NDP passes motion to have CEOs appear before committee on Nutrition North food subsidy program

APTN report shows subsidy program short-changing northern consumers.

APTN News: The NDP says it has passed a motion calling on the CEO of NorthWest Company and general manager of Kimik Co-operatative Association to appear before the House of Commons’ Indigenous Affairs committee and talk about the Nutrition North Canada (NNC) program.

The heads of two regional airlines, Canadian North and Calm Air, are also being invited to appear said the April 17 motion.

The move comes after Dan Vandal, minister of Northern Affairs responsible for the Nutrition North Canada program, told the committee on March 20 that an internal review is planned of the program that hands out millions of dollars in subsidies to grocers with the goal of making food cheaper in northern and remote areas of Canada.

According to the motion, the invitation is being extended to the “President and CEO of NorthWest Company, Daniel McConnel, the President and CEO of Canadian North, Shelly De Caria, the CEO of Calm Air, Gary Bell, the General Manager of Kimik Co-operative Association Limited, Donald Power.”

The motion said the invite will be “at the earliest possible time as arranged by the Chair” and if not accepted a “summons to appear” will be issued.

The committee also wants to hear from Vandal and the director general responsible for the NNC, Wayne Walsh.

“Northerners experience some of the highest costs of food in the country while Northern grocery stores receive federal subsidies meant to lower prices,” said Nunavut MP Lori Idlout in a statement.

“I called on the CEOs to come to Parliament to explain why they’re taking the subsidies to [allegedly] go to their profits, and not lower food prices for Northerners.”

In January 2024, APTN Investigates reported on a study that showed only a portion of the subsidy was being passed on to consumers in the 116 remote and northern communities that are eligible to receive it.

The federal government spends $134 million a year on NNC which is designed to keep food costs down. It requires food companies to pass on 100 per cent of the subsidy to consumers.

The Northwest Company, one of the food companies operating in the north, told APTN in January that it “unequivocally passes along 100 per cent of all NNC subsides in our pricing.”

APTN Investigates spoke to Tracey Galloway, a professor at the University of Toronto who said that food insecurity has only risen since the creation of the NNC. She co-authored a study published in the Journal of Public Economics that analyzed dozens of communities between 2016 and 2018 and found the subsidy wasn’t being fully passed on to consumers to make groceries cheaper.

“The amount of subsidy that was being translated into lower (grocery) prices were 67 cents on the dollar,” Galloway told APTN.

After the story was broadcast, Idlout wrote to Vandal and asked for the NNC program to be audited. Of the 116 communities that receive the subsidy, 25 are in Nunavut.

“How do you substantiate keeping this program going with this fact, when retailers are keeping one-third of the subsidies for themselves?” she wrote. “I have asked many questions (oral and written) regarding this program. Your responses are not leading to positive change.”

Despite repeated interview requests, Vandal hasn’t made himself available to APTN to talk about the program and the subsidies since the January story broke.

In Vandal’s response to Idlout’s letter, the minister didn’t mention the internal review, but said the programs are constantly being audited.

“The Department is continuing to work closely with northern and Indigenous partners to drive ongoing improvements to the subsidy program including third-party auditing measures for ensuring the subsidy’s pass-through by registered retailers and suppliers,” he said in the letter.

The internal review Vandal announced at the March 20 committee isn’t mentioned in the letter to Idlout.

Previous audit

In 2014, Canada’s auditor general looked at Nutrition North and found that the federal government hadn’t “managed the Program to meet its objective of making healthy foods more accessible to residents of isolated northern communities.”

“We concluded that the Department has not done the work necessary to verify that the northern retailers are passing on the full subsidy to consumers,” the report said. “The Department did not require information on profit margins, either in its contribution agreements with retailers or through its compliance reviews of retailers, which is necessary to verify that the subsidy is fully passed on to consumers.

“The northern retailers have attested to the Department that they do pass on the full subsidy to consumers. If the Department was able to verify that this was the case, some of the public skepticism surrounding the Program could be lessened. This would benefit both the Department and northern retailers.”

Nicholas Li, who co-authored the report with Galloway, is one of two or three researchers in Canada who have confidential access to the information on the federal government’s NNC program. The data includes prices and the subsidy paid for a certain number of products.

Li told APTN in a previous interview that while he doesn’t know what the federal government’s internal review involves with Nutrition North, he said he would like to see more transparency from the retailers.

“This is something that should be done by the retailers, they’re the ones getting the subsidy,” Li said. “It’s much easier to provide comprehensive list of all the subsidized goods and how they’re priced and basically report that.”

Li said he doesn’t see any “insurmountable, logistical or political hurdles” for the companies to provide this information “especially if retailers are confident they’re complying with the program as they claim to. It’s just greater transparency of the pricing of these subsidized goods.”