North Mart in La Ronge, Saskatchewan. Larger retailers will benefit disproportionately from the new, privatized Nutrition North Canada program.

Changes to the government’s food subsidy program are making some in Northern Canada fear higher prices and fewer small, local stores.

The Food Mail Program was axed last October, to be replaced by a redesigned initiative in April 2011. The program, jointly run by Indian and Northern Affairs Canada, Canada Post, and Health Canada, provided food and sanitary items to isolated communities in the North at reduced postal rates. By cutting down on the transportation costs, food prices in the North were more affordable.

An INAC spokesperson told us that the program started around the 1960s through Canada Post’s air stage program. In 1991, responsibility over the program was transferred to INAC. Toward its end, the program was supporting 70,000 people in 80 communities each week, delivering over 18 million kilograms of food by mail annually.

The program required meticulous detail. Food arrived in shipping centres in the South, were packaged for sale and insulated to survive northern weather conditions. They were then driven to nine points of entry before being loaded into Canada Post aircraft, along with postal deliveries. Although 90 percent of the food was sent to communities in Nunavut and northern Quebec, the program served communities from Yukon to Labrador.

A 2007 video (which looks much more dated) explains the process in detail. The government subsidy meant that northern food prices were about 40 percent more than in the South—instead of double the price, which they would have been without the subsidy. (A Globe and Mail article reported on one community affected by the changes. Photos from the local grocery store include $30 jars of Cheez Whiz, $13 spaghetti, and $7 heads of cabbage.)

Last May, the Conservatives announced that three private companies would take on Canada Post’s role after concluding the crown corporation was too expensive.

The program was cut in October and will be replaced with the Nutrition North Canada initiative in April. The new program limits subsidies to “nutritious” perishable foods instead of “convenience” perishable foods (TV dinners, breaded meats) and limits eligibility of non-perishable foods. In the interim, the original Food Mail Program continues although subsidies have been discontinued for a list of items that aren’t covered under the new plan. Discontinued items include “whole pumpkins” and “croissants and garlic bread,” but also discontinued are water and prescription drugs.

An excellent CBC radio segment explored the implications of food costs for the largely Aboriginal populations who live in the isolated communities served by the program. With a genetic susceptability to Type 2 diabetes, a high rate of social assistance use, and a higher birth rate, these northern communities badly need access to nutritional foods. When a jug of fresh orange juice is 10 times the price of a bottle of Coca-Cola, affording a balanced diet is a struggle.

It’s this line of thinking that prompted changes to the subsidy system, but is it really the most effective action? Some advocate investment in summer agriculture programs, noting that areas in the Far North receive near-24 hour sunlight, making them even more fertile than some communities in the South.

But the loudest criticism of the new plan has to do with funding structure.

The old subsidy applied to the grocery item itself, allowing businesses and consumers to pay a fixed price for groceries, while costs such as air shipping were handled by the government. The new subsidy goes straight to retailers, leaving it to them to negotiate their shipping and air costs.

Smaller stores therefore face unfair competition. Larger chains like North Mart will benefit from economies of scale, but smaller stores—in the most remote areas with small populations—will face higher shipping costs—and thus higher prices. Ultimately this risks not only the livelihoods of food vendors, but also the purported goal of the subsidy program: the ability of Northerners to get a balanced diet.