Indigenous and Northern Affairs Committee on May 4th, 2021

[The Chair, Liberal, Bob Bratina]

We now have quorum. Accordingly, I call this meeting of our committee to order.

We start with the acknowledgement that, in Ottawa, we meet on the traditional and unceded territory of the Algonquin people.

Pursuant to Standing Order 108(2) and the motion adopted on April 29, 2021, the committee continues its study of food security in northern communities.

For our witnesses, please speak and listen in the official language of your choice. In the globe at the bottom of your screen, you can select English or French. Once you begin your testimony, you can actually switch from one language to another—as you speak—without changing that icon. When speaking, make sure that your video is turned on and that you please speak slowly and clearly. When you're not speaking, your mike should be on mute.

Pursuant to the motion adopted on March 9, 2021, I inform the committee that Silvano Cendou and Merlyn Recinos have not completed a technical pretest.

With us today by video conference are the following witnesses. We have Duane Wilson, vice-president, stakeholder relations, Arctic Co-operatives Limited. We have Daniel Lelievre, manager, store services, Fédération des coopératives du Nouveau-Québec. We have Alex Yeo, president, Canadian retail, and Michael Beaulieu, vice-president, Canadian sales and operations, North West Company. We also have Wade Thorhaug, executive director, Qajuqturvik Community Food Centre.

Thank you all for being with us today.

Mr. Wilson, would you please start your opening remarks? You have six minutes, go ahead.

[Duane Wilson, Vice-President, Stakeholder Relations, Arctic Co-operatives Limited]

Thank you very much, Mr. Chair.

I offer a sincere good morning or good afternoon to you, honourable members of the committee, and to Canada C3 alumni, wherever you may find yourselves this morning. I sincerely appreciate the opportunity to participate and share a perspective on the challenges to food security in Canada's remote, fly-in communities.

I think Monsieur Lelievre would agree that when we look backwards or listen to and read the stories of early co-op leaders in Canada's Arctic, I for one have come to recognize that the co-operative movement was one of economic reconciliation, food security, social enterprise and collective entrepreneurship long before anyone had actually coined or defined these terms. Co-ops work together and have diversified over the decades to achieve scale in pursuit of their vision of people working together to improve their social and economic well-being.

Given the short time allotted, I'd like to confirm our organization's belief that a holistic food security discussion includes elements of country foods, which have historically sustained the people of Canada's Arctic and remain the most nutritious and culturally appropriate diet for many of the residents of Canada's remote fly-in communities.

Despite this, I'm going to focus my comments today more on store-bought food, an area with which our organization is most familiar and has the largest capacity to affect.

It's very simple to compare the shelf price of widgets in Winnipeg with that of widgets in Whale Cove. Many people would point to freight costs or other high operating costs as the reason to explain some of these differences.

Residents in the north move cargo around. They purchase airline tickets. They pay high costs for such basic utilities as electricity and the internet. Therefore, I think many have an appreciation of these cost differences. However, many will not fully appreciate the vital role that economies of scale—or more accurately, the lack thereof—play in the cost of goods in remote communities.

The NNC program commissioned a report on this exact matter, entitled “The Roles of Scale, Remoteness, Business Structure, Competition and Other Operational Factors in Nutrition North Canada's Relationship with Canada's Northern Retail Operations”, authored by A.J. Phillips & Associates, November 2017. For the benefit of the members of the committee, I will send a copy of this report to the clerk of the committee. I highly encourage committee members to review this report for an interesting and informative assessment of these topics.

From the executive summary, however, I'd like to highlight the following:

The Nunavut economy lacks the scale or “critical mass” to support a normal market structure, and

The long supply chains, with missing modes, exacerbate the impact of the lack of critical market mass....

While the citation specifies Nunavut, I would maintain that it applies equally well to other territories and much of the northern reaches of many provinces. An important realization for all might be that the unintended consequences of directing resources at marginal projects or at initiatives such as greenhouses, or nutrition north Canada's permission of personal orders, might have the unintended negative consequence of further eroding what economies of scale may exist to the detriment of all, for the benefit of the few. This manifests itself as economic leakage from many communities.

The report also highlights the distinct relationship between household income and food security or, inversely, food insecurity. Sample research and evidence point to a strong correlation between income and food security. In their report entitled “Household Food Insecurity in Canada”, Tarasuk and Mitchell report that 60.5% of households citing social assistance as their main source of income experience food security issues, compared with fewer than 12% among those reporting their household income as being derived as wage earners.

