EdinburghNLP/nunavut-hansard-plusplus huggingface dataset:
Our job is to be as efficient as possible in bringing healthy, nutritional, and value products to our market because it is inherently important to our customers and it is inherent in the nature of that product that it has a short shelf life.
That’s our priority. Where we do get bumped that we have no control over is what takes precedence with air companies overall and that is the movement of people. When you have isolated communities with one airline going in, sometimes our freight has traditionally sat because the preference has gone to people over products.
But in negotiating with airfreight companies, they understand the urgency.
I would suggest that the majority of the airfreight companies also are accountable and responsible community citizens. They will work with us and I’m sure with the legislature to ensure that the high priority, healthy, perishable products get to the communities. It’s in their vested interest as well because of our contracts but also because of their service component to the communities to make sure that product moves effectively, Mr. Chairman.
I wanted to follow along the same lines of questioning to Mr. Morrison in terms of the Co-ops.
I know Mr. McMullen said that he couldn’t speak specifically about Resolute Bay. I just figured in terms of supply chain and streamlining, I was wondering if he could explain. Let’s say for the Resolute Bay Co-op itself, in terms of ordering something from a southern supplier and getting it up to the community, maybe to show what Mr. McMullen was talking about of fewer hops and faster travel times, if he could explain how exactly something that was ordered from the south gets up to Resolute Bay.
If he could explain that.
Mr. Morrison.
Mr. Morrison: Mr. Chairman, the supply chain that is in place for the Co-operatives is very similar to the supply chain that would be in place for other retailers in the north.
The major improvement that has been noted under the new Nutrition North Canada Program is the involvement of the inspectors and the role that Canada Post played at a specific entry point.
Whether that entry point was a normal shipping route or not, in the case of Resolute Bay, that was the entry point for the eastern arctic. Now retailers have the option of choosing the most efficient location to ship product. It may be Ottawa, it may be Val-d’Or, it may be Montreal, it may be Winnipeg, it may be Yellowknife, it may be any location, the subsidy that is provided by Indian and Northern Affairs is the same no matter what route that is taken.
So by not having to deposit a product at a specific location, on a specific day, at a specific time to be available and sorted in specific ways for inspectors to look at the product, we are now able to arrange for the product at a destination point, whatever that destination point may be, based on when the product is needed in the community.
If the normal busy days of the week in a retail store in a community are Wednesday, Thursday, and Friday, then ideally the product will be scheduled to arrive on Tuesday so it’s available to be on the shelves.
If we’re looking at Resolute Bay, the particular route that that particular product will follow would be from our southern point. Traditionally for Resolute Bay the last number of years, it has been Ottawa, Val-d’Or to Iqaluit, then Iqaluit to Resolute Bay, Mr. Chairman.
If it’s still following the same route, I don’t see how it’s getting to the community any faster.
My understanding too is that now with the negotiated rate with one specific airline, that’s a specific problem we have in Resolute Bay, which then translates to a problem in Grise Fjord.
Again, it seemed like people and Mr. McMullen said that one of the positives of the food mail was not having Val-d’Or. My understanding is that food for Resolute Bay goes from Val-d’Or, then it goes to Iqaluit via Canadian North, then it sits in a Canadian North warehouse until it’s transferred to a First Air warehouse, then it gets onto First Air, which is the only airline that flies up to Resolute Bay and Arctic Bay, and then it sits in Resolute Bay, and that’s when they get the materials.
So there is actually a changeover of two airlines.
I think there are other communities out there and I have heard that Kimmirut is under the same situation. By having all of those hops, the food doesn’t actually get there faster.
If anything, it actually gets there more expensive because there are more hands or, as Mr. McMullen said, more footprints put on the product.
So I’m just wondering if Mr. Morrison could confirm that.
Mr. Morrison: Mr. Chairman, the contracts that have been negotiated with airlines are contracts from the point of origin. So if we are transporting a product from the south, then we would have the same airline carrying the product from the entry point in the south to the destination point in the community. We would not cross-dock a product from one airline to another airline.
So, in the case of Resolute Bay, if First Air is the carrier, First Air would pick up the product at the point of entry and transport the product right to the community.
As I indicated a moment ago, the major savings from a time perspective is the inspection process.
We don’t have to have the product in the point of entry to sit there for an inspector to arrive, to inspect the product when it’s convenient for them, not when it’s convenient for the retailer. We negotiate our contracts and our shipments based on when a product is needed in the community, not based on when an inspector is available to inspect the product, Mr. Chairman.
Again, maybe other MLAs have similar concerns in their communities.
I’m specifically going from what I have been told in my communities and I want to be able to go back and report to my communities and tell them what’s going on.
