Some Fort Simpson residents say they have been confused by prices as the Nutrition North subsidy reaches the village for the first time.
After being accepted into the federal program in April, the Northwest Territories community became eligible for a series of subsidies that aim to lower the cost of basic products for northerners.
The program covers food items like fruit, vegetables and infant formula, as well as household goods such as toothpaste, soap and diapers. Fort Simpson will now receive the subsidy during periods in spring and fall when the ice road has closed but the ferry cannot run.
The Liard River ice crossing that connects Fort Simpson to the NWT’s highway system closed on April 27, triggering the program for the first time.
However, some customers expecting to see savings at the village’s Northern grocery store this week expressed disappointment.
“They list the milk and eggs as having a subsidy, but they are both exactly the same price as before the road went out,” Sarah Camsell wrote in an email to Cabin Radio.
“Some items that are flagged as ‘Nutrition North’ are actually more expensive than their counterparts.”
Sean Whelly, the mayor of Fort Simpson, said that after campaigning hard for entry into the program, Nutrition North’s first couple of days had been a little disappointing.
“It may not be instantaneous, the way people think it is,” he said. “That’s something that I wish could be made more transparent for people, so they could see the savings – because it’s hard to tell, right?
“I think if you asked the average person on the street, they’d say, ‘Yeah, we can’t tell if it’s working, if we’re getting anything cheaper.'”
Matthew Gutsch, a spokesperson for Crown-Indigenous Relations and Northern Affairs – the program’s lead department – said a simple formula is applied to derive each item’s subsidy:
subsidy level ($/kg) x weight of eligible item (kg) = subsidy payment
The subsidy level is one of three – either low, medium or high – depending on the nutritional value of each product and the location of the community.
Fort Simpson’s high subsidy rate is $2.90 per kg, medium is $2.80, and low is $1.00.
So if a high-value item like 2 kg of frozen peas usually costs $10, with the subsidy, customers save $5.80 and the price should come down to $4.20.
“Businesses must pass on the full subsidy to consumers,” said Gutsch.
Two reasons for price confusion
So why are residents finding prices that look high?
Brent Smith, a spokesperson for the North West Company (which owns Fort Simpson’s Northern store), said there were two reasons for confusing prices.
“The first NNC-eligible product hits the shelves this week,” Smith said, using a shorthand for Nutrition North Canada’s name.
“It’s mixing with product brought in before breakup at a lower freight cost and not eligible for the NNC subsidy. This can create temporary price differences between similar items. As more eligible product is brought in by shuttle, these differences will disappear,” he said.
“Second, some products, including cream cheese, margarine, bacon and juice, are only eligible for the lower, level-two subsidy. The increased freight cost for these items during shuttle season may be more than the subsidy, causing a price increase compared to stock shipped on the road, even with the subsidy added.”
Smith said Nutrition North had already significantly lowered the price of many items in the store, citing milk and potatoes as examples.
“A four-litre jug of Beatrice two-percent milk has gone from $11.19 to $4.99,” he said, “and a 10-pound bag of red potatoes has gone from $18.19 to $11.39.”
Smith said anyone curious about how Nutrition North is affecting pricing should now be able to see the “before” and “after” prices on labels and receipts.
He added that the company had, in previous years, protected Fort Simpson from price spikes associated with delivering food during breakup or freeze-up by “blending costs across the year.”
With that spike offset by Nutrition North this year, he said, extra costs don’t need to spread across the year and customers “will get a much lower basket cost” year-round.
Fort Simpson customers should see the full effects of the new program very shortly, Smith said. The average opening date for the Liard River summer ferry is May 13, which will mark the rough point at which the subsidy ends.