The data from Statistics Canada's Canadian community health survey indicates that more than 93% of Nunavut households on social assistance were food insecure. Again, I'm happy to forward this report that I'm citing to the clerk of the committee for the benefit of the members.

While the nutrition north Canada program may affect part of the cost side of the equation, it does nothing to address the lack of scale, nor does it address the most reliable determinant of food security, that being income.

Those of us who have spent time in remote communities recognize that there is a high degree of income disparity and bimodal income distribution that are masked by statistics that cite averages or median levels of household income. In his testimony, I believe Mr. Natan Obed of Inuit Tapiriit Kanatami pointed out some of these issues from their research.

I could go on at length, but out of respect for the allotted time I will stop my comments there. During this time we have, we're only going to begin to start to unpack all of the issues surrounding this important topic, but I'll be pleased to try to answer any questions and attempt to provide any clarifications. I will also provide my direct contact information to the clerk of the committee should any of the committee members wish to contact me at a later date.

Thank you, Mr. Chair. That concludes my comments.

[The Chair, Liberal, Bob Bratina]

Thank you, Mr. Wilson. It's very much appreciated.

Mr. Lelievre, you have six minutes, if you please.

[Daniel Lelievre, Manager, Store Services, Fédération des coopératives du Nouveau-Québec]

Thank you very much, Mr. Chair.

I appreciate the opportunity to address the committee.

Mr. Wilson has already made a number of points about co-ops, so I will try not to repeat what he said.

Mr. Wilson and I represent two co-ops [Technical difficulty—Editor] and we have similar problems. I would like to focus on the infrastructure.

In Nunavik, the population is growing and the construction of new infrastructure is not currently keeping up.

Furthermore, our planes are not refrigerated, which causes a lot of difficulties in keeping the products fresh. This could create a big problem with food security.

Also, a lot of information is circulating on social media, which causes a lot of problems for our retailers. People are not aware of the real costs associated with living in the north or in remote areas. Many factors affect the cost of products and many, such as the weather, work against us. We need to educate and inform people so that they understand the reality of the north.

That's basically what I wanted to say. Mr. Wilson has already said it all and I don't want to repeat it. For us, the infrastructure needs are the greatest.

Thank you for your attention.

[The Chair, Liberal, Bob Bratina]

Mr. Lelievre, is that your testimony?

[Daniel Lelievre]

Yes, it is. I don't want to be repetitive.

[The Chair, Liberal, Bob Bratina]

Thank you very much.

We'll go now to Mr. Yeo and Mr. Beaulieu, for up to six minutes, please.

[Alex Yeo, President, Canadian Retail, North West Company]

Thank you, Mr. Chair, and good morning to everyone on the panel. Thank you again for extending an invitation to the North West Company to testify on this really important topic of food security in northern communities.

First, I will give you a quick overview of the North West Company. We operate 135 community stores across Canada and offer a broad range of products and services, depending on each community's needs. While our primary focus is on food, we also offer a broad selection of general merchandise, health services, optometry and pharmacy, as well as financial services. We are the largest employer of indigenous employees in the north. In addition, we operate an airline, North Star Air, that provides cargo service to 35 communities in Ontario, Manitoba and Nunavut.

I provide that overview because it gives you a sense of how deeply focused we are on the food value chain and supply chain across all of northern Canada, and it brings to light the fact that food security is something that we care deeply about as a long-standing community retailer.

The two previous speakers made a lot of points that I will make.

The first point that I really want to make is that food security, at its heart, is tied to the broader issue of income insecurity and the high cost of living and operating in the north, given the complex operating environment.

Here are a couple of facts to bring that home: Number one, the cost of energy is up to 10 times higher in Nunavut versus in the south. Making a repair to a building in the north can be 50% more expensive due to the cost of flying in supplies and skilled trades and the lack of infrastructure that previous speakers alluded to.

The cost impact of green policies can have outsized effects on the north due to the high-carbon footprint required to operate in northern Canada. As one example, the move to low-sulphur fuels for ships operating in the Arctic will increase sealift costs. It's the right thing to do, but it will have an outsized impact on food prices in Nunavut alone. Transport Canada estimated that this move to low-sulphur fuels could increase food prices by up to 2% and cost each Nunavut household between $500 and $700 a year. At the same time, no income support programs that many of the customers we serve depend on, whether it be child or old age benefits, are indexed to the higher cost of living, operating and working in the north.

