Canada Post to lose Food Mail Program

A federal program that subsidizes the shipping of nutritious, perishable foods by air to remote northern communities will beawarded to three retailers instead of Canada Post, CBC News has learned.

The government is expected to make an announcement this week that North West Company, Arctic Co-operatives Limited and La Fdration des coopratives du Nouveau-Qubec will be provided with the multimillion-dollar subsidy instead of thenational postal service, the CBC's Laurie Graham reported.

In reaction to the news,a Canada Post spokesperson issued this statement: "The Food Mail Program is a federal government program run by INAC [Indian and Northern Affairs Canada]. Canada Post has a long-standing agreement with INAC to help administer it. We recover our costs but do not earn a profit. Any changes to the program should be answered by INAC."

Ottawa has been providing Canada Post with a $60-million annual subsidy to deliver fresh food to the North under the Food Mail Program. Along with letters and packages,the national postal servicetrucks food and other items from warehouses to places such as Val-d'Or, Que., wherethey're then flown to remote northern communities.

Too expensive

It's a method that has long been criticized as too expensive and time-consuming.

Last year, officials with Indian and Northern Affairs Canada said they were contemplating running the program without thecarrier service, and dealing directly with food suppliers in an effort to shave transportation costs.

In April, Indian and Northern Affairs Minister Chuck Strahltold the House of Commonsthe program had to change.

"Northerners deserve to have a program they can count on, and we are going to deliver that to them," he said.

The hope is that by cutting out the middleman, the retailers will be able to get nutritious food to northern grocery shelves more efficiently, Graham reported.

Reduced costs

Michael McMullen, executive director ofthe North West Company, said direct channels of distribution along withless staging, loading and offloadingwill lower the distribution costs.

North West Company, a retailer to underserved communities in northern and western Canada as wellas rural Alaska, the South Pacific and the Caribbean, posted a profit of $81.8 million on sales of $1.4 billion for the fiscal year ending Jan. 31, 2010.

The federal government also plans to reduce the subsidy on items such as frozen dinners, processed foods and junk foods or remove them from the list altogether while increasing the subsidy on fresh fruits and vegetables, dairy products and meat, Graham reported.

That will make nutritious food more affordable for families trying to raise healthy children.

"If the kids come first they should do something about it because if they come first everything should be cheaper," said Ooleepe Ekho, a shopper in Iqaluit.