Consistently, since there has been the turnover from food mail to Nutrition North, I have been receiving emails about not having juice or milk in the community but they aren’t interested in tofu.
I’m just curious if you could tell me what the Co-op is doing to ensure… .
Again, if there’s an accountability factor to make sure that nutritious food get to my communities faster, what recourse do I have? Do I go back to the airlines and say, “Why is it taking so long to get there?” Do I talk to you and ask why it’s taking so long to get there and why it’s not on the shelf, or do I call Nutrition North or do I call the advisory board?
Mr. Morrison: Mr. Chairman, Co-operatives in the Arctic are locally owned and locally controlled businesses. Ultimately, the responsibility for a product on a shelf in a local Co-operative is the responsibility of the local manager of that Co-operative. The manager is responsible for placing orders in appropriate quantities and at appropriate times to ensure that it meets the demand of the community.
As a support federation, our job is to assist the local Co-operative in negotiating purchasing arrangements, pooling the buying power of the Co-operatives as it relates to freight, and coordinating any issues on the supply chain route. If there are problems in any particular community, then we will work with the local Co-operative to ensure that the problems are overcome. If the problem is a local problem, then we will assist the local Co-operative in managing that problem.
If it is a supplier problem, we will represent the Co-operative to the supplier to ensure that the product is available when it is scheduled to be available.
If it is a transportation issue, then we will represent the Co-operative with the transportation company to ensure that the product is delivered in accordance with the contracts that have been negotiated with the transportation company, Mr. Chairman.
So then I guess my next question would be: are you aware of what’s going on in Resolute Bay or are you working with Resolute Bay to maybe help with some of their issues?
Mr. Morrison: Mr. Chairman, last night at the Nutrition North public meeting, I became aware of the issue in Resolute Bay. I had not been aware of the problem previous to that. I was in contact with our office immediately after leaving the meeting last night and I haven’t had a follow-up yet but I will have a follow-up very soon of the issues in Resolute Bay.
That’s great to hear. Yes, it was interesting to hear someone in Iqaluit actually talking about a community outside of Iqaluit. So it was nice to hear that last night.
I guess a more general question as overall… . I know, as you, there are Co-ops all across the north.
Mr. McMullen had answered this and it seems like with the North West Company, with two months of the rollout of the program, generally overall, it seems like materials are travelling faster to the communities and less spoilage. Is that what you’re finding generally overall? I’m not talking about specific communities across Nunavut and across the north, but are you finding that foods are travelling faster and are you having less spoilage?
Mr. Morrison: Mr. Chairman, yes, we are finding improvements in our supply chain.
The fact that we have the control over the process has enabled us to set specific criteria, particularly with carriers, which we didn’t have in the past. The contracts that we negotiate with the various carriers stipulate when the product has to be delivered and how much time they have to deliver the product.
We have the opportunity, as I mentioned in my opening remarks and as Mr. McMullen has already mentioned, we control the product when it arrives in the community and if the product is not of acceptable quality, then we will follow back on the supply chain to determine where the problem occurred. If the problem occurred from our original supplier, we will claim to that supplier. If it is a trucking company, we will claim to the trucking company.
And if it is an airline, we will claim to the airline.
Previously with Canada Post and the airlines, there were no circumstances under which Co-operatives or any other retailer could file a claim for poor service. That was a major impact on the cost of food in the north. When bananas arrive black because they have been frozen on the tarmac, they can’t be sold.
The cost of that banana and the cost of the freight for that banana must be absorbed in the business somehow. We now have an option which we didn’t have before and we’re very pleased that we have that option. We believe it will, over time, show positive benefits for the people of the north, Mr. Chairman.
Your last question, Mr. Elliott.
This question is for both Mr. McMullen and Mr. Morrison.
In regard to the negotiated freight rates that you have been talking about in terms of whatever airline carrier that you have negotiated with hopefully, according to Nutrition North, a better rate because of competition or whatever, how often do you negotiate those? Is it a yearly thing or is it five-year contracts?
I think that leads into some other questions that will come up in terms of fuel prices increasing and other costs of food going up for the future.
But I’m just wondering: how often do you sit down and negotiate these rates with the airline carriers?
Mr. Morrison: Mr. Chairman, on behalf of the Co-operatives in the Arctic, we negotiate freight contracts with numerous airlines and other transportation companies and the terms vary. Some contracts are negotiated for a year and some contracts are negotiated for two or three years. Generally speaking, they are not five or more year contracts.
The airlines and certainly we don’t want to be tied down for exceptional periods of time. We often build in provisions for cost escalation, particularly cost escalation as it relates to fuel cost increases. Fuel riders are a normal part of the contracts that are negotiated.
So we will certainly try to establish some comfort zone in terms of the length of time of the contracts.
