EdinburghNLP/nunavut-hansard-plusplus huggingface dataset:
I know people, we have been talking about this before, were under the impression that we would have lower prices for food, but it almost sounds like, in actuality, because of the way the program is set up, it will actually be either paying lower prices for food, yet higher prices on other items like shoes or others. Ultimately businesses need to stay afloat and they also need to make a profit.
Again, that’s perfect because it points out the fact that possibly the program is not working as well as the North West Company and the Co-op were alluding to yesterday.
The other thing that was mentioned yesterday from the North West Company through Mr. McMullen, he was putting out some price drops of between 5 and 7 percent in stores and specifically mentioned Arctic Bay and Cambridge Bay.
I’m just wondering: again, with being a smaller business, have you found a drop in prices in your store through the Nutrition North Canada Program? Are you able to pass on… ?
Again I want to make it clear because there is the subsidy and the subsidy has to be passed on, which I’m sure your company is doing, but are you able to, with making things work, like you said, pass on a 5 to 7 percent savings to consumers as well?
Mr. Harper: In some cases, our prices on nutritious perishable foods have gone down.
In other cases, they’re about the same, but there are a lot of dynamics going on at the same time because this program came along, took effect quite recently, at the very same time that our electricity costs increased 19 percent, and that’s a huge jump all in one shot.
The electricity costs apply directly to most of the nutritious perishable foods because you need freezers and coolers, and that’s what eats up most of the electricity in our store and in any small business or large business, for that matter, that is carrying these products.
At the same time as our electricity costs rose dramatically, as we all know from watching the National and the world news, food prices worldwide on many products are increasing and there is food instability in many parts of the world, so wholesale prices are increasing.
The other thing that happens is that we do our cost landing pretty much every time we get a shipment because the prices from the wholesalers change from week to week, so we’re constantly monitoring.
If something changes by a penny, we’re not going to change our shelf price and change our sign, but if something changes dramatically, we have to be doing that as well.
So there are a lot of factors that come into play, but one of the reasons why… .
As I said in my introductory remarks near the end and INAC has never communicated this clearly, but I think that the program was designed to stabilize the cost of food. I don’t think there was an expectation that food prices would go down because, as I pointed out, they were already subsidized under the old Food Mail Program.
So if INAC got it right in a particular community and you’ve got a freight rate, you take a subsidy off it, and you end up with a subsidized freight rate, if you want to call it that, if that more or less equals what the old cost was for nutritious perishable food, then you won’t see a decrease but you shouldn’t see an increase. But that’s if INAC got it right.
Under this very complex program, they’ve got, what, 26 communities in Nunavut that they have to come up with a community specific subsidy for. It’s very difficult to get all of those things right. Also, what will happen when the airline raises its price?
I don’t imagine that the INAC subsidy is going to be modified the very next day; there will be some lag time in this. So this is another factor that hasn’t come into play yet but will.
I believe it is the North West Company that created the expectation in people from their public comments that food prices should decrease and that theirs have decrease by 6 to 7 percent, I think Mr. McMullen said.
That can only happen if they have negotiated the great freight rate that I keep alluding to because presumably they’re buying from the same people, although they are delivering to Ottawa now instead of Val-d’Or, so probably their delivery costs to the airline staging point are lower.
In our case, one of the factors that have allowed us to reduce the costs on some items is that we’re not buying in Val-d’Or, where everything is more expensive. We are buying in Ottawa or Quebec with delivery to Ottawa. So that’s cheaper and that’s why we have been able to reduce the price on some things.
Don’t underestimate, please, how inefficient Val-d’Or was as a point of entry. You probably don’t know this but some times, some weeks, all of the stuff on a particular day would not fit on the plane, yet they have a requirement to deliver that stuff within so many hours.
The stuff doesn’t grow in Val-d’Or, so suppliers would truck to Val-d’Or, deliver to the postal facility in Val-d’Or because you have to have that Val-d’Or postage meter stamp on the stuff, and then if the quantities were so high that they wouldn’t all fit on the plane for delivery on the right day, the airline would then truck them back to Ottawa and put them on a scheduled flight. To support Val-d’Or as an entry point, stuff was sometimes being trucked in both directions and that’s just foolish.
So getting out of Val-d’Or has helped to lower the costs.
I hope I have answered most or all of Mr. Elliott’s questions.
Chairman: Thank you, Mr. Harper. Mr. Elliott.
For the next couple of questions, I wanted to talk around the idea of the extended time period for the list of eligible essential and non-essential food items.
Some of the comments from the federal government officials… .
There was like sort of a two-year window or two cycles of sealift to get everything to 2012.
