Iqaluit businessman Kenn Harper says politics were behind the federal government's new northern food subsidy program, which he says puts smaller Nunavut grocers like his at a disadvantage compared to larger companies.

Harper appeared before Nunavut MLAs on Thursday afternoon, as part of a series of legislative assembly hearings into how northern food prices are being affected by the Nutrition North Program.

Nutrition North came into effect in April, replacing the federal government's old Food Mail Program that subsidized the costs of transporting groceries to isolated northern communities.

The new subsidy instead goes to retailers, which in turn negotiate freight rates. Retailers must then pass on any savings to consumers, especially on nutritious, perishable grocery items.

Nunavut MLAs launched their hearings into the Nutrition North Program amid public concerns that the subsidy may not really be saving them money on groceries.

No more equal freight rates: Harper

Harper, who owns the Arctic Ventures store in Iqaluit, said small retailers like his have enjoyed equal freight rates under the 25-year-old Food Mail Program.

Kenn Harper, president of Arctic Ventures in Iqaluit, speaks to MLAs in the Nunavut legislature on Thursday. ((CBC))

But Harper told MLAs that under Nutrition North, retailers must negotiate individually with the airlines, which he claimed is the real reason why the program replaced Food Mail in the first place.

"It was changed, in my opinion, because of political interference in support of the airline that did not have the contract to carry the Food Mail [Program]," he said in the legislature.

Harper said Canadian North, one of northern Canada's major airlines, pressured the federal government to end the monopoly that another airline, First Air, had for the Food Mail contract.

He also alleged that the North West Company and Arctic Co-operatives Ltd. — the North's largest grocery retailers — jointly lobbied Ottawa to make changes in their favour, even submitting recommendations on letterhead with both companies' logos on it.

"This sounds dangerously close to collusion to me," Harper told MLAs.

'Unimaginable' paperwork

Harper said one positive result of the Nutrition North Program is that his store has passed on some savings to customers, now that he can get products shipped in from a variety of places.

But Harper added that the amount of paperwork under the new program has been "unimaginable" and Arctic Ventures may have to raise its grocery prices to pay for the increase in administrative costs.

Harper's testimony was received favourably by some MLAs who said they preferred his answers over what they had heard from North West Company and Arctic Co-operatives executives on Wednesday.

"The honesty in the answers that we received today are definitely a lot better than yesterday," Quttiktuq MLA Ron Elliott said in the legislature.

Finance Minister Keith Peterson told Harper, "I find your presentation and your answers to my colleagues' questions to be more forthcoming."

Large retailers explain grocery prices

On Wednesday, the North West Company and Arctic Co-operatives officials told MLAs how Nutrition North has affected their grocery prices in Nunavut, where residents face a higher cost of living compared to the rest of Canada.

"The average price reduction has been approximately six per cent on the eligible items across Nunavut," said Michael McMullen, vice-president of the North West Company's northern Canadian retail division.

McMullen said Nunavummiut will save about $2 million a year with the Nutrition North subsidy. Customers will also see fewer spoiled and expired food on grocery shelves, since retailers have more control over their supply lines, he said.

"It's in everyone's best interest to get the product as quickly as possible, in the highest-quality form with the longest dating, into our communities," McMullen said.

But Andy Morrison, Arctic Co-operatives' chief executive officer, gave a less glowing assessment of the new subsidy.

"In our opinion, the new program attempted to maintain the status quo for the price of most perishable and nutritious food products," Morrison told MLAs.

Food costs rising globally

Morrison said some grocery prices have gone up, despite the entire subsidy being passed on to consumers, while McMullen warned that the cost of food is on the rise globally.

"The North is not immune from these price increases," McMullen said.

The retail executives also noted that a recent 19 per cent increase in Nunavut's electricity rates will be reflected in store prices.

Health Minister Tagak Curley said he wants accountability from federal government officials, which have spent tens of millions of dollars on the Nutrition North Program.

"It is shameful and regrettable that they have not agreed to appear before the Committee of the Whole," Curley said on Wednesday.