EdinburghNLP/nunavut-hansard-plusplus huggingface dataset:
Part of what we’re trying to find out is in terms of the accountability, and we’re putting a lot of faith and trust in the businesses to be able to pass on the savings.
How is that being monitored?
Mr. Morrison: Mr. Chairman, I believe we’re talking about two different things in terms of the administration of information or the collection of information and reporting to Indian and Northern Affairs.
In the Co-operative system, each Co-operative is an independent local business.
The responsibility for the management of that business rests in the hands of the community and rests in the hands of the general manager.
We do not monitor purchases on a daily basis in every Co-operative to ensure that the proper products are ordered, that the proper products are on the shelf. That is the responsibility of the autonomous local Co-operative. Our job is to support them in that process.
However, under the Nutrition North Canada Program, our members have asked us to assist in the administration of the program. So we are collecting data on a daily basis on what is happening at the local Co-operatives, but we don’t go down the list and say, “Somebody forgot to order this” or “This didn’t arrive” or “That didn’t arrive.”
That’s one of the great benefits of the Co-operative.
It is a local business and it is up to the local community to run that business. Our goal is support.
There were reports of problems in Resolute Bay. I can’t confirm the problem exits and I can’t confirm the reason. It could have been mechanical problems on an aircraft that particular day.
Unfortunately we experience that more frequently than we like, where a product is all set to go into a community and the aircraft is halfway to the community and has to turn back for mechanical reasons. If that happens and a Co-op orders a product that is due to be on the shelf for tomorrow and the plane doesn’t come until the following day, then we have holes in the shelf. And that’s certainly not what we want, but some of these things are very difficult to monitor.
If there is a consistent problem with ordering and supply, that’s where we can really provide the support to our members. Thank you.
Again to Mr. Morrison. Again it may keep flipping back and fourth between the umbrellas of Arctic Co-operatives Limited, which allow us to be able to buy in bulk and get the rate at a better price, but going back to saying that they are locally owned and operated and you guys provide support.
So when you were talking about best-before dates, because these businesses are locally owned and operated, can you guarantee that they are not selling products that are after the best-before dates?
Like maybe the Northern Store could where it’s centralized and they send out directives and it happens.
Mr. Morrison: Mr. Chairman, no, I cannot. As a locally owned and controlled business, each Co-operative chooses whether or not to adopt and implement the policies and procedures that have been recommended through the Co-operative system. Generally speaking, Co-operatives adopt the policies that are developed and generally speaking, they implement those policies.
If there are problems or issues particularly on things that are of a serious nature, we deal directly with the board of directors to ensure that they are implemented and directed.
But all of the policies and procedures that are recommended from a good business practice standpoint by the Co-op system, the board of directors of each local Co-operative, as an autonomous board of directors, choose whether or not they will be implemented in the local Co-operative.
Next, I wanted to sort of talk about the subsidy and how pricing happens.
Again, we have talked a lot about getting the products there, products on the shelf, and whatnot, but the other part that confuses me is I don’t understand how, and more so, I guess, Mr. McMullen, because it’s right here with Arctic Bay.
My understanding of the program is it’s a per kilogram subsidy. So in Arctic Bay, for the level 1 subsidy according to this, and I know it’s correct because I have been on Nutrition North Canada’s site, $7.80 per kilogram is what we receive in Arctic Bay. To me, it’s a per kilogram subsidy.
I think, for ease’s sake, in here it’s got 1 kilogram of frozen peas.
Before Nutrition North, it was $6.29 and now it’s $5.95, but it was kind of funny because I figured I needed something to show you for sure.
So I have the one actually taken out of the Arctic Bay store. It does actually have a $2.40 difference in the price.
It was $8.69 in Arctic Bay before Nutrition North and $8.25 now in the store, so it is a 44-cent savings, which is great.
