North West may face Nutrition North suit as program review begins

A major northern grocery retailer could face a class action lawsuit related to its use of Nutrition North funding. Meanwhile, the federal subsidy program is being reviewed.

Earlier this month, three Inuit women from Nunavut filed documents with the Manitoba Court of King’s Bench asking the court to certify a class action lawsuit against The North West Company, as first reported by the Winnipeg Free Press.

North West operates NorthMart, Northern Stores and Northern Quickstop stores.

Through Nutrition North, the federal government pays millions of dollars in subsidies to retailers and suppliers every year, including North West, for certain foods and other items. Funding agreements require retailers to pass on the entire subsidy to customers in isolated communities through price reductions.

In court documents, Nellie Taptaqut Kusugak, Malaya Qaunirq Chapman and Isabelle Mark Chapadeau allege that North West has illegally retained millions of dollars in Nutrition North funding that should have resulted in price savings for northerners.

They filed the proposed class action lawsuit on behalf of people who have purchased goods eligible for the subsidy from North West’s stores, who they said are predominantly Indigenous residents of isolated northern communities.

“These funds are desperately needed to offset food prices in northern Canada,” their claim states.

“Canada’s northern communities face a food insecurity crisis. Healthy food staples are significantly more expensive in Canada’s northern regions with the result that members of northern communities are often unable to afford adequate amounts of nutritious foods.”

The suit claims that due to North West’s misconduct northerners have had to spend more of their limited income on nutritious food, and have been unable to purchase as much of it as they would had the full subsidy been passed on.

That has caused a reduction in health and well-being outcomes, the suit alleges, including increased rates of malnutrition, obesity, cardiovascular disease, diabetes and depression.

The suit further alleges that North West has been unjustly enriched by retaining the subsidy and has engaged in unfair business practices.

The lawsuit asks the court to order North West to account for all of the subsidy it has allegedly retained and repay that amount back to customers. The suit estimates that equates to between $21.6 million and $30.8 million annually.

The suit is also seeking damages and a permanent injunction restraining the company from retaining any portion of the subsidy as profit.

North West has yet to formally respond to the suit in court.

In a statement to Cabin Radio, Brigitte Burgoyne, a spokesperson for North West, said the company was reviewing the claim and could not comment on it “out of respect for the legal process.”

The company has previously denied claims that it has kept any of the Nutrition North subsidy it receives as profit.

Nutrition North under scrutiny

Nutrition North Canada was launched by the federal government in 2011, replacing the Food Mail program that gave Canada Post federal subsidies to ship food to isolated northern communities.

There are currently 125 communities eligible for Nutrition North funding. Subsidy rates depend on the community’s location, products being sold, and how goods are transported.

While the program aims to make nutritious food and essential items more affordable, it has faced increasing criticism and scrutiny in recent years.

The lawsuit references a 2023 study that suggests the full subsidy isn’t reaching northerners as intended.

The study’s authors found that for every dollar paid to retailers to reduce shipping costs, average retail prices fell by 67 cents.

The study states the amount of the subsidy passed on to consumers was 18 to 69 cents lower in communities with just one store – a store that, in most cases, was owned by North West.  

Dan McConnell, chief executive officer of the North West Company, insisted to a committee of MPs in May 2024 that the company passes 100 percent of the Nutrition North subsidy on to its customers.

Head of external review announced

An external review of the subsidy program, which was announced late last year, is now set to begin.

Earlier this week, Minister of Crown-Indigenous Relations and Northern Affairs Gary Anandasangaree announced the appointment of Aluki Kotierk to lead that review.

As the minister’s special representative, Kotierk is mandated to meet with national and regional Indigenous organizations, retailers, transportation providers and others to evaluate the effectiveness of Nutrition North and make recommendations on how to improve the program. A final report is expected in 2026.

“Northerners have the knowledge and experience to determine what works best for their communities,” Kotierk said in a statement.

“This review is an opportunity to ensure their voices drive real, lasting improvements to Nutrition North Canada. I look forward to working directly with Indigenous partners, local leaders, and northerners to make actionable recommendations to strengthen food security across the North.”

Kotierk is an Inuk leader who was born in Iqaluit and grew up in Igloolik. She was formerly president of Nunavut Tunngavik Incorporated for two terms from 2016 to 2024.

In a news release on Thursday, North West said it “welcomes” the external review of Nutrition North and Kotierk’s appointment.

“North West has always supported external audits and independent reviews of the program to ensure it is effectively serving northern communities,” the release states.

“We look forward to working with Ms Kotierk in her capacity as the minister’s special representative and contributing to this important review process.”

North West added that it believes Nutrition North is not sufficient on its own to address issues that lead to high prices in the North, such as gaps in northern infrastructure.