Therefore, addressing food security will require a multi-pronged solution that's not just about food prices. As an example, nutrition north, which we will talk about, has done an excellent job of addressing the high freight cost of flying in product. Because of the subsidy for freight costs, a four-litre jug of milk in Shamattawa costs $5.79 today, which is comparable to the price in many southern hubs.

At the same time, though, it only addresses one cost input that affects the overall issue of income insecurity. Other additional measures will be required to tackle the underlying root causes of food insecurity, whether they be infrastructure, indexing benefits in the north or making deliberate infrastructure investments to help mitigate the higher costs of operating in the north and to help northern communities mitigate the costs of greenhouse gas and climate change adaptation.

Once again, I thank the panel for inviting me and Mr. Michael Beaulieu to testify on this topic today. I would be happy to explore the topic in the rest of today's panel during the Q and A, or after this panel in individual one-on-one conversations as the committee sees fit.

Thank you again for your invitation. We look forward to continuing this conversation.

[The Chair, Liberal, Bob Bratina]

Thank you.

Mr. Beaulieu, were you going to add anything to Mr. Yeo's testimony?

[Michael Beaulieu, Vice-President, Canadian Sales and Operations, North West Company]

At this time, no, but certainly I am prepared to answer any questions the committee might have.

[The Chair, Liberal, Bob Bratina]

That was just for my own information.

Now we'll go to the executive director of the Qajuqturvik Community Food Centre, Wade Thorhaug.

Please go ahead.

[Wade Thorhaug, Executive Director, Qajuqturvik Community Food Centre]

Thank you very much. Thank you to all the committee members for the invitation to speak today.

Qajuqturvik Community Food Centre is a charity based in Iqaluit that works to reduce barriers to healthy food in Nunavut, and we accomplish this through a variety of programs and advocacy work. I would also like to thank our national partners, Community Food Centres Canada, who worked with us on the brief submitted to this committee. Much of what I have to say has been mentioned by previous witnesses before this committee, but I will focus on a few important points.

First, you are no doubt all aware of the strong link between poverty and food insecurity, and it is no coincidence that the regions of Canada with the highest rates of food insecurity are also those with the highest rates of poverty. We cannot hope to address issues of food insecurity without first addressing lack of income. We feel strongly that boosting incomes for those living in poverty is the most impactful policy tool available. Research shows that increases in income lead to higher rates of reported food security, but recently we were able to see this first-hand. In the week that the Canada emergency response benefit, CERB, was first distributed in April 2020, demand for our emergency food services suddenly dropped by over two-thirds.

While lack of income is the principle driver of food insecurity, as you are also well aware the cost of living in the north is another major factor, particularly when it comes to food prices. The nutrition north Canada program was established to help rectify this problem, and while it undoubtedly benefits northern communities, it is worth taking stock of its shortcomings, particularly since 2021 marks the 10-year anniversary since its creation.

Natan Obed, the president of Inuit Tapiriit Kanatami, pointed out before this committee in December that NNC is blind to income and benefits everyone living in an eligible community. As was mentioned by Mr. Wilson, in Nunavut, income disparities are larger than in the rest of Canada. One-fifth of the population earns over $80,000 a year, while over half of individuals earn less than $30,000.

It was demonstrated that food insecurity in Nunavut has actually increased since the implementation of NNC, based on one report, despite an increase in the quantity of subsidized food purchased in communities. One reason for this may be that the list of eligible items that are subsidized are more commonly consumed in higher-income households. In effect, NNC may disproportionately benefit higher-income households more than lower-income ones. It is worth asking whether NNC can be reworked to primarily benefit low-income households, or whether it should be replaced by an entirely different form of intervention.

Finally, I would like to highlight the often undervalued importance of our local food system. We are grateful for the addition of the harvesters support grant as part of the NNC program, but we hope this is just the start of sustained investments in local harvesters. There is an abundance of food in the Arctic that has sustained continuous settlement of the region for millennia, yet too often it is not considered a viable food industry. Supporting harvesters has a myriad of benefits to communities, including increased economic development, skills training and nutrition, but most importantly, food from the land has enormous cultural importance for Inuit and other indigenous groups in Canada.

Too often agricultural commodities are favoured over local foods. In addition to the nutrition north program, another example of prioritization of southern or commodity-based food systems is the emphasis placed on greenhouses as a potential solution. While there are several successful growing initiatives in the north, the output is low compared with the inputs required, and there is often a lack of community support to sustain them over the long term. In the case of Inuit Nunangat, we feel agricultural solutions are a distraction from what could ultimately be accomplished by focusing on the food system that is already established. We should be wary of perpetuating colonial methods when addressing issues in indigenous communities.