My question and what I have had people ask me many times, and I just want to be able to go home and be able to explain it to people in Arctic Bay, Grise Fiord, and Resolute Bay, is: if you can give us a savings of 44 cents on 1 kilogram of frozen peas, which is subsidized by $7.80 through Nutrition North Canada, why can’t you provide a 44-cent savings on 1 kilogram of frozen carrots, 1 kilogram of frozen peaches, 1 kilogram of frozen avocados or whatever is on the shelf?
It’s not a commodity price in terms of bananas are higher and because, I don’t know, some worm ate them and they were shipped and there was spillage and shrinkage... . How is there a difference? If it’s per kilogram landed in the community and put on the shelf, why isn’t it across the board?
Why is it sporadically, whether it’s tomatoes or potatoes? I guess that’s the biggest concern that people in my communities have been asking me.
They don’t understand how the pricing works. So if you could explain that, it would be great.
Mr. McMullen: Thank you. Mr. Chairman.
There are a number of variables in pricing; the exact discounted rate or the subsidized rate.
First of all, this level 1 subsidy rate published here is in comparison and what you need to compare it to is the previous food mail rate and the gap between.
The prices are inconsistent because of several factors.
The subsidy rate is consistently applied and that’s what INAC will audit us to. So when you go to the auditing process through INAC, they will look at 1 kilogram of frozen peas, 1 kilogram of carrots, 1 kilogram of peaches, and they will look specifically to see if we applied the subsidy rate to that product.
The inconsistency from your perception or the customer’s perception has to do with the total cost of the goods and a number of variables.
If you’re looking at some of these prices, it’s where, in the case of the cost of frozen peas, that vendor specifically has a lower cost or we got a lower cost from that vendor on that product because it’s higher volume than the carrots, higher volume than the peaches.
So there are negotiations with the vendors that play a role in this as well as the subsidy rate.
I don’t know. As Mr. Curley always points out, I’m a non-technical MLA, but I didn’t catch that and I didn’t understand what you said.
To me, a kilogram of peas, it’s on the kilogram, it’s on the weight of the product coming in.
It’s not on the peaches. It’s not on the others.
It’s on a per kilogram subsidy.
So maybe if you can explain it again how you come up with the difference in the prices because I don’t get it.
There are three factors at play. There’s the subsidy, which is all passed on, secondly, it’s the negotiations through the airfreight company, and third is the negotiations with the vendors.
So in those prices before and after, it’s just not the subsidy that you’re seeing. You’re seeing the efficiency of the retail chain at play.
We have gone out and negotiated with the vendors and we have negotiated with the airfreight companies, so it’s not going to be consistent across the board in terms of the price reduction because it’s more than the subsidy.
It’s our negotiations with the airfreight carriers and our negotiations with the vendors.
I would suggest to you that in the case of the peas versus the carrots, we have done a better job negotiating the price with the vendor of the peas. It might be based on the volume, that we buy more peas or more carrots.
It could also be based on the packaging. The packaging varies from product to product in terms of how it’s shipped, the weight of the non-product, cardboard, the containers, and it could be the route of the product to the end market.
So it’s just not the subsidy rate. It’s the negotiations with the freight vendors and the negotiation with the vendors.
So again, you’re talking about the overall… . When you actually do your reporting to INAC, you’re not talking about the overall 1 kilogram package of frozen peas getting to Arctic Bay, you’re talking about the overall tonnage that you bought, that was shipped and purchased in the south, and then divided up and sent out through your whole system.
Is that what you’re talking about?
When we report to INAC, we report the subsidy applied to the eligible products, every single product.
I’m still not getting it, but again, I might need some time to think about how it’s actually coming out.
I’m just wondering too in terms of then, if you can break down the individual amounts for what’s happening with what you’re purchasing.
Can you not show that on our receipts when we purchase them as well?
No, I think that question was asked earlier and the answer is the complexity of the point-of-sale system.
Again, to report on a line-by-line basis, we can report back the subsidy applied to a product, but to report back on a line-by-line basis over 4,000 products in 65 communities, all of the factors that go into the cost of goods, no, sir, we don’t have the capability of doing that.
