Canadian North welcomes new Arctic food scheme

Tracy Medve, the president of Canadian North, says her airline welcomes Nutrition North Canada because it fosters more competition among northern airlines. (PHOTO COURTESY OF CANADIAN NORTH)

The Canadian North airline strongly supports the federal government’s new Nutrition North Canada program because it forces airlines to compete with one another for subsidized nutritious food freight, Tracy Medve, the airline’s president, said Nov. 17 before the House of Commons northern development committee.

“No longer will the government be in the business of tilting the balance of competitive power in favour of one carrier over another,” Medve told MPs in her opening statement.

She also said Nutrition North, which will replace the old food mail program on April 1, 2011, is superior to the old scheme in many ways.

These include a tight focus on perishable, nutritious foods, more efficiency through the elimination of mandatory entry points, more transparency and more accountability for food quality.

“Our shareholders need this program to ensure they can feed themselves and their families in a healthy and affordable way. We believe Nutrition North will meet this need in a meaningful and sustainable manner,” she said.

She also pointed to an INAC study that found only 62 cents of every dollar spent on the food mail program actually reached consumers.

“We believe Nutrition North Canada will ensure that the people for whom the subsidy is destined get every dollar of benefit possible,” Medve said.

In 2005, Canadian North submitted a bid to Canada Post for part of the eastern Arctic food mail contract, but were turned down in favour of First Air, despite having bid the lowest price.

In 2007, the Canadian International Trade Tribunal ruled Canada Post improperly handled the bidding process for the food mail contract by applying different sets of rules to each proposal.

But later that year, the Federal Court of Canada overturned the CITT ruling, saying Canada Post is not bound by contracting rules that apply to regular federal government departments.

Medve did not refer to these bitter legal disputes at the hearing, but she did tell MPs that the old food mail contracting process is bad for all stakeholders.

“Fortunately, the Nutrition North program corrects this situation by removing government from the equation and forcing each airline to earn their business based on the quality and cost of the service they offer,” she said.

First Air, owned by Makvik Corp. now enjoys a virtual monopoly over food mail freight sent to the Nunavik, Qikiqtani and Kitikmeot regions. Its sister company, Air Inuit, enjoys a virtual monopoly within Nunavik.

These arrangements, done through Canada Post food mail contracts, mean the two companies carry about 85 per cent of the nearly $60 million worth of food mail freight that Ottawa each year.

“[We] do believe the program must be respectful of commercial interests by not disrupting the marketplace through contracts of such significant size that they become economic weapons which can stifle healthy competition,” Medve said.

Later, in reponse to questions from MPs, Medve said Canadian North is willing to invest in the kind of ground-based infrastructure, such as warehouses and cold storage, that airlines need to handle large volumes of perishable food.

“We wouldn’t build those kind of facilities on spec, but we’re in a position where we can do it if we know that we’ll have the revenue stream to support the investment,” she said.

In 2005, Canadian North sent materials to Kuujjuaq that would have allowed the rapid construction of a warehouse there, but because Canada Post did not award the food mail contract to them, Canadian North never implemented their infrastructure plan.

Canadian North is owned equally by the Inuit of Nunavut and the Inuvialuit of the western Arctic.

MPs from all parties who sit on the Commons northern development committee have been studying Nutrition North Canada since the end of last September.

On Nov. 15, they heard from Leona Aglukkaq, the national health minister, and various officials from INAC and Health Canada, who told them that by Dec. 1, Ottawa will release its new nutritious food subsidy rates and other details of how the program will work.

The commitee is to continue its work on Nutrition North Canada Nov. 22.