A little bit was discussed yesterday with Mr. McMullen and Mr. Morrison in terms of the distinction between… . I think part of this too for some of the people back home who were watching the proceedings today is a learning curve in terms of the difference between best-before dates and expiry dates.
I know a lot of people have commented saying, “Why does the federal government expecting us to eat expired food or food that is outdated?” So I was wondering maybe if you could talk around the idea of what “best-before” means and what it means in terms of expiring, and the idea that they’re talking about having storage facilities built so that we can store this food in these, whether it’s a crate or in a real storage facility.
I think some people are concerned about possibly eating food that is good or not good, so if you could talk about that.
Mr. Harper: Well, I can only give you my perspective on it.
You talked about the extension to keeping some items that normally wouldn’t have been eligible because they are nutritious but not perishable. I think it’s the main criteria on the category 2 list. A couple of comments; I’ll address it from my own perspective first and then from what I think might be a more isolated community perspective.
We were quite surprised at Arctic Ventures when the announcement was made that, “Okay, we’re giving you a reprieve on the category 2 list. You can have another year and a bit, and you don’t have to start not bringing these things in by air on a subsidized basis until October 2012,” I think.
We were quite surprised because we got the same notice everybody else did and we were ready for this.
I think the notice came in May of last year and that gave us sufficient time to modify our sealift orders and to plan for where we were going to put the stuff.
So we were ready and in one sense, we couldn’t understand why other people couldn’t be ready in time.
I want to point out that when you live in Iqaluit, it’s very easy to forget that Iqaluit is not the centre of the world and that there are different ways of doing things in smaller, more isolated communities that we need to have some acceptance of and sympathy for.
Perhaps if you’re in a more isolated place, if you’re in Gjoa Haven, if you’re in Pond Inlet, you should be able to modify your sealift order very quickly, but you might not be able to find more warehouse space as quickly as you can in Iqaluit. There are two choices, rent it or build it.
You can do either in Iqaluit fairly simply, but you certainly can’t rent it in most of the smaller communities because there simply aren’t the facilities to rent and it might be hard to build it. You may not have a building lot. Your local council may take considerable time to approve a request for a building lot.
So I have come to understand from a non-Iqaluit point of view why that extension might be necessary.
I don’t think that INAC can solve all of our problems or should be expected to.
One of the costs of doing business is that you own or rent the facilities necessary to do that business in.
If you can’t do that sooner or later, then maybe you should find some other way to make a living.
You might not be able to do that in the short time period that you can do it in Iqaluit, so that’s why I have come to accept that the extension on the category 2 eligibility list was necessary to allow people that time to prepare.
On best-before dates versus expiry dates, this is a good question.
A best-before date is not an expiry date. An expiry date is a date that you’re not supposed to sell the product after. In the case of medicines, it’s because it might lose its potency or its efficiency and actually be harmful to you.
In the case of milk, it’s because it will go bad and you wouldn’t drink it anyway.
A best-before date, to me, is something different.
I believe that a best-before date is a manufacturer’s ploy. We don’t stamp that date on there. The guy who makes the packaging puts that date on there.
I believe that this date is a manufacturer’s ploy to sell more products. In the south, where you can order your supplies every week, you can order your supplies every day if you want, but a truck backs up and delivers your stuff and your job is to sell it.
The manufacturer puts that date on the product so that when the retailer in the south sees that date approaching, he will drop his price to blow the stuff out the door.
So you can order more from the manufacturer. So it’s the manufacturer’s ploy to increase sales, really.
Consumers don’t necessarily understand that.
They certainly don’t down south, but down south, they seldom ever are faced with something on the shelf that has passed its best-before date because the retailer only buys what he can sell in a short time and the truck comes again next week.
But up here, when you’re dealing with sealift, people come in my store and other stores and see packaged products primarily with a best-before date that may have been gone.
Now, I heard Mr. McMullen this morning on the radio explaining that generally, the North West Company doesn’t sell past the best-before date or doesn’t want to sell past the best-before date, but then he contradicted that in the case of pop and soft drinks and said that it doesn’t matter.
In general, I would say that it doesn’t matter at all if you accept that it is a manufacturer’s ploy to sell more products. What’s the alternative in any case?
If you follow those dates slavishly, then you would only order enough of a certain product to last until that date using your best judgment on how you’re going to sell it before that date comes along, and then it’s going to be gone from your shelf and from your warehouse.
But if your customers want it and demand it, then you’re going to have to fly it in and what’s it going to cost then?
It’s going to cost something like Cheez Whiz in Arctic Bay. So who wins there?
Not the customer. If you have to fly something in to slavishly follow a best-before date, who wins? It’s not your customer and it might not even be the retailer, it might be the airline.
So that’s my attempt to answer that question, Mr. Chairman.
