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Cheez Whiz was selling for $29.39 at the Northern Store in Arctic Bay, Nunavut, this month, after the federal government began phasing out subsidies for hundreds of grocery products. A new program, called Nutrition North, will focus on making healthy and perishable food more affordable in the Arctic. ((Submitted by Ron Elliott))

Federal Health Minister Leona Aglukkaq says decisions by retailers, not a federal food subsidy program, are responsible for exorbitant grocery store prices in Canada's High Arctic.

Aglukkaq was responding to photographs released last week of $29 jars of Cheez Whiz, $27 tubs of margarine and $77 bags of breaded chicken that were recently photographed on the shelves of the Northern Store in Arctic Bay, a community of 700 in Nunavut's High Arctic region.

The photographs surfaced amid concerns about the federal Nutrition North program, which is replacing the government's 40-year-old Food Mail transportation subsidy program.

Although the Nutrition North program officially begins in April, the transition between the two programs actually began on Oct. 3, when the federal government began phasing out subsidies on foods considered not to be healthy and perishable, including Cheez Whiz and household products such as toilet paper.

Consumers in remote communities say they are noticing higher prices on grocery items, especially for processed cheese spread, hydrogenated margarine and other products.

"I can tell you, it has nothing to do with the Nutrition North Canada program," Aglukkaq said Tuesday in Iqaluit, where she was speaking at a meeting of Baffin Island-area mayors.

Program starts April 1

Smaller budget

The Nutrition North program has a budget of $54 million in its first year, slightly less from the Food Mail budget, which was between about $55 million and $58 million every year.

Federal officials said in a technical briefing Wednesday that the smaller budget will go toward subsidizing a smaller list of nutritious foods.

And for the first time ever, traditional northern game meats — known as country foods — such as caribou, seal and whale meat will qualify for a subsidy.

Federal Health Minister Leona Aglukkaq told reporters that for now, eligible country foods will come from four licensed processing plants in Nunavut. Officials will see how that works and determine if it can be expanded.

Indian and Northern Affairs Minister John Duncan is expected to comment on the new program on Thursday.

Aglukkaq, who is the Conservative MP for Nunavut, said the grocery prices in Arctic Bay are not the fault of a program that has not even started yet. Nutrition North will officially replace the Food Mail program on April 1.

In the meantime, Aglukkaq said, federal officials have been in contact with northern retailers to find out what's going on in communities like Arctic Bay.

Rather than subsidizing the transportation costs of shipping grocery items to northern communities that are cut off from regular road or water access, the Nutrition North subsidy will instead go to retailers, who in turn will negotiate their own freight rates.

Retailers are then expected to pass on savings from the subsidy to consumers.

Aglukkaq said northerners, including herself, want transparency from retailers when the new program begins.

"That would show people that are buying the groceries that … there is a subsidy being passed on," she said.

The Nutrition North program will mainly subsidize healthy and perishable foods such as produce, meat, milk and eggs, according to officials.

Ordering glitches in Arctic Bay

The North West Company, which runs Northern Stores in Arctic Bay and other northern communities, said Cheez Whiz is one of 2,700 grocery items the company carries that are no longer eligible for a subsidy.

Advisory committee

Federal Health Minister Leona Aglukkaq said northern consumers who have concerns about changes to the food subsidy should contact a federal advisory committee that has been created for the Nutrition North program.

The committee is chaired by Elizabeth Copland of Nunavut and includes members Wilfred Wilcox, Nellie Cournoyea, Katherine Nukon, Steve McDougall, Marie-Josée Gauthier and Michele Wood.

The committee's representatives are from the three territories, northern Quebec and Labrador.

"It's really an advisory committee that looks at issues raised by people in the community to improve the program further," Aglukkaq said.

But Doug Anderson, the North West Company's general manager for major market stores, admits that in the case of the Arctic Bay Northern Store there were some glitches with the ordering system and some products were flown in at a high cost.

"I believe that that has been rectified now, and they are working right now diligently on improving the sealift itself to ensure that products don't have to get flown in," Anderson told CBC News.

Anderson said the North West Company supports Nutrition North, which he said will result in a "lowering of prices on the healthy living product."

The company will also publish subsidy rates in its stores, in a bid to promote accountability and transparency with the new program, he added.

"We are going to be giving live examples of the product to show … the decreases, and we will stand the test of the transparency," Anderson said.

"So we are very, very confident that the rates and the subsidy changes will be reflected in the communities."

With files from the CBC's Patricia Bell