It’s very time consuming. It’s a very long process to negotiate new contracts, so certainly annual contracts are really not in the best interest of the Co-op system. We prefer multiple-year but not long-term contracts, Mr. Chairman.
Before I go on to Mr. Curley, normally I don’t ask a question, but I want to follow up on what Mr. Elliott said. In regard to the Co-op in Kimmirut, First Air is the only airline that flies in there and apparently you have been negotiating with all of the other Co-ops and getting a good deal on their freight. They’re tied to a contract that doesn’t expire until February of next year.
I was talking to the manager there and he says that he’s losing $3,000 a week to be competitive with the Northern there because he’s not getting the cut in the rate. What are you doing with, for instance, Kimmirut and I think the other community is Arctic Bay to compensate or help these Co-ops that are stuck in this situation?
Mr. Morrison: Mr. Chairman, there are a number of issues associated with the rates in a couple of communities, certainly Kimmirut, Arctic Bay, and a number of other communities. In our opinion, the subsidy rates are not at the same level as the old Food Mail Program. We are having discussions, we have made recommendations to Indian and Northern Affairs and the Nutrition North Advisory Committee, and we are also looking at ways in which the Co-operatives system as a whole will assist these particular Co-operatives.
An important difference between Co-operatives and some of the other businesses in the north, particularly our competition, the North West Company, is each Co-operative is a local entity, it’s locally owned and locally controlled, and every Co-operative is a separate legal entity.
Generally speaking, we do not have the capacity to smooth prices over multiple communities. What happens in a community generally stays in that community.
We do have some support available through the federation through Arctic Co-operatives. We have not implemented anything as yet, but we are looking at alternatives for a couple of communities.
Chairman: Thank you, Mr. Morrison, for that answer.
Now I’ll recognize the seconder of the motion. Mr. Curley, the floor is yours.
I have a number of points that I want to address also, specifically when both witnesses commented on their views with respect to the original Food Mail Program. One comment was it was not an efficient supply chain and the other said it was flawed and broken. I need clarification from both.
Could you guys explain to the Committee of the Whole exactly what you mean by that? Was it mainly because it was consumer driven?
I’ll start with Mr. McMullen.
Mr. McMullen: The changes in the food mail system from our perspective were not consumer driven. If we’re interested in the consumer, we’re going to find a supply chain model that moves the product as expeditiously as possible without extra touches or expenses.
The food mail system, Mr. Curley, had those extra touches and administrative burdens associated with it because it had to go through very specific entry points at very specific times that made it inefficient, not to the benefit of the end consumer. Thank you, Mr. Chairman.
Now I will ask the same question to Mr. Morrison.
Mr. Morrison: Mr. Chairman, the Food Mail Program, if we were to use a term that we certainly use often in the retail and service industry, is customer service. How do we ensure that we provide the best and most efficient customer service at all levels of the businesses that the Co-operatives provide in their communities?
Customer service, in our opinion, was not part of the old Food Mail Program. In the process of transporting perishable nutritious products from southern destinations to northern destinations, there was more concern with the administration of the program than the delivery of a top-quality product.
The lack of customer service, the lack of a commitment to deliver a high-quality product, in our opinion, resulted in major problems from a supply standpoint that a product was not received on a timely basis, a product was not received at the quality that it should have been received, and as a result, there were losses incurred by the retailers. The cost of that product ultimately was passed on to the consumer.
So there were a number of issues with the old program that fundamentally could not be changed by making some minor changes and minor communications issues, informing people about the program, certainly important issues, but that was not the major problem with the program.
In our opinion, there was no commitment to provide top-quality service to the end user, Mr. Chairman.
Hon. Tagak Curley: Thank you for part of that response.
My understanding of the consumer portion of that program was that the consumers really didn’t worry too much about which of you they were going to purchase products from and have it shipped by Canada Post.
They were responsible mainly for buying products from the point of entry that qualified for them to ship it and they were able to get a better rate.
I can ask you a question that one of my constituents in Rankin Inlet says now. This is an individual who has had the benefit of the old program. He said that currently the cheapest freight rate he can find right now is $3.80 a kilogram from Winnipeg.
Under the old program, it was a 75-cent fee per box. It averaged at about $1 a kilogram to ship things to Rankin Inlet. I’m now paying $2.40 a kilogram under the current program, which is $1.40 more.
How could both of you explain that this good for the consumer?
Mr. Curley, that individual is not dealing with either one of our companies.
They’re dealing with a southern retailer, and the explanation for why they would be charged that much more from that southern retailer, I can’t specifically answer that for you. That’s not our company.
Mr. Morrison: Mr. Chairman, the personal food mail component of the old Food Mail Program and the new Nutrition North Canada Program is something that we have nothing to do with.