Thank you for that explanation, especially the small community perspective in terms of storage. Again, in the way you look at it in terms of a small business, you’re probably always making less profit because you don’t have the buying power and you don’t have the power to negotiate the best freight rate. I think smaller communities will always seem to have higher prices because buying power and just similar reasons.
But in terms of the best-before dates and looking at how to deal with this, is this something that you have been in contact with Nutrition North Canada about or is this something that Nutrition North Canada needs to look at in terms of making the program work?
Mr. Harper: I haven’t talked to them particularly about that, but I think it’s something that probably Nutrition North Canada or Health Canada, in some way, makes clear because there is misinformation, I believe, and misconceptions about it and people deserve to know whether my interpretation of it is right.
Perhaps I’m off base in some aspects of my understanding of it, so I think some clarification is needed.
In terms of sealift and again, smaller communities, the further distance is definitely higher costs for sealift.
I’m assuming, in your opening comments, you never mentioned it, but it might have been rolled up into one of your views as to why there’s more profitability in the larger businesses because there is more buying power. Obviously the North West Company has their ships, so they bring up products cheaper than what smaller stores would too. I was wondering if you could speak to that.
One of things that they said about the Nutrition North Canada Program was that they wanted the retailers to purchase more on sealift because that’s the cheapest way to order.
It was kind of interesting that Mr. Morrison actually said yesterday that Pampers, which was an example that Mr. Curley brought up, since they’re big and bulky, it’s not actually cheaper.
I was surprised to hear that when you had the federal government and the Nutrition North Canada saying that this is a cheaper alternative, bring stuff up on sealift, don’t use the airlines because it’s more expensive, yet he was giving a different story.
So I wonder if he could talk about that.
Mr. Harper: On the subject of sealift, that is also another complex subject.
We’re at the mercy of both the giants of the retail industry up here when it comes to sealift because Nunavut Eastern Arctic Shipping, or NEAS as we call it, is owned by the North West Company and Logistec, a publicly traded company out of Montreal, and by some of the Inuit birthright corporations.
To my knowledge and someone can correct me if I’m wrong, the birthright corporations have this as an investment but are not involved in the management of it.
Having said that, I have to use somebody to bring my freight in and we use NEAS and we get very good service from them and we think we get a good rate, probably, again, not as good a rate as they give themselves but I don’t know that. We get a very good service from them. It works for us.
On the other side of the coin is NSSI, which is a venture between Desgagné Shipping and the Co-operatives.
So a small retailer is going to be dealing with one or other of their competitors to get their supplies in on the ship.
Traditionally we think that sealift freight is the cheapest way to go and it is. I mean sealift freight is a fraction of what airfreight is.
However, unless you’ve actually gotten a big sealift in yourself, you may not know how the sealift companies do their billing.
When you get your manifest, it will have the item you got or the crate, then it will have a column that lists the weight, and then it will have a column that lists the volume.
Because your contract with the shipping company says that if you’re shipping something light like Pampers, toilet paper, Kleenex, marshmallows, potato chips, if you were, they can charge you the volume rate, they can charge you the rate that gets them the most revenue, basically. 2.5 cubic metres equals a tonne. So if you’re shipping something that takes up 2.5 cubic metres and it’s not dense, you’re going to be charged the tonnage rate for it. So when you look at that manifest, they simply go down it and circle, “Okay, this item weight.
This item volume,” weight, weight, weight, volume, weight, volume, and so on. They total it up to equal the way that will give them the most revenue. That’s a valid way of doing it.
That’s probably a necessary way of doing it.
If someone shipped a shipload of feathers, nobody is going to make any money if they charge it at weight, but that makes Pampers and all of these other light products expensive on sealift. They’re also expensive by air because the airlines charge you a volume rate. I can’t remember offhand what the formula is, but the airlines will charge you a volume rate as well.
Generally, they have to. If you shipped a planeload of marshmallows and you were only charged weight, that plane would be operating at a considerable loss.
The shipment of Pampers, toilet paper, Kleenex, and many other light, non-dense products is a problem both on sealift and by air.
At the advisory board meeting a few nights ago, Reverend Gardener pointed out that 40 years ago, maybe, there was a subsidy on some of these items by ship and he was arguing that perhaps this needs to be looked at again.
That’s the best I can do to answer that concern, Mr. Chairman.
That was actually going to be one of my next questions in terms of all of your work with the committees that you’re on and constantly going back to the Food Mail Program to go to their hearings for evaluating it, and then with the Nutrition North Canada consultations. In your knowledge of the development of the program, was anything like that considered in terms of making the program work better? If they’re saying, “Go sealift,” and that’s the way it is to provide affordable nutritious food, not necessarily bring down the prices all of the time, but if there’s no difference, is that something that they actually looked at?