In closing, I would like to reiterate our recommendations to the committee: boost incomes for those living in food insecurity through tax credits or social assistance programs, re-evaluate nutrition north Canada to ensure that it primarily benefits lower-income households, and increase support for local hunters and harvesters.

I would also like to thank the committee for investing so much time and attention to this issue. We should not be content to live in a country where so many of our citizens are unable to meet their dietary needs, where food banks dot the landscape and where regions that were once food sovereign are dependent on subsidized imports.

We look forward to continued engagement with the government to seek sustainable, culturally appropriate and impactful solutions to food insecurity in our communities.

[The Chair, Liberal, Bob Bratina]

Thank you very much.

We go to our committee now for the first round of questioning, which is six minutes.

I have Mr. Melillo, Mr. van Koeverden, Madam Bérubé and Ms. Ashton.

Eric, please go ahead, for six minutes.

[Eric Melillo, Conservative, Kenora, ON]

Thank you very much, Mr. Chair.

I just want to thank all of the witnesses for joining us today. It's really good testimony already, and I know it's a lot to think about. I appreciate that all of you touched on the aspect of income and that we have to do more to raise incomes in the north and, of course, look for more opportunities to do that.

I will get back to that, and I hope I can put a question to all of you with the limited time I have.

I first want to go to Mr. Wilson. If I was understanding correctly, I guess you were talking a bit about how there doesn't really seem to be an advantage for companies to scale up their production. I suppose, if I'm understanding correctly, the cost per unit is still relatively high regardless of how much they are ramping up their production.

I'm curious. Can you speak in a bit more specificity to the circumstances that are leading to this result and what potential measures you feel might be able to address that.

[Duane Wilson]

Thank you very much for the question.

I wouldn't look at it so much in terms of ramping up production. I look at it more from the perspective of the size of the community.

The reality is.... In my past I worked for a large retail chain that wouldn't even look at a market unless it served 50,000 people for one store, so their draw was 50,000 people. When you took all of their fixed costs and you divided them over a consumer base that large, they're now very thin.

Compare and contrast that to some communities in the Arctic. If I look at Kimmirut as an example, there are about 440 people served by two stores. Many of the economists would describe markets that size as being where competition is destructive, where the intended benefits of competition are actually outweighed by the costs of the duplication of those services—two management salaries, two banks of refrigeration, two separate sets of repairs and maintenance and on and on—so that you have a little bit of a compounding effect.

Really, it's not so much about production as it is about the demand side, owing to the size of the communities. If the economists would describe these markets as being of such a size that competition is destructive, they are actually best served from an economies of scale perspective by a monopoly.

I guess that begets the next question. If a community is best served from a cost perspective by a monopoly, what type of monopoly is it best served by? We're of the belief that it's a monopoly that sees the owners of the business and the consumers as the same people. That monopoly position is not going to be abused because the group of owners and consumers are the same people.

[Eric Melillo, Conservative, Kenora, ON]

I appreciate those comments. Thank you for going into more detail.

With the time I have left I will go back to you, Mr. Wilson. Hopefully, we can get to everyone else as well. We have heard some testimony, some suggestions about reforming nutrition north, specifically so that it goes directly to individuals living in the north rather than to retailers.

I guess I'm curious about two things: how you would see that benefiting the individuals themselves, and how potentially the retailers might be impacted by that. How might they have to adapt to that change if it were to be made?

[Duane Wilson]

I'll attempt to answer the question, given that it's somewhat hypothetical.

At the heart of it, really, I think what we're actually talking about is boosting incomes. If we use Iqaluit as an example, where the NNC level one rate is $3.45 a kilogram and a four-litre of milk is four and a half kilograms, if the desire is to change the program entirely and, instead of subsidizing milk, to provide it in the form of income, then as long as everybody is prepared to live with the consequences that the unsubsidized milk is probably going to be priced—just doing the simple math—at between $15 and $20, that's probably an acceptable choice.

However, that's now reliant on the individuals taking that extra income and directing it to those nutritious perishable goods, and that is outside of my control. Those are the individual choices that people would make day in and day out.

It's important to recognize that you need to consider both halves of that equation equally, because the removal of the NNC subsidy is going to have some pretty significant consequences on the price side of the equation.

[Eric Melillo, Conservative, Kenora, ON]

Thank you.

