The North West Company says grocery prices in Churchill, Man., will not go up, even though shipping costs are rising due to rail service cuts, but the northern town's mayor says he still has concerns.

The company, which runs the Northern store in Churchill, sent out an advisory on Tuesday about a recent reduction in rail service from Winnipeg from twice a week to once a week.

Company spokesperson Derek Reimer says that change means it will have to pay more to fly up those products, but it will not adjust its prices to reflect the higher costs.

"Had we passed on those costs, it would have resulted in retail prices on some perishable items, like fresh meats, produce, et cetera, increasing by up to 13 per cent," he said.

"The good news is that we're going to be holding those prices and absorbing those costs."

Churchill Mayor Mike Spence said the possibility of a 13 per cent price increase is "totally unacceptable."

"That's something we're going to have to … deal with. I mean, this is not a good thing," he said.

Spence added that the Manitoba government's Affordable Food in Remote Manitoba (AFFIRM) program subsidizes up to 35 per cent of costs to have food and other essentials transported to northern communities, but he doesn't believe the full subsidy is being passed on to shoppers.

"I don't think everyone's buying into it. I think the AFFIRM program needs to have a deep look at the costs that, for instance, the North West Company are passing on to the customer," he said.

"There are some products that are being reduced, but not all products."

Subsidy concerns

A spokesperson with Manitoba Health, Healthy Living and Seniors said the subsidy is based on food weight, not based on cost percentages.

"The range for the subsidy is between $1.20 to $1.60 per kilogram, depending on the community, and is consistent with the subsidy rate range that other northern Manitoba communities receive under the Nutrition North Canada (NNC) program," the spokesperson said in a statement. 

"At the time of program implementation, Churchill was experiencing some of the lowest prices amongst AFFIRM communities and therefore it was determined that they receive the lowest AFFIRM subsidy rate of $1.20/kg."

The spokesperson added that the province takes concerns about whether the full subsidy is being passed on to consumers "very seriously."

"[We] will be working closely with the Town of Churchill and local retailers to ensure that those in northern Manitoba have access to affordable healthy foods. Based on our agreement with retailers, there is an understanding and expectation that Manitoba will conduct a comprehensive evaluation, and possibly an audit, after a full year of operation."

Reimer said the North West Company is passing all of the provincial subsidy on to consumers. As well, he said he welcomes an audit of the Northern store's pricing.

The company added that it did recently work with the province on the AFFIRM program, and it will keep working with the government and other stakeholders to address the situation in Churchill.

Corrections

  • A previous version of this story incorrectly said the North West Company is raising grocery prices by about 13 per cent in Churchill, Man., due to rail service reductions. In fact, the company says it will not raise prices for consumers, even though it will have to pay about 13 per cent more for shipping products to Churchill.
    Feb 09, 2016 3:49 PM CT