Mr. Harper: I can’t say whether or not INAC looked at it, but I can say that they never asked us about it or consulted with us about it because their focus was entirely on nutritious perishable food and stabilizing or, in some cases, bringing down the cost of that.
Their focus was in getting on the category 2 lists things that shouldn’t be there off that list so that they would be coming on sealift.
To my knowledge, they didn’t address at any of the public meetings I was at the cost of bringing it in on the ship. The focus was entirely on the nutritious perishable food and on the nutritious things in category 2 that were less perishable.
Also what I was hoping to find out is… . Before March 9, the eligibility list, I guess it was in October of 2010 when they dropped the list under the Food Mail Program of what was eligible and what wasn’t eligible, and then they reinstated everything back on March 9.
As of 2012, it sounds like they will be dropping the list of eligible essential and non-essential food items.
One of the things that Mr. McMullen left us with yesterday was what we could possibly do to help make the program better was to talk to our constituents to find out what should be in that basket or what should be on that list as of 2012.
I was just wondering: in your opinion, is the list fine the way it is now? Should things be dropped? With that, in terms of the first part of the question, should there be things added or should there be things taken away?
The second part of the question would be: by dropping items from that list, does that mean prices will go up? I’m not talking about the fluctuation of the commodities and pricing of food going up and down.
In your opinion, if they drop items from the list, will prices go up? It seems like the way the Nutrition North Canada Program is being promoted by Nutrition North Canada is that things will be in place, storerooms will be built, and everything will be there so that people could keep the prices at a relatively stable… .
I guess in plain language, I don’t want to see the prices go up in 2012 like they did in October. Will that happen if they change the eligibility list?
Mr. Harper: I think it’s pretty certain that they will change that eligibility list again in October of 2012 and that if retailers have not adequately prepared for it, having been given considerable time to prepare for it… .
So if you don’t have the warehousing or the ability to somehow bring some of those products in on the ship and store them and if they fly them in, yes, the prices will go up because there will be no subsidy on them.
The list is fairly confusing as well. You know, fish sticks are eligible but breaded fish sticks aren’t.
Well, if you wanted breaded fish sticks, then you’re going to fly them in because nobody is going to try to fill their warehouse with breaded fish sticks for a year, I don’t think.
So I believe it’s safe to say that the cost of some products that are impractical to bring in on the ship, if people still want them… . A retailer’s job is to asses what people want and give them what they want.
People will have to get used to paying a higher price for some of those things that are not nutritious and not perishable.
To be fair to the members and the witness, we will now break for 10 minutes and when we return, I will have Mr. Curley begin his 10 minutes of questions. 10-minute break.
>>Committee recessed at 15:13 and resumed at 15:37
I will now invite Mr. Curley to begin his statement and some questions. Mr. Curley, the floor is yours.
Yesterday, when the two individuals appeared before the committee from the North West Company and Arctic Co-operatives Limited, it became understandable that this new program has onerous compliance requirements.
In English, they said that it’s a pain due to its complexity. Perhaps the questions will be the same due to the regulations that have to be followed.
Can you elaborate further on the compliance issue?
If you’re going to make an arrangement with the federal government through the Nutrition North program, what kinds of differences are there between the old program and the requirements under that program?
Were they easier to complete or did it have its own idiosyncrasies with the paperwork requirements?
Mr. Harper: Under the old food mail system, the paperwork requirements were easy because there weren’t any.
Canada Post and INAC administered the program, and as a food retailer, we simply contacted one of the suppliers that was registered with the program and that was generally in Val-d’Or or near Val-d’Or, established an account with them, and started doing business.
So when the goods that we ordered were received, there was a schedule.
You know, dairy products would come on a certain day, bread products would come on a certain day, dry cargo would come on a certain day, generally eggs and dairy products were together, so when we received it, it was just like any other retailer anywhere receiving products.
We knew what our rate was because, using nutritious perishable food as the example, it was 80 cents a kilogram plus that surcharge of 75 cents a box, whether it was a tiny box of cheese or a big box of milk, a 75-cent surcharge.
So we would receive the goods and do our costing, and there are three components to our cost: how much you’re paying the southern supplier for the product; how much you’re paying for it to get to your community, now it’s by airfreight but in those days, it was the postage rate that Canada Post charged; and then there is the third component, the local delivery charge because it’s got to get from the airport to your place of business. So those are the three elements that add up to make what we call our landed cost, and then onto that cost goes your markup and goes on your shelf, and hopefully your customers buy it.
That’s all there was to it.
There were no reporting requirements at all to anybody, just like a southern retailer wouldn’t have any reporting requirements or there would be no reporting requirements for other things we ordered in the store that weren’t part of the Food Mail Program. Under the new program, it’s very different.