The way the program has been explained to me when I was in Ottawa sitting in front of Mr. Doyle is that it’s a per kilogram subsidy on the product, so the product is not actually getting any subsidy.
If I buy the bag of peas for a dollar and then ship it, what I get for the price of the peas shouldn’t matter. It should matter about the actual kilogram and that $7.80 is applied to it. So I’m still a little confused.
My other lines of questioning are sort of along the actual formation of Nutrition North happening. One of the things you had said, Mr. Morrison, was that you guys track all of this stuff, the amount you ship to all of your stores and whatnot, yet the way the Nutrition North Canada Program was explained was that they had to change from food mail because they didn’t have this information. The information wasn’t available about what kilograms and what tonnages were sent to different communities.
If that’s the case, again it’s just a little bit of conflicting… .
So do you guys have all of this information about how many kilograms go to each community each year?
Mr. Morrison: Mr. Chairman, under the old Food Mail Program, we were not responsible for the negotiation of the airfreight on that product and we did not track the amount of product shipped under the Food Mail Program. Under the Nutrition North Canada Program, we are required to report to INAC on category 1 products and category 2 products. We are required to tell them how much we have shipped in each category.
If it is 100,000 kilograms or 500,000 or 50,000, we have to be able to identify what we have shipped on a location-by-location basis. Previously we were not tracking it to that detail. We were tracking the product coming in.
We were tracking our orders. We were tracking the sales, but they were not consolidated in a fashion that would allow INAC to evaluate the program to the degree that they want to evaluate it today.
Within category 1 and category 2, there is a whole series of subcategories. There may be a proper term for it.
Oranges, for example, there may be 5 or 6 different types of oranges, or 10 or 15 types of oranges. We have to provide the information on not just category 1 and category 2 but breakdowns within those categories. That’s part of the additional reporting that is taking place now.
Some of that information was already there but not necessarily being consolidated in the fashion needed by Indian and Northern Affairs. Indian and Northern Affairs, I believe, is evaluating what they are getting and I’m not sure that they are 100 percent certain what they need. Over the next 6 to 12 months, we will have extensive discussions with INAC on how the reporting will be taking place, what they need for information, and what they will be doing with the information.
For my last question, I was curious to find out about the storage facilities from both the representatives here, Mr. McMullen and Mr. Morrison.
I know in his opening comments, Mr. McMullen mentioned looking at $6.5 million worth of increase in storage facilities and talking to his board next week about possibly $10 million to $12 million.
I was wondering if he could expand on what types of expansions they would be and where funding would go.
Specifically for the Co-ops, the idea that they’re locally owned and operated, I think a lot of them don’t have the ability to build structures unless they get help and support, like you said, as your role through Arctic Co-ops Limited, to either expand or provide them with the space for storage.
First and foremost, my comments did not say that capital expenditure was going towards storage. My comments were that was the capital expenditure plan for the fiscal year 2011 and being requested for 2012. To state that it was going towards storage would be incorrect.
That goes for a number of things.
For example, in Iqaluit, we have a budget recommendation for a $700,000 improvement to the central store.
We actually have a couple of projects for complete store renovations or new stores. Throughout Canada, we will also spend about $3.8 million in total on housing, the upgrading of the housing for our staff, and we also have a budget for warehousing. In that total picture of the $6.5 million and the $11 million to $12 million over the next two years, that is broken down through all of those categories.
That comment was made in the context of our continual reinvestment back in Nunavut because we need to keep the totality of our business, warehouse, stores, and our housing for our folks at a good level. That’s where the money is allocated to.
Mr. Morrison: Mr. Chairman, as far as warehousing is concerned, Co-operatives are constantly evaluating what our warehouse requirements are.
In recent years, Co-operatives have been investing significant amounts of capital in new facilities, new retail facilities, hotels, warehousing, accommodations, and various types of capital expenditures.
