Thank you, Mr. Chair.
It is a pleasure, of course, to appear along with my colleagues here and to answer your questions to the best of my ability.
Indian and Northern Affairs Canada recently completed an extensive review of the Food Mail Program. During this review, Indian and Northern Affairs Canada officials held more than 70 engagement sessions across the country to collect the views of a wide range of consumers and stakeholders. INAC also worked extensively with subject matter experts to develop alternative models for the subsidy program. The results of this review showed that the existing program is not economically sustainable and that its 40-year-old design does not provide the most effective and efficient means of supporting access to nutritious food to residents of isolated northern communities.
One of the main issues of the Food Mail Program is its lack of financial sustainability. The program's annual base reference level of $27.6 million had to be replenished every year through supplementary funding to operate the program which cost close to $60 million during the last two fiscal years. In its most recent budget, the government announced an important investment to fund a new food subsidy program and nutrition and health promotion initiatives. This investment will provide stability to program funding by increasing its annual budget to $60 million on an ongoing basis.
On May 21, 2010, Ministers Strahl and Aglukkaq announced the replacement of the food mail program as of April 1, 2011, by Nutrition North Canada, a new market-driven model that will be a sustainable, efficient, cost-effective, and transparent means of helping northerners access nutritious foods in eligible, isolated, northern communities. To complement the subsidy program, ministers also announced that Health Canada will invest new resources to promote healthy eating in eligible communities.
The new program model, which responds to the growth, development, and increased capacity of the north, will create an environment where market forces and competition will lead to a more effective and efficient means of transporting foods to eligible communities. The shortened food supply chain will reduce the handling of fresh foods destined for the north. This change will improve the quality of food that is available to northerners and reduce costs associated with spoilage. Instead of funnelling the subsidy through Canada Post, INAC will provide the subsidy directly to retailers and wholesalers, who will make their own supply chain arrangements to ship food to eligible communities. This improvement will enable retailers and wholesalers to negotiate the best possible prices for their consumers and to maintain better quality control.
Under the Nutrition North Canada program, northern retailers and southern suppliers will make their own supply chain arrangements to ship eligible items to eligible communities, at their convenience and discretion, and pay the full shipping rate they have negotiated with the airline. Northern retailers and southern suppliers will then claim the subsidy from INAC for eligible items shipped by air, as per a pre-determined subsidy rate per kilogram basis, customized by community. The concept of entry points will not longer exist and the government will not intervene in shipping routes or schedule decisions.
A key aspect of Nutrition North Canada is that INAC will enter into formal arrangements with retailers and suppliers to enforce program requirements such as responsibilities tied to transparency of the subsidy, accountability, marketing, data reporting and audit. These arrangements will provide INAC with the leverage required to ensure that consumers benefit from the subsidy. None of this is possible under the existing model since neither INAC nor Canada Post has this kind of arrangement with retailers.
To ensure that smaller northern retailers can continue to have access to subsidized foods, these businesses will have the option of ordering eligible foods from southern suppliers who will be registered with the program and who will be able to claim the subsidy from the department.
Under the new program, personal orders will be retained to preserve a measure of competition for northern retailers and provide consumers with flexibilities related to special dietary needs. Individuals, establishments, and institutions will benefit from the subsidy by ordering from southern suppliers registered with the program.
As well, existing flat shipping rates will be replaced by subsidy rates per kilogram, customized by community. More remote communities with higher costs will have a higher subsidy rate than less remote communities.
Subsidy rates for the first year of the program will be similar to the level of subsidy currently provided by INAC under the Food Mail Program, and will be adjusted at least annually thereafter based on forecasts and food prices per community.
Another important element of Nutrition North Canada is the focus on the most nutritious perishable foods. To that effect, food of little nutritional value will be removed from the food mail program as of October 2010. In addition, to promote the use of the most efficient unsubsidized modes of transportation, such as the sealift and winter roads, non-perishable foods and non-food items will also become ineligible. Exceptions will be made for communities without any regular surface transportation access, such as Old Crow in the Yukon. Eligible perishable foods will be separated in two categories, and the category containing the most nutritious foods, such as fruits, vegetables, eggs, and milk, will receive a higher subsidy level than the other category.
Another new element of Nutrition North Canada is the subsidization of the transportation of commercially produced country foods. This will support increased access to these traditional foods, which are vital sources of nutrients for northerners. Minister Strahl has already indicated that he would like the advisory board to look at options to further develop the support for access to country food.
With respect to the external advisory board, as noted at the outset, Mrs. Elizabeth Copland agreed to act as the chairperson for this board. Her nomination is very recent, and other members of the board have yet to be appointed. Mrs. Copland can provide you with an overview on the role of the advisory board and how she thinks it can help this important program improve over time.
Mr. Chair, before giving the floor to Ms. Copland, I would like to say that Indian and Northern Affairs Canada believes that the implementation of the suite of changes and improvements I briefly described will lead to a program that is more cost-effective and that will ensure greater efficiency and transparency.
Thank you.