I was hoping to get a round here, but I think I'm running short on time, so I'll end it there.

[The Chair, Liberal, Bob Bratina]

You're at 10 seconds. Thanks, Mr. Melillo.

Mr. van Koeverden, you have six minutes.

[Adam van Koeverden, Liberal, Milton, ON]

Thank you, Mr. Chair.

Thanks to all the witnesses for joining today. It's great to hear from you. I think I speak for all of us when I say that one of the silver linings of this Zoom meeting world that we're all living in is that we can come together without having to travel from our very distant locations.

I'm joining you today from Milton, which is the traditional territory of the Haudenosaunee, the Mississaugas of the Credit First Nation, and many others.

I appreciate the call-out, I think it was from Mr. Wilson, to the C3 alumni. I am one, and my main exposures to life in the north have been on those vessels. I was very grateful to have an opportunity to both paddle an indigenous kayak and meet many people who live in the north. I continue to talk with them relatively often, actually.

I have a couple of questions for anybody who would like to chime in. I applaud the message of poverty reduction being the most tangible method by which we can improve the issue of food insecurity.

I would also highlight that included in the budget is over $160 million over the next three years to expand nutrition north Canada, which I think is good news. As you have very correctly pointed out, it doesn't necessarily achieve all of the necessary outcomes that are important to highlight and consider as we look to improve social and health outcomes in the north, but one that I think might get us a little bit closer to that is the enhancement of the Canada workers benefit.

I'd love to hear from anybody who has any insight or suggestions on how the improvements to the Canada workers benefit will have an impact.

Mr. Wilson, you referred to the cohort of people who are earning less than $30,000, which is certainly not enough to provide for a family in the north with the additional costs associated. Budget 2021 proposes to expand the Canada workers benefit to support about a million additional Canadians in those low-wage jobs, helping them to return to work and increasing those benefits.

One of the aspects of this is for people who, until now, were only eligible once they were making about $23,000 a year. It's going up to over $26,000 a year, so this means that, for the first time, most full-time workers earning minimum wage, which will also go up to $15 with the national minimum wage, will receive significant support. It's an important benefit.

I'm asking for any reflections on our current poverty reduction measures and how they'll impact your customers, people living in the north, and what we could do specifically for people in the north with those programs or other ones.

Thank you.

[The Chair, Liberal, Bob Bratina]

Who would like that?

[Michael Beaulieu]

I might just comment on that question quickly. The various programs we have seen unfold through the pandemic over the past year—whether they're provincial, territorial or otherwise—that have been directed at low-income wage earners have had a very positive impact on employees at North West across the north in terms of improving quality of life and making more affordable household decisions for those families. We're certainly in favour of the continuation of those types of benefits, in addition to the federal approach of adjusting minimum wage. We think it's a very favourable move for our employees and customers across the north.

From a policy perspective, a perspective that is worth keeping on the agenda to talk about is one that allows people to move effectively from social environment programs to wage economy programs. I think it was Mr. Wilson who commented in his earlier testimony on the difference in food security in households. Those who are in social programs are reporting somewhere in the 60.5% range in terms of food insecurity versus only 12% in the wage economy. I think it's important for government to keep on the agenda programs that allow people to transition from social programs into the wage economy without potentially losing a lot of the benefits that go with social programming.

Across many of our northern markets for instance, heating fuel for households is supported by income programs. When somebody joins the wage economy, often the trade-off is so great that they essentially can't afford to work. I'll just leave that comment with you.

[Adam van Koeverden, Liberal, Milton, ON]

Do you think that balance between not being able to afford to work...?

This increase is about $2,400 a year for families and I presume that it would have a similar impact on families in the north. My question is for you or anybody who would be interested in taking it. An additional $200 a month for families helps, obviously, but will it have an impact? Do very many people living in the north earn minimum wage? The current minimum wage is less than $15, which is certainly not a living wage anywhere in Canada, but particularly not in the north.

Do you think that additional threshold of $4,000 would maybe offset, as you put it, not being able to afford to work?

[The Chair, Liberal, Bob Bratina]

You have 30 seconds. Go ahead.

[Michael Beaulieu]

I think it certainly heads down that path. I don't know if I have enough data to give you a real, accurate answer on that topic, but it definitely is headed in the right direction.

For our own workforce, we're above minimum wage for almost all roles except for potentially what we would call our casuals, which are really just starting, part-time, student-type wages. We continue to look at our own wage programs as helping address some of the food insecurity issues and enabling our employees to live better lives.