New rates for northern food retail subsidy program

New rates have been posted by the federal government for its Nutrition North Canada program, a new food retail subsidy program aimed at giving isolated communities access to healthy and affordable perishable foods.

The program replaces the federal government's Food Mail Program, which subsidized the cost of flying groceries into those northern communities without year-round road, rail or marine service.

Originally announced in May, Nutrition North Canada is being implemented in phases to eligible communities, including the territories, Saskatchewan, Manitoba, Ontario, Quebec and Labrador. The program is slated for full implementation on April 1, 2011.

Under the old Food Mail Program, retailers and individual consumers in the territories paid a fixed rate--80 cents per kilogram--for groceries shipped by air. But with Nutrition North Canada, the subsidy will now go largely to retailers instead.

When the program was announced, Indian and Northern Affairs Canada (INAC) stated that the government would "directly subsidize retailers and wholesalers who already ship large volumes of food and goods to the North." The introductory subsidy rates were developed on a per community basis.

This is intended to enable retailers to negotiate the best prices for their consumers. The retailers will negotiate their own shipping agreements and shipping rates directly with the airlines that fly into the isolated communities the program serves. "Food suppliers will receive funding based on the total per kilogram weight of eligible foods shipped to each eligible community," said INAC.

INAC defines northern retailers eligible to take part in the new food retail subsidy program as retailers who operate stores located in food subsidy eligible communities. It defines southern retailers as retailers and wholesalers who operate a business located in Canada but not in a food subsidy eligible community (find full definitions and further subsidy eligibility information here).

Individuals who choose to order their groceries from southern retailers will pay the airline's shipping fee and subsequently apply for the Nutrition North subsidy applicable to their community. Depending on the shipping rates northern retailers negotiate with air carriers, individuals who buy from northern retailers may save money.