That component of the program was included in the regulations of the program that were approved by the Government of Canada and we have nothing to do with it.
I really can’t offer much to the minister in terms of the impact from a consumer standpoint other than to say that I can tell you that the freight rates we have negotiated… . I would expect the freight rates that the North West Company has negotiated are somewhat less than that. Certainly we can offer value to consumers by purchasing locally.
We can offer value to the community by creating employment. We can offer value to the community by developing community infrastructure. So obviously there are trade-offs in terms of how programs work.
We believe that supporting businesses within the community is in the long-term best interest of the community.
I, too, would say that the responses that I got are the views of the respective retailers. It’s certainly not the view of the northern businesses or smaller companies.
I also have another view from my constituents as well. One of the local businesses believes that Nutrition North is a step backwards and it doesn’t believe small businesses will be getting a subsidy for years and probably never will.
Is that good for competition from both of you?
Again, Mr. Curley, small businesses follow the same procedure for adapting into Nutrition North Canada as we would, so their ability to access the program is not different than ours.
Again, I think the accountability for getting involved in Nutrition North Canada rests with the individual entrepreneur or business or company.
In Rankin Inlet, there are other competitors, good competitors, and using that community as an example, I would be surprised if they’re not all accessing the Nutrition North program and taking advantage of the subsidy as it exists.
Mr. Morrison: Mr. Chairman, the Co-operatives across the north, as I mentioned in my opening remarks, are small businesses. They are the prime example of what a small business is. It is ordinary people in the small communities of the Arctic who have come together to provide themselves with core services.
Most of the Co-operatives that exist in the Arctic today began as communities were developing, when there was no service available or the members were not satisfied with the services that were available. Ordinary people have built viable business enterprises at the local level.
They have chosen to work together to pool the buying power so that they can get better prices to sell retail goods for.
Mr. Chairman, I would have great difficulty in going to communities in the north, to Co-operatives in the north and say, “We should not be as efficient in terms of our buying power for products, our negotiating for freight, the services that Co-operatives provide so that prices will increase, so that other small businesses can compete with you.”
Co-operatives are committed to providing the best value and the best service to our owner members across the north.
A key feature of Co-operatives is that it is an open and voluntary membership. That’s at the grassroots level. Ordinary people choose to become a member of their Co-operative.
They’re not forced.
That’s also true at the territorial level. Co-operatives choose to become a member of the federation and use the services and pool the buying power. Co-operatives don’t have to do that, but they have chosen to do that so they can become more efficient, more effective, and offer better services to their communities.
Other small businesses have the same kinds of opportunities that the local Co-operatives have. Local Co-operatives are successful in the smallest communities of the Arctic and providing great benefit and great value.
So the Co-operatives are very pleased of the progress that they have made in that regard and will continue to do that, Mr. Chairman.
I understand fully the points that both of you are taking.
That means business is business and competition is competition.
But what the smaller retailers are afraid of is that under the new regime of the federal government, Nutrition North, as I indicated, there is a real fear of negative impacts that small businesses are facing because they will not have the ability to negotiate prices. They will be subject to the prices you negotiated and they will be marginalized by the air carriers.
Air carriers are not going to cherry-pick for them; they are cherry-picking with you guys.
I can tell you that each store in Nunavut is not going to be negotiating with Nutrition North or air carriers. The North West Company is going to be doing that for them, likewise with the Co-ops throughout Nunavut.
Each Co-operative doesn’t have the ability to negotiate or enter into contracts. They will be negotiated by Arctic Co-operatives. That’s my perception.
So if this economic impact, if these small retailers are marginalized and have to conform to the airlines’ prices, there won’t be much choice. Will it have a negative impact on their operations, in your view?
Mr. McMullen: It’s a very difficult question to answer. I don’t know the balance sheets or operating statements of the small businesses. I know very many small businesses are lucrative because they’re run by good entrepreneurs.
Things change in the economic environment and businesses have to adapt no matter what their size is.
Mr. Curley, we run a division in western Canada called Giant Tiger. Walmart is opening super centres left and right and Target is coming to Canada.
The economic conditions have changed. The competitive model has changed. So we will have to find a business centre entity or a way of doing business in that environment that allows Giant Tiger to thrive and prosper.
In fairness, I cannot address the individual companies and will it negatively impact them. The size of the North West Company in March did not change to April. We’re the same size we were in March as we were in April.
The federal government has instituted a program where the subsidy rate is the same for all retailers, not different, the same, and all retailers have access to that rate for moving their goods.
There are individual negotiations with the airfreight companies. Again, we are the same size in March as we were in April, as were the small independents. Now their clout as well as our clout has increased proportionately.
So their clout has moved up because now they get to negotiate a bigger bundle of goods, just as we do. So relatively, it’s the same for all players.