May 1, 2009

What’s wrong with the food mail program?

NUNATSIAQ NEWS

Graeme Dargo, Chuck Strahl's special representative on food mail, said in his recent report that the program, run by Indian and Northern Affairs Canada and Canada Post, is an essential tool for lowering the cost of nutritious food in the North.

But he also said the program has lost its focus and needs a complete overhaul.

Here are a few of the shortcomings that Dargo spotted:

many non-food items, such as men's socks, babies' designer sleepwear and ladies' jeans are eligible for the food mail program's air cargo subsidies;
many food items of limited nutritional value, such as frozen pizza, ice cream and frozen dinners, are eligible for food mail subsidies;
country foods with high nutritional content are not eligible for food mail subsidies;
there is no requirement for retailers to pass the subsidy along to their customers, although Dargo believes most probably are;
the program unfairly discriminates against residents of Nunavut and other territories by offering a $2.15 per kilo subsidized rate for non-perishable goods in Nunavut, but a non-perishable rate of only $1 per kilo in provincial regions like Nunavik;
because of the low provincial rate, many retailers, especially in Nunavik, use food mail to airlift non-perishable supplies that once were transported by sealift;
personal food orders, available only to people with bank accounts, credit cards, vehicles and the ability to communicate in English or French, subsidizes affluent people who likely don't need the help;
the freight distribution system is cumbersome, slow and reduces the freshness and quality of perishable products;
Canada Post pays no compensation to retailers for food shipments that are spoiled or damaged while in Canada Post's care;
Canada Post likely uses the food mail program to cross-subsidize the cost of delivering regular mail;
financial demands on the program are escalating rapidly: in 2004-05 the program cost about $36 million, but figures for 2008-09 are expected to show costs of about $60 million;
lack of transparency: because they can't see the benefit being applied, most consumers believe retailers are not passing the subsidy onto customers;
the federal government provides little public information or marketing, so few people understand or even know about the program.

Fixing the food mail scheme

Graeme Dargo, Chuck Strahl's special representative on the federal government's review of the food mail program, made nine recommendations in his recently-released report.

Here's a summarized version of Dargo's advice to the minister:

dump the existing food mail program and work with retailers to replace it with a new transparent and accountable food subsidy plan;
develop a new budget for the program, based on the estimated cost of paying for a new arrangement with retailers, with increases tied to the cost of living;
develop new administrative systems for the program;
review the list of eligible communities, because in 31 northern communities, regular cargo rates are lower than food mail rates;
review the list of products eligible for air freight subsidies, removing many items that aren't nutritious or aren't even food, but possibly adding others, such as country food;
create a pilot project to test the idea of using a food subsidy plan to defray the cost of transporting country food;
bring in "moderate" increases to air subsidy rates, since the current rates haven't changed since 1993;
study the idea of transferring the program to the federal Department of Health and Welfare;
clarify the purpose of the program and establish ways of measuring its performance.