figure it out, it got changed and it was confusing.

"So when they talk about Food Mail not being accountable - and that's why they wanted to create Nutrition North and have a process in place so that it was more accountable - what they failed to realize on a broad spectrum was that the Northern and the Co-op were using the Food Mail program for many, many, many, many years and there was no requirement to give a cost savings to people. There was no requirement to show that they were even receiving a subsidy."

Tootoo-Fotheringham contends that the two main grocers and purveyors of goods were making money from the Food Mail program for years ahead of Nutrition North under the Canada Post regime.

"Nobody really knew about it. Everybody kind of complained about the price thing. Nobody from Canada Post came and said, 'Wait a minute, we've been handing out money. We're charging Northern a very low rate to ship the stuff, therefore they should be charging less.' But Northern wasn't. There was no requirement that they had to pass on a savings."

She says she learned about this when she started a restaurant business in 2005 and used selected retailers, or approved retailers, to drop off the goods.

"So I was getting my bill from Pratts (Wholesale), for example, and it would include the items broken down separately."

The prices were broken down in terms of what was eligible, or not, for Food Mail. If an order contained ineligible items, the entire order might be held back.

"It was a gong show. I can't say it was any better, but what we paid for freight rate was absolutely consistent with what everybody else had to pay. It was fair to all businesses."

Such is no longer the case, with the North West Company, for example, chartering planes and Nutrition North offering a subsidy based on per kilogram of food.

When AANDC ditched Food Mail and rolled out Nutrition North with its intention to ensure the customer received the subsidy by way of cheaper, healthier food, Tootoo-Fotheringham quickly realized that her computer system would not be able to provide the information needed to show compliance.

She spent $60,000 of her own money for a software developer to create a program that could capture the correct information and import it to show, on each invoice, the subsidy on the eligible Level 1 and Level 2 food items her customers buy.

She makes it clear that her business does not receive a subsidy.

"It's not ours. It's not our profit. It's not our anything. It's a wash - in and out."

Rather, she said, she administers the subsidy for AANDC for the benefit of her customers. It's a service she provides for which her business makes $100 per month.

"So what I don't understand is why everything is so transparent in our business, where I tell you on your invoice that you received a $54 subsidy, I can only bill back a $54 subsidy to the feds. For us there's no plus in the game."

The North West Company and Arctic Co-op, she said, do not have to submit their claims as she does.

"They have to show based on what they bought, not per customer, so potatoes and tomatoes and corn or whatever, from Crescent MultiFoods (owned by the North West Company) - all they have to show is the invoice was sent to the Rankin Inlet store and went on a cargo jet charter that they have."

She adds nobody knows for sure if it's gone to Rankin, or if what they say is going on that plane actually goes on the plane.

"The problem they're having saying stuff that gets thrown out at the dump, well, it kind of makes sense. If they can put two pallets of these kinds of heavier eligible items on a cargo jet and fill the other three quarters of the jet with pop, chips and kukkuk (chocolate bars) then the subsidy they get on those eligible items could very well pay for the rest of the plane.

"And they get the full entire subsidy."

Former MLA Ron Elliott explained the charter math in a conversation with Nunavut News/North.

"The Northern will say 'our freight rates are pretty high,' but they're doing charter planes," he says.

"In the summertime, I did another little experiment."

In his example he uses Resolute Bay as the food's destination - where the level 1 subsidy is $10.60 per kg.

"I got a quote from First Air on chartering a 737. That was going to cost me $45,000 if I flew from Yellowknife to Resolute. The pay load is something like 12,000 kg. So if I fill that totally with Nutrition North-compliant food, the federal government would give me $110,000."

It's worth mentioning here that one of Tootoo-Fotheringham pet peeves is that the North West Company does not charter from a Northern airline, but from southern companies which are cheaper. Elliott mentions they charter from CanJet.

Elliott continued: "So if you subtract the $45,000 for the charter ... It worked out that if I brought something to Resolute Bay (that costs) under $7.00 per kg - it would be free."

Using that math, the charter and the food on the charter does not cost the company a cent.

Furthermore, he said, if he flew up something at a lesser cost, say hamburger at $5 to use round numbers, the company is then making $2 on the free food. And that's before it ever hits the shelf.

He does note that the company has overhead costs, which are huge in the North.

"The question becomes: do we have the program set up properly?"

Tootoo-Fotheringham's technological capabilities as a small business owner are not magical. It's evident that the technology exists that could tie in with scanning technology, for example, to create a system that could show each and every customer, as well as AANDC, just where the subsidy flows.

After the Office of the Auditor General released a report stating there is no way to know whether customers are benefitting from the program intended to make nutritious foods available and affordable, both the North West Company and Arctic Co-op issued statements. Both companies stressed they support the need for improvement.

And both insist all of the subsidy is passed on to customers.

"Under the Nutrition North program, North West passed on to customers $31.7 million in subsidies in 2013," stated the North West Company in its release.

North West received 51 per cent of Nutrition North's $60 million in available subsidy funding in 2013.

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