North West Company speaks up
President defends value of Nutrition North subsidies while acknowledging its critical flaws
Michele LeTourneau
Northern News Services
Monday, March 2, 2015
IQALUIT
Amidst the outcry about high Northern food costs and the failures of the Nutrition North Canada Program, there's no doubt frustrations have been taken out on the largest Northern retailer.
dy visited Iqaluit Feb. 25 to meet with community stakeholders, including local food bank representatives to discuss ways to improve collaboration. Kennedy also met with the Government of Nunavut. - Michele LeTourneau/NNSL photo
President and CEO of The North West Company Edward Kenne |
Even Nunavut MP Leona Aglukkaq jumped on the bandwagon, telling one news outlet at a Feb. 3 Economic Club of Canada luncheon, "At the end of the day, the retailers have to ensure that the federal subsidy is being passed on to the consumers."
This is despite the fact that a report by the auditor general was, in fact, critical of the program itself, which is entirely the responsibility of Aboriginal Affairs and Northern Development Canada.
Meanwhile, on Feb. 25, Northwest Territories MP Dennis Bevington released a statement shedding light on a few Nutrition North financial facts.
"The $11.3 million included in recently tabled budget documents for Nutrition North is not additional money but a politically motivated shell game," he said.
"We looked at past expenditures and found the Harper Conservatives have only brought the funding level back up to what it was under the old system (of Food Mail). The Conservatives would have Northerners believe they have increased funding when that is not the case."
This is much the same information Edward Kennedy, the president and chief executive officer of The North West Company, shared with Nunavut News/North when he visited Iqaluit Feb. 25 to meet up with volunteers of the city's Niqinik Nuatsivik Food Bank and representatives of the Government of Nunavut.
"I was in Ottawa a few weeks ago," said Kennedy. "All the Opposition critics want to vilify the Conservatives, because they'd be loath to admit that maybe Nutrition North has done something positive. And it has. I'm agnostic politically, and I give credit where credit is due."
Kennedy says the idea that Food Mail was really good is a fallacy.
"I think we've all got ourselves really worked up because there are things that are not working with Nutrition North that could be improved on."
Funding, for example, has remained the same, with no inflation indexing.
"Where I don't give credit is where the government has not increased the funding," he says, adding his company continues to maintain its 10.3 per cent price decrease in the cost of eligible items since 2011, despite inflation.
Kennedy said the government has been distributing funding inconsistently between communities.
"There are about 22 communities that have no subsidy or almost none and that to me is awful. They're not in Nunavut, by the way, but in northern Manitoba. It's just awful that that's being allowed," he said, adding that the list of subsidized items needs to be revised.
According to Kennedy, these problems have been raised with the government from day one of the program. However, he thinks it's taken the auditor general's critical report to galvanize people.
Kennedy brings up the 25 per cent increase in consumption of perishable foods.
"Those kinds of things (funding levels) need to be fixed but, in the meantime, the consumption speaks for itself. We put this out in press releases but it tends to get overlooked. I'm not always sure why. Consumption is up 25 per cent in meat and produce and milk. In the 25 years I've been doing this, I've never seen so much bang for the buck. Ten per cent lower prices four years later? With no increase in subsidies?"
Unfortunately, he says, it hasn't gone well equally across all communities. Baker Lake is a great example, where the milk is $4.99. The same four-litre jug of milk costs $10.59 in Iqaluit and $21.11 in unsubsidized communities.
"From the start, the subsidies looked a bit wonky, by community. Some were too high and some were too low. And they're very hard to rebalance now. You can't go back and take away from Baker Lake to give to Pang. Then we'll just be vilified again. People will say, 'You've jacked the prices again.' But, no, you've taken the subsidy and moved it around."
It's the company's intention to help make a case for deeper subsidies in communities that have low subsidies or none at all, and explore whether that would make a difference in people's consumption and their cost of living.
"I think we've seen in Baker Lake and a few other places where the discount is really deep, where the subsidy is relevant, the consumption is very high. I'm going to guess that if it's 25 per cent across the North, once we look into Baker it's probably going to be a 30 to 40 per cent increase in consumption of these healthy food products."
Kennedy explains how The North West Company was able to maximize Nutrition North's potential. He begins with an $8 million Nutrition North contribution.
"When we were able to break free from Canada Post (Food Mail) and basically sit down with First Air and Calm Air and renegotiate lower freight rates ... that was six million dollars in savings. So eight from the government, six in lower freight rates, another four in lower product margins.
"Because in the post office system (the product) would be trucked up to Val-d'Or, trucked back to Ottawa - it was like a pact with the devil. Yeah, it's a low freight rate but when you get it it's not even saleable. So that waste declined."
Kennedy says the company got into "a virtuous circle of selling more product."
"You sell more so you can charge less, because it doesn't waste. In our math, that's four million dollars of
lower margins.
"So eight begat six which begat four, so now you have $18 million invested in perishable foods, of which the government deserves credit for eight. And they do deserve credit for changing the whole system."
Kennedy asks, "What do we get out of it?" And answers, "We get people shopping locally for fresh foods, which are typically harder to shop for out of town. If it's at a great price, they're going to buy more. And if we're wasting less, we're going to do fine, too."
But setting aside the technicalities of improving a flawed program, Kennedy points out that poverty is a real issue and that it needs to be a part of the food conversation.
"Poverty is everywhere. It gets magnified here because the income supports aren't indexed to the cost of living. That's a very serious public policy issue that I find, surprisingly, doesn't get as much attention as it should.
"The Nunavut index is very low on social assistance. Nunavut has a very progressive public policy for housing - 50 per cent of the Nunavut population lives in public housing. But in terms of pure income support, Nunavut indexes rate poorly relative to the cost of living.
"To be low income is bad enough. To have low income in a high cost environment is very, very bad."
Kennedy says it's within that context that The North West Company and other companies in the service industry get vilified.
"You can't vilify the people who service the communities and say, 'You must have exorbitant profits.' There's no actual basis for that at all. It's actually the opposite.
"I think the auditor general is saying to look at it a certain way, and that's fine. But I think it's almost a red herring in the context of everything that's going on with the program and issues in the North."
Kennedy raises the issue of a wage economy. For example, he asks, how do you enter the wage economy, without having income support clawed back?
"A guaranteed income may be part of the conversation. When people have income security and it doesn't get clawed away when they enter the work force, they're able to build their capacity, whether it's in entry-type roles, like retailing, or elsewhere."
He hopes to become more of an advocate on some of these issues that affect so many Nunavummiut through the company's participation in the Nunavut Food Security Coalition, "because, as we dig into them deeper, it seems that there are more dimensions to this than just the cost of food."
He points out that there are two types of income in Nunavut.
"If you're employed and you're here from the south, you're usually well-looked after in the sense of your Northern Living Allowance, low tax rates, generous benefits. But the real world of the other 80 per cent, the people that we serve and see ... We see them in their homes and see there's no furniture. We see very, very sparse conditions and overcrowding.
"That's the reality."
Government subsidy
Food Mail
Nutrition North
- 2011-12: $57,467,786
- 2012-13: $62,317,423
- 2013-14: $63,879,237
- 2014-15: $65,230,000
Source: Northwest Territories MP Dennis Bevington
