New campaign aims to shed light on the high cost of food in Canada’s north

Click to play video: '#EndthePriceHike brings awareness of high cost of food in Nunavut'
#EndthePriceHike brings awareness of high cost of food in Nunavut
WATCH: Would you pay over $26 for a jug of orange juice? How about $40 for a pack of toilet paper? Online producer Yuliya Talmazan has the reality of grocery store prices in many of Canada's northern communities – Jan 15, 2016

A new social media campaign aims to spread awareness among Canadians about the high cost of food in Canada’s north – especially in Nunavut.

Developed by WAX, a Calgary-based company, the campaign sheds light on the high cost of food by using parody ads about a fictional grocery store called “Way North Foods”. The ads showcase prices of foods in Nunavut in the framework of a “deals of the week” television spot.

“It was shocking to see these prices,” said Chris Lihou, the copywriter for the campaign. “Seeing [almost] $100 for a flat of water, your jaw just kind of drops.”
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“One of the ways that we thought would be really attention-grabbing to us in the south, which is really our true intended audience is people in the south, getting them talking about it, getting them interested in the issue and raising their voices,” added Lihou.

The campaign encourages people to use the hashtag #endthepricehike to raise awareness on social media platforms like Twitter.

“We wanted to take that familiar genre and spin it on its head and make it about high prices, compared to low,” said Lihou. “We tried to use humour this time to get into a serious issue.”

Four litre jugs of milk for sale in the North Mart in Iqaluit, the capital of Nunavut, Canada on February 15, 2014. Expensive groceries contribute to a high cost of living in the north. THE CANADIAN PRESS IMAGES/Don Denton. THE CANADIAN PRESS IMAGES/Don Denton
A price tag lists the price of a 355 ml can of Coke at a grocery store in Iqaluit, Nunavut on Monday, December 8, 2014. THE CANADIAN PRESS/Sean Kilpatrick. THE CANADIAN PRESS/Sean Kilpatrick
A price tag lists the price and subsidy of a 4-litre jug of milk at a grocery store in Iqaluit, Nunavut on December 8, 2014. The federal government's $60-million food subsidy, Nutrition North, is only the latest of the proposed solutions that has stumbled under mismanagement and the enormity of the hunger problem. Whether a solution can be found is anyone's guess. After all, food shortages are nothing new to the Inuit. THE CANADIAN PRESS/Sean Kilpatrick.
A price tag lists the price of a jug of orange juice at a grocery store in Iqaluit, Nunavut on December 8, 2014. A university researcher says the federal government's subsidy program for high northern food costs still hasn't fixed problems pointed out by the auditor general. THE CANADIAN PRESS/Sean Kilpatrick.
Iqaluit resident Imoe Papatsie holds a giant mock traditional Inuit drum during a demonstration in Iqaluit, Nunavut on Saturday June 9, 2012. Fed up and frustrated by sky-high food prices and concerned over widespread hunger in their communities, thousands of Inuit have spent weeks posting pictures and price tags from their local grocery stores to a Facebook site called Feed My Family. THE CANADIAN PRESS/Aaron Watson.

While the grocery prices are often shocking for people to see, some people who work with northern communities say it’s important for people to understand what goes into the prices of groceries in Nunavut.

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Nutrition North Canada (NNC) is a government program that works within 103 northern communities with approximately 93,700 residents, based on the latest census data available.

Most communities contain less than 1,000 residents.

The program is designed to reduce the cost to consumers of perishable, nutritious food in the north. On May 21, 2010, it replaced the Food Mail Program to help Canadians living in those communities.

In November, 2015, the NNC was seeking members for the advisory board to help “guide the management, direction, and activities of the program.”

Northern grocery costs are driven by transportation, the cost of maintaining stores, staff costs, spoilage and theft, high inventory costs and retailer profit margins.

“It’s not uncommon for utility rates to be anywhere from five to 30 times higher what they are in the south,” said Duane Wilson, vice president, merchandising and logistics for Arctic Co-Op, a grocery chain in northern Canada.