In terms of where we are at for warehousing facilities, it’s a little bit of a Catch-22 situation. You don’t want excessive amounts of warehousing because you have to build it, you have to heat it, you have to insure it, there are great costs associated with warehousing, and if you have excess warehousing space, you’re liable to fill it with excess inventory, which is certainly not something that we want to do.
So it’s a delicate balancing act to make sure that you have the right amount of warehousing to meet the requirements of your retail business.
You’re absolutely correct in your comments, Mr. Elliott, on the process that the local Co-operatives go through on the development of fixed assets. Because each Co-operative is an independent local business, it has to stand on its own two feet in terms of the capital requirements of that particular business.
Co-operatives are somewhat at a disadvantage to other types of business and certainly to our competition because we can’t combine all of our capital requirements under one organizational structure; each Co-operative has to have the capital to develop their own businesses.
We are fortunate within the Co-operative system that just a few weeks ago, Arctic Co-operative Development Fund celebrated the 25th anniversary of its incorporation and the Co-op development fund is the financial arm of the Co-op system in the Arctic. We have a fairly substantial capital base that has been accumulated over the 25-year history of the organization. That organization plays a fundamental role in working with local Co-operatives to develop new facilities.
I am very pleased to say that the Sanavik Co-op in Baker Lake opened a 9,600 square-foot retail facility on May 20 and the Mitiq Co-op in Sanikiluaq opened a 7,000 square-foot retail facility this past Monday.
Certainly the success of the local Co-operative is fundamental to that process, but certainly the strength of the Co-op system and the pooling of capital to a degree through the Co-op development fund allow Co-operatives to invest in new facilities.
So we do have processes in place.
They are somewhat different than they are from a corporation that can go to capital markets, the stock exchange, or whatever for capital.
Mr. Chairman, if we have time, I won’t be too long, I have two main points.
I just want to thank both of you. I know you guys took quite a bit of time for members.
In terms of the policy change, I think we haven’t stated the reason. I think we know pretty well why the federal government restructured it completely. To be honest with you, pretty much, I think that the retailers and airlines do compete, and one of them was about to probably close its shop if nothing happens.
So I think this change of regime and new arrangement to benefit primarily through the freight subsidy revived the financial purchasing power and certainly revived the whole industry and they are now able to compete more. So that was the underlying reason for the federal government, which they haven’t made public to anyone.
But I’m interested in hearing about how often you apply for this subsidy and what you are required to provide the feds as you apply for the subsidy and what time of the year you apply.
Mr. Curley, that’s a good question.
We just finished this process. I think it’s an annual application. I think the window is defined in the legislation but I’m not exactly sure of that timeframe.
For an application, there’s an auditing process that we go through on a monthly basis in order to get reimbursed. So I think that’s ongoing in nature, sir.
In terms of the airline situation, I can honestly say, sir, that that never came up in any of our dialogues with the federal government.
Mr. Morrison: Mr. Chairman, I understand that the application process for the first year is a one-year process.
We certainly hope that after the first year and after the growing pains of the implementation of the program, the agreements that we will enter into with INAC will be longer than one year as it was fairly onerous to go through the application process.
Part of the process that we had to go through was a compliance audit.
The auditors of the federal government came to our offices to ensure that we had the capacity to meet the requirements of the new program.
We do have very specific reporting requirements on a monthly basis and we have very specific audit requirements that have been agreed to under the contribution agreements as well.
Also, at the same time, though, there were some comments about the old program being complicated and it didn’t work, and the other comments to it.
I think this particular new program is also probably simpler in some ways because it’s mainly a freight subsidy.
In view of that, my question is related to when… . Regardless of whether a product is purchased or not, you are subsidized.
Mr. McMullen: Mr. Chairman, the INAC organization is subsidizing eligible goods. That subsidy or that rate that they apply to the transportation part of the freight is directly passed on to the consumer. So if there is a subsidy in this whole process, it’s to lower the cost of goods for the consumer.
It’s a consumer subsidy.
I’m not sure, sir, whether I’m answering your question.
