Thank you.

Good afternoon, committee members, and thank you for the invitation. The North West Company is committed to working with parliamentarians to address persistently high food costs in the north. We are pleased to be here.

The North West Company is Canada's primary retailer serving northern and remote communities. We also operate stores in southern Canada, including some under the Giant Tiger brand, and serve communities in Alaska, the south Pacific and the Caribbean. We are more than just a store. We are a primary source of employment and a major economic partner in the places where we operate.

We're here to discuss nutrition north. However, we must put it into context. The nutrition north program is an important lifeline for reducing grocery costs by providing a consumer subsidy through retailers like North West. However, it does not fix the underlying infrastructure and supply chain issues that cause high costs in the first place, and neither does it address inflation.

Communities receiving year-round nutrition north retail subsidies do not have year-round road, rail or marine access. Most of these communities lack port facilities and appropriate mooring infrastructure, warehouses and other basic logistics infrastructure. Most do not have paved runways, hangars or sufficient airport weather services. Because of the historic lack of investment in northern infrastructure, these communities are isolated from the global supply chain, making them harder to reach and more difficult to serve.

These communities must rely on service by air. Where possible, we take advantage of the limited number of sealift deliveries arriving in each community in the summer and the short duration of winter roads to resupply staple goods at the lowest possible cost. We work with the few transportation companies serving these communities.

At the best of times, the state of infrastructure in the Arctic and remote indigenous communities makes supplying our stores challenging and costly. Weather and environmental challenges sometimes make it almost impossible. For example, after wildfires devastated the Northwest Territories in 2023, subsequent droughts on the Mackenzie River disrupted our ability to barge goods into the western Arctic.

Close to 10% of our scheduled flights are cancelled due to weather, and 60% of pre-takeoff cancellations occur because community airports do not have sufficient de-icing capability. Melting permafrost is putting infrastructure at risk, shortening ice road season, damaging runways and creating other challenges that drive up the costs of operating in the north.

There are other high operational costs in the north that nutrition north is not designed to subsidize. These include the high cost of energy, which in Iqaluit is almost six times more than in Winnipeg, and other utility costs, such as water. There is a lack of both heated and cold storage warehousing available to rent, which limits how much we can store at any one time. The cost of building in the north is substantially higher than in the south. Site maintenance costs in the north are three to five times higher than in the south.

The nutrition north program improves the accessibility of healthy foods and significantly reduces the cost of nutritious food in our stores. However, it does not fix the underlying inflationary issues that drive retail prices, such as fuel or cost of goods. The nutrition north subsidy lacks the investment needed to keep pace with inflation. As a result, its positive impact has eroded.

The subsidy, however, remains impactful. It still has the ability to efficiently lower prices for consumers. For example, because of the nutrition north subsidy, a four-litre jug of milk is $4.09 in Oxford House, Manitoba. Without the subsidy, it would be $18.28. In Arctic Bay, Nunavut, it is $6.49 instead of $61.32. For reference, in Winnipeg, where I live, it costs $5.59.

We understand that the members have questions about how the subsidy is passed along to northerners. In our NNC-eligible stores, the subsidy is applied to eligible items at the appropriate subsidy level. Our shelf tags reflect the retail price of goods inclusive of the subsidy. The value of the subsidy for items purchased is printed on each customer receipt.

I want to further emphasize that the full value of the subsidy is passed on to our customers. We are independently audited by Canada and consistently found in compliance with the program's directive to pass along the entire subsidy to our customers. Our pricing team provides the Government of Canada with over 83,000 detailed, item-level records each month, and we are subject to random audits each month from the claims processor. We take our commitments to our customers, transparency and accountability very seriously.

We want to leave the members with one main message: The north requires significant attention and investment. We are your partner in northern development, and we look forward to any questions you might have.

Thank you.