23 Feb What’s behind rising food costs in Canada’s North? Questions emerge over how retailer sets prices
When spending more than $100 yields only a little bag of groceries, Nora Jean Omand is trying her best to do more with less.
This week, the resident of Norway House in northern Manitoba is hoping a package of stewing beef will be enough to feed 10 people in her extended family.
“I’m an old age pensioner and that’s what I have to survive on and at times that’s all I have to feed them with, but I’ve learned to budget,” the 66-year-old member of Norway House Cree Nation said.
Omand will often drive more than four hours to Flin Flon or Winnipeg to save money on groceries, she said.
“I went and got a whole bunch of tomato soup and vegetable soup. There, it’s only 97 cents and here it’s $3-something, so I got a whole bunch. It’s worth it.”
For residents in Canada’s North such as Omand, high food prices have long been a fact of life. But the problem worsened after the pandemic, with supply chain disruptions, the war in Ukraine and other global factors all contributing to rising food inflation. For example, one litre of olive oil can now sell for $36.59 and a family-size box of cereal can cost $17.99.
There’s one dominant grocer in the north, the North West Company, which owns 129 stores across northern Canada.
- Watch the full documentary “Who’s minding the store?” from The Fifth Estate on YouTube or CBC-TV at 9 p.m. ET. It will also stream on CBC Gem.
But a former employee with a North West Company store in Iqaluit told The Fifth Estate, in a co-production with APTN Investigates, that she has concerns that the company often inflates prices beyond its rising costs.
The co-production also looked at allegations that the company isn’t fully passing along a federal subsidy that’s supposed to help keep nutritious food prices low for consumers.
The North West Company disputes those allegations, saying that operating in northern and remote communities comes with unique costs, which include everything from higher electricity and utility rates to higher costs of fuel and transportation.
Ex-employee speaks out
Alexyss Dodd worked as a financial administrator at Northmart in Iqaluit from the fall of 2021 until the middle of 2023. Every morning as part of her job, she would receive new prices from head office and relabel prices on the store’s shelves.
She alleges that she would see price increases that she believes did not reflect rising costs faced by the North West Company and she believes they weren’t always justified.
Dodd said the price increases, coupled with the time between them, seemed suspicious to her. She points to olive oil as an example. On Nov. 9, 2022, a 500-millilitre bottle was priced $16.49. On Dec. 31, 2022, the price had gone up almost $6 to $22, an increase that she believes can’t be attributed to transportation costs alone.
“I noticed there was consistent price increases of almost double. And I started mentioning that to head office, and head office started fighting back a little bit because it’s not my job to question the pricing,” said Dodd, who took hundreds of photos to document what she was seeing.
She said during the recent furor over high grocery prices in Canada, grocers in the North haven’t faced the same scrutiny as southern companies like Loblaw and Metro. Given its dominant position in the North, she believes North West “takes advantage of that, that nobody’s really looking.”
“I call it the Wild, Wild West because anything goes pretty much,” Dodd said, referring to how she thinks the company sets its pricing.
She points out that non-perishables come to the North via ship once or twice a year. Because they come at a set time, she said transportation costs for sealift deliveries shouldn’t fluctuate and affect price.
“It makes you ask a lot of questions because you know that they aren’t paying more for receiving their freight from down south. So it makes you wonder why that cost has gone up so significantly,” Dodd said.
In a statement to The Fifth Estate, the North West Company disputed that, and said that during the months of November and December in 2022 cases of various olive oil products were shipped via air freight.
“When items like … olive oil have their sealift stock depleted, it can be the case that an item will increase in price when it is flown in via air given the higher cost of transportation.”
Questions about subsidies
The North West Company, which owns Northmart, traces its roots back to the 18th century. In some communities, its stores occupy the same place as trading posts dating back hundreds of years.
In addition to being the main grocer for most northern residents, including dozens of communities where it’s the only option, the company is also the primary recipient of a federal subsidy aimed at lowering food prices.
Introduced in 2011, the Nutrition North Canada retail subsidy is the latest iteration of federal government efforts to address affordability and food insecurity in the North. The program has long faced questions about its effectiveness and whether it’s actually caused food insecurity to go up.