Mr. Morrison: Mr. Chairman, we will only receive a subsidy from INAC if we have purchased a product and shipped a product.
One of the requirements under the contribution agreements that we sign with INAC is we have to prove that we have bought something and we have shipped it.
Under no other circumstances is the subsidy provided.
Hon. Tagak Curley: Yes, that’s what I thought it was. I can use the analogy of a chicken. We ship a whole bunch of chickens to Grise Fjord, they’re shipped, and the airline sends you a bill for the freight.
You have bought them from a supplier down in some poultry farm or somewhere and they’re shipped up there. They can remain on the shelf or warehouse.
It doesn’t matter to you guys because you’re going to get your bill subsidized anyway.
It’s not contingent on whether or not the best-before date has arrived and expired, you still get your subsidy. Am I correct in that assumption?
As Mr. Morrison said, we only get it… . So you have nailed it.
Yes, we have to purchase and ship it.
The interesting thing is: what’s our motivation?
We would like to gain market share, but freight and distribution is only 13.5 percent of our cost, sir, so we need to sell that product.
That absolutely drives our motivation to be in business. We need to sell that product.
Because the subsidy goes to the end consumer when they purchase, they’re the beneficiary, but for us every day, we have to sell that product.
If you just look at all of the other costs we have to cover, if it doesn’t sell, if I’ve got $10 worth of chicken on my shelf and it’s a 1-kilogram chicken, the freight subsidy per kilogram is $7, but the rest of the cost to get that, the infrastructure, the cost of the goods sold, I have to cover everything.
So one of my primary goals as a retailer is to sell the product to the customer at a good price every single day and not have any waste.
Mr. Morrison, do you want to add to that?
Mr. Morrison: Mr. Chairman, I think we should be looking at this as a reimbursement of freight. The subsidy is reimbursing retailers for freight costs that they had incurred.
So if the freight subsidy to Arctic Bay is $7.80, we’re paying more than $7.80. Maybe we’re paying $8.80 or $10, but we’re paying more than the amount of the subsidy. So we’re buying the product, we’re paying the full amount of the freight rate, and we’re being reimbursed for a portion of the freight rate.
If that product doesn’t sell, 100 percent of the net amount is lost. We have no sales. We have no gross margin.
We have nothing available to pay the bills. The business will fail. The business will fold.
So I think it’s easier to consider this as INAC reimbursing us, reimbursing all retailers, for a portion of the freight. We still have to pay 100 percent. They reimburse us, for argument’s sake, 75 percent on perishable nutritious products.
For argument’s sake, we still have 25 percent of the freight still there.
Yes, we appreciate that so much. I think the public is quite interested in how that subsidy is actually applied towards that portion.
What are complicated obviously are your other reporting requirements in terms of whether the products are bought and all of the other audits that are needed. We understand that, but that’s what you get for banking into the fed’s program. If I was in the private sector, I would say, “Forget it.”
My view is that I wouldn’t be surprised if the products that qualify for subsidy are more than the other product commodities that I, as a regular individual, require every day. So these are the products I see. What I think Mr. McMullen said is that they’ve got to be sold if they are shipped into communities.
There are no subsidies on freight unless they are bought by a person like me.
Having said that, Mr. Chairman, I have one last point. Nunavut is one of the regions that have the most staggering birthrates compared to other parts of Canada.
We have a young generation of citizens who have children and young families who are struggling to survive, yet both of you are charging young families very essential needs like Pampers at staggering prices.
If I were to use Ottawa as an example, Walmart, the No. 5, a very popular product, 100 in a box is sold today at $36.97.
In Rankin Inlet’s Arctic Co-op Limited, No. 6, slightly smaller, I believe, or whatever, Pampers 40 in a bag, much smaller, is selling for $36.99. Another example, the Rankin Inlet Northern Store’s No. 6 Pampers, 90 in a bag, is $71.99.
Arctic Bay’s Northern Store, No. 5 is $71.69 for 116 in a box.
Similar prices. How did you arrive at those non-competitive prices?