Food mail subsidy: limited help for high freight rates
Northern residents can pay up to three times more for fresh fruit and vegetables than their southern neighbors, but it’s still less than they’d pay if Ottawa weren’t subsidizing shipping costs to remote locations.
But even with this subsidy, this disparity will increase if the corporation responsible for delivering air navigation services in the country follows through on a new rate structure this fall.
Under the proposal introduced by Nav Canada, northern airline companies said they’d have to increase their rates by 15 to 30 per cent to cover the cost of the service.
Higher freight costs means northerners relying on the federal Northern Air Stage Program, or food mail, subsidy will have to pay higher cargo costs.
It could also mean a reduction in the number of items available under the subsidy.
“There would have to be a really significant postage rate hike,” said Bruce Myers, who oversees the program for Indian Affairs and Northern Development.
Under the program, DIAND sets a delivery, or postage, rate for food and essential items eligible under the subsidy.
Nutritious, perishable food, delivered to any of the 150 isolated communities in the country, is 80 cents a kilogram. Non-perishable foods and non-foods are subsidized at $2.15/kilogram in the Northwest Territories.
Canada Post negotiates a set rate with airline companies for all its mail, including food mail.
DIAND pays to Canada Post the difference between what that negotiated rate is and what people pay as the subsidy. Both individuals and grocery stores can access the subsidy.
For example, a litre of milk costs 80 cents to be shipped to the North using the subsidy. Without that subsidy that same litre of milk could cost as much as $5 to be shipped to the more remote communities.
In May, 1996, DIAND tightened the criteria for items eligible under the subsidy. Items such as video tapes, publications and high-fat foods were deleted from the list.
Meyers said he doubted the federal cabinet would approve an increase in funding for the program, especially since it was capped at $15.6 million at that time.
“At 15.6 (million dollars), this program can operate with the present rate structure for a couple more years before bumping into our budget ceiling.”
He said as populations increase and people eat more perishable nutritious foods, such as fruits and vegetables, the funding ceiling will be reached and changes will then have to be made.
He said the federal government urged provincial and territorial governments to take on some of these food delivery costs last year, but, so far, none have committed.