The subsidy is paid directly to northern retailers to offset the higher cost of transportation and is supposed to be passed along to the consumer.
But a University of Toronto researcher, widely regarded as a leading expert on the controversial program, said it’s failing to improve access to nutritious food and isn’t doing enough to track whether companies like North West are fully passing along the subsidy to consumers.
Community health scholar Tracey Galloway questions whether a federal subsidy meant to lower prices in remote northern communities is being passed along properly by northern retailers.
Tracey Galloway, who has published a number of papers on northern Indigenous communities, found that for each dollar of subsidy given at specific points in 2016 and 2019, retailers passed on an average of 67 cents. Almost one-third of the subsidy can’t be accounted for, she said.
“In our writeup, we call it leakage, but it appears that the retailer may be keeping the extra money,” said Galloway, who published a paper on the program last fall.
Galloway’s study looked at 83 northern communities. Northern retailers are expected to pass along 100 per cent of the subsidy to help offset the high cost of food. In 2022-23, the retail subsidy for all northern retailers was $131 million.
Galloway’s research found that competition plays a role in how much of the subsidy is passed through to consumers.
If there were two or more stores in a community, the pass-through was 84 cents per dollar, but if there was no competition, the pass-through was 58 cents.
Galloway said in 30 remote, mainly Indigenous communities, the North West Company store is the only grocer in town.
Because of its dominance, she said, the North West Company receives more than half of the annual subsidy.
She points out that in 2022, the company’s Canadian operations earned $119 million.
“I can tell you that they also received about $67 million in federal subsidy to sell food in those communities. That subsidy appears to be contributing to their bottom line,” Galloway said.
In a statement to The Fifth Estate, the North West Company refuted Galloway’s findings, writing that the study “did not accurately take into account all factors which impact pricing” and that a recent government audit found the “funding provided … was spent … for its intended purposes.”
Defending Nutrition North
Wayne Walsh, who oversees Nutrition North Canada through Crown-Indigenous Relations and Northern Affairs Canada, said he’s aware of the study.
In an interview with Brittany Guyot of APTN Investigates, Walsh pointed to a 2019 study by the University of Guelph that looked at the prices of 300 items in Nunavut in 2017 and 2018. The study found more than 90 cents of every subsidy dollar goes to consumers.
Wayne Walsh from Crown-Indigenous Relations and Northern Affairs Canada defends the Nutrition North Canada retail subsidy.
Walsh said his staff are going to look at both reports.
Galloway said the other study used a different methodology that compared prices in the North to prices in Ottawa, while hers focused directly on northern communities.
Nutrition North Canada needs to do a better job of auditing how northern retailers pass along the subsidy, she said.
“There aren’t any punishments. There’s no threat that a retailer would be removed from the program because ultimately that would have a negative effect on consumers,” Galloway said, noting that many remote communities don’t have multiple grocery stores to choose from.
When questioned by APTN Investigates about the high profits by northern retailers, including the North West Company, Walsh said he’s not in a position to determine what’s appropriate at for-profit companies.
“I think it’s also up to the consumer to decide if the level of profit is acceptable or not and make choices where they can.”
Competing with the North West Company
Indigenous communities in the North are exploring new ways to improve their food security and lower food prices on their own. One proposed solution is to encourage support of traditional hunting and gathering.
Last year, Nutrition North Canada announced new funding for the Harvesters Support Program, which aims to encourage communities to be more self-sustainable by harvesting, growing, preparing and storing their own food.
“What we’re looking to do as a collective is start buying wholesale and once we’re able to buy wholesale, that’s an additional savings for our community members as well as the local store owners,” said David Neegan, executive director of the Kiikenomaga Kikenjigewen Employment and Training Services program in Matawa First Nation.
Last year, the program announced $4.5 million in new funding for five remote northern Ontario communities. Neegan hopes to lower prices and increase access to more nutritious food.
“There’s going to be competition and then the prices are going to drop. What that means for families is that they have more buying power to buy milk or the basic staples for life,” Neegan said.
Back in Norway House in northern Manitoba, Nora Jean Omand is hoping to stretch the groceries she’s bought this week as her grandparents used to.
“I watched my grandparents make a meal out of nothing…. You can have a few potatoes and … vegetables and … a chunk of meat and they can feed a whole family.”