“Salaries and wages [are] higher,” added Wilson. “The investment in the size of a facility that you need, the ratio of retail to warehouse is dramatically different because just-in-time delivery is not the same in the north. You’ve got some locations that need to invest in a full year shelf-stable inventory that can be shipped in by sea, so as a result you need to have more warehousing space. You need to heat it, you need to insure it, you need to finance that inventory because the alternative of bringing it in by sea at, pick a number, say 50, 60, 70 cents a pound; the alternative to flying in might be $4 a pound.”
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A report about the NNC working in the north looked at the “nature of grocery retailing in isolated northern communities and specifically, an examination of the retail situation in the 103 communities served by the Nutrition North Canada Program.”

Transportation (source: NNC report)

The cost of transportation is a significant factor in the pricing of grocery items in Nunavut, according to the NNC report.

Grocery stores in Canada’s north are responsible for the transportation and cost of their products to their stores.  They also have to pay for the supporting infrastructure like warehouses.

The mode of transportation, the amount of distance the goods have to travel and the number of times they are handled along the way are all factors that contribute to the cost of goods in the store, according to the report.

NNC serves communities that do not have year-round surface transportation, such as permanent roads. So they must be serviced by air and sea. Of the 103 communities, 44 are served by road, mainly in the winter.


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Distance to market (source: NNC report)

Whether goods are delivered by sea, road or air, the distance the goods have to travel is also a factor in pricing, according to the NNC report.

It found the distances are considerable, leading to higher prices for the goods in the stores.

Maintaining a Store (source: NNC report)

A major factor contributing to a higher cost of groceries in the north is maintaining a physical store in the region. Materials have to be trucked in or sent by barge, depending on the time of year, and many of the workers have to be flown in and housed during building, according to the report.

Electricity costs and maintenance can also add to the considerable cost of the products.

Wages for the workers (source: NNC report)

The cost of paying people to build those stores also drives up the cost of operating in the north. The report found many store managers indicated in the report that they have to pay their workers more than in the south due to the high cost of living and housing.

Those who hold government positions are often given a northern allowance to maintain an income closer to those who live in the south, but that allowance is not given to everyone.

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Spoilage (source: NNC report)

Due to the distance the products have to travel and the harsh weather conditions there is greater risk for spoilage and shrinkage, according to the report. With every item lost, there is also the additional costs with it being transported and stored at high costs.

Market size

Wilson said the cost of importing the food and maintaining the buildings is one thing, but the size of the market is often overlooked.

“If you look at a typical grocer in Vancouver, there’s probably not many stores that are doing under $20 million,” he said. “So you take that hydro bill, which is already at a rate that might be 10 times less than that one in the [north], and you’re spreading the cost of that out over $20 million worth of sales, the cost of cleaning the store, it’s all spread razor thin, just because of the sheer volume these locations are doing.”
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“So you now take that high-cost environment and you have a store in a community of 230 people, that struggles to do $1.5 million, even at the higher prices, and you take that much much larger hydro bill and spread it out over $1.5 million in sales, for example.”

WATCH: Taye Newman from Feeding Nunavut speaks to Global News about how to help:

Click to play video: 'How you can help the residents of Nunavut'
How you can help the residents of Nunavut

Taye Newman, who lives in Ontario, runs the not-for-profit website Feeding Nunavut, which has a directory of food banks, soup kitchens and school meal programs that are working in Canada’s northern regions.  Seven in 10 preschool Inuit live in “food insecure households,” she said.

“I believe it’s at crisis levels in Nunavut but it is a problem across the country, every territory, every province,” she said. “Until the government creates policy, it will always be an issue.”

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Newman said that in the short-term her group would like to see people help with emergency food relief by donating cash to food banks, soup kitchens or a meal program so they can go purchase the supplies they need.

“I know that it’s common for people to have food drives and ship food, but because of the distance and the expense of shipping to the north, and because basically the only thing you can ship is processed food, it makes more sense and program workers are able to make dollars work more when you donate cash,” said Newman. “So for example, grocery stores usually give food banks or food programs a meal discount and you completely avoid the shipping costs, which are massive.”

“They can purchase country food or fresh produce, depending on what the program needs.”

In the long-term, Newman would like to see people petitioning the government for change.

Lihou said they also hope their campaign helps to lead to a change in policy.

“We need to take care of our northern neighbours,” he said. “It’s not a great situation up there for the Inuit people in particular.”

“A lot of people are hungry and tired and they’re wanting relief in some way.”

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