Good afternoon. I'm Carol Hunter, the executive director of the Canadian Co-operative Association. I'm pleased to be joined by Lynne Markell, who is our government affairs and public policy adviser and who specializes in agricultural policy.
The Canadian Co-operative Association is a national association for cooperatives. We represent more than seven million cooperative and credit union members from over 2,000 organizations. Our members operate in many sectors of the economy, and our members include such cooperatives as Federated Cooperatives Limited; United Farmers of Alberta; Co-op Atlantic; GROWMARK; and three dairy cooperatives: Gay Lea Foods, Scotsburn, and Northumberland Dairy co-op. We work closely with our francophone sister umbrella organization, le Conseil Canadien de la Coopération.
The five-year plan for how Canada's governments and others will work together to ensure a healthy and sustainable agriculture industry is one of the most important pieces of public policy being developed today. The new APF and the supportive programming will impact farmers, rural communities, rural businesses, industries that use agricultural products, and consumers of food. It will also affect Canadian cooperatives and their members. These include all types of agricultural co-ops, credit unions serving rural communities, co-op retail stores distributing food and agricultural supplies, rural energy co-ops, and emerging biofuel co-ops.
During the consultations on the APF, we suggested three pillars for the new APF: public goods and services, strategic growth, and primary producer support. The reason we suggested a primary producer support pillar was to focus serious attention on solutions to the profitability issue for ordinary farmers. Governments need to address the imbalance between farmers and large agri-businesses, as well as between primary producers and other links in the production chain. If both federal and provincial governments concentrate on the producer portion of the industry for the next five years, there is a better chance that the whole agricultural industry can be strengthened.
Canada cannot afford to lose small and medium-sized producers, which sustain rural communities. If we only have larger corporate farms whose profits leave the community, we are in trouble. If we keep losing more agricultural land to urbanization and housing, we are also in trouble. When the world's oil supply peaks and the cost of transporting food from around the globe becomes expensive, we will be in trouble if there are not enough Canadian farmers to grow our domestic food supply.
Governments need to help existing farmers, encourage new farmers to replace retiring ones, and make the primary production side of the agricultural industry stable and viable. In our brief, we recommended seven measures that should be part of the next APF. The first one is development of support and financial investments to enable farmers to move up the value chain and collectively own value-added and processing businesses. The second is adequate resources to assist farmers in developing cooperatives. Thirdly, strengthen mechanisms that give producers bargaining power in the marketplace. Fourthly, support the move into non-food agriculture, such as biofuels, renewable energy, health products, and fibre-based products. Fifthly, share the information from scientific research with groups that work with farmers, so that the information can be used for enterprise development. Sixthly, provide support to help local communities, both rural and urban, organize local food systems to distribute locally grown and processed food. Lastly, we need a federal policy on domestic food sustainability that ensures we meet more of our domestic food needs from Canadian sources.
In terms of the new APF document Growing Forward, agreed to by the ministers of agriculture in June, we were very pleased to see cooperatives mentioned as one of the approaches that could be used to enable the sector to be more competitive and innovative. While there is a phrase in the principles section of Growing Forward about helping producers improve profitability, there is no emphasis on this in the rest of the document. We have noted that the new APF has been broadened to include the agri-based products industry. One note of caution and concern is whether scarce government funding will be used for this at the expense of support for primary producers. We also think that producers who will be producing the raw materials for the bio-products industry need to be involved in the development and ownership of this new industry.
Moving to your committee's report, we see that you have championed the needs of primary producers and have called for more emphasis on farmers and on primary production. We particularly support your recommendations on a national food supply policy, “buy local” or “buy domestic” campaigns, better labelling, compensation for environmental stewardship, supply management, marketing agencies, and improved sharing of publicly funded research with the producers. What we have not seen is any discussion of farmer ownership.
If farmers are to increase their incomes and profitability, they must be more involved in other parts of the value chain. They need to have collective ownership of input supplies, marketing, value-added processing, and even retailing to consumers. Without this involvement, they will always be dependent on others who sell to them or buy from them.
Because ownership matters, thousands of farmers have successfully used the collective enterprise model of cooperatives. There are over 1,200 co-ops in Canada—these are agricultural co-ops—and new ones are starting all the time. In 2004, agricultural co-ops had annual revenues of $14.3 billion, and they returned more than $220 million in patronage dividends to their members. I would like to finish with what is needed to support producer ownership through cooperatives.
Both the Canadian Federation of Agriculture and the National Farmers Union support cooperatives and have called for resources to help producers learn about, plan, and start agricultural co-ops. Groups wanting to form new agricultural co-ops need three basic things: information, specialized advisory services, and financing. Currently, the federal government is involved in a modest way in supporting new co-op development, as are some provinces. Both CCA and the Conseil canadien de la coopération appreciate the recent funding from Agriculture Canada for the agricultural co-op development initiative. Ag-CDI helps groups of producers start new value-added agricultural and biofuel co-ops. I have brought along some material from this program, and it will be available from the clerk. This profile of 25 co-op groups that we helped shows the breadth of ideas and initiatives amongst farmers.
The broader and generic co-op development initiative, which started five years ago as a partnership between the federal Co-operatives Secretariat and the co-op sector, is up for renewal. CCA and CCC have submitted a proposal to expand and improve this program, which provides co-op advisory services across the country and helps with grants for innovation and research.
Demand for the advisory services has outstripped the inadequate resources of the provincial and regional co-op associations that provide these services on the ground. A budget of $1 million per year to pay for co-op advisory services in two official languages means that many co-op groups are not getting the help they need to get started. That is why we have proposed a reasonable expansion to $4 million a year for advisory services and $2 million a year for a grant program for emerging cooperatives. Our overall request is for $30 million over five years.
With ownership comes the need to capitalize the business. In today's economy, starting any new co-op costs money, but constructing and starting a new processing plant or biofuels refinery involves millions of dollars. The lack of capital is holding back co-op development. Groups get together and develop a viable business plan, but then find they can't get the financing to start. New co-ops have a hard time because a new co-op does not have a track record in business, their members do not have the money to contribute the large amounts of equity required by lenders—often 50%—and lenders do not understand the cooperative structure. The solutions to this are a range of capital and tax incentive measures, such as a cooperative investment plan; loan guarantees; equity matching grants; improved government lending programs, such as FIMCLA; and specialized co-op lending programs managed by the co-op sector.
CCA and CCC have proposed that the federal government seed a $70 million co-op development fund over the next five years. This fund would provide patient capital through long-term, low-interest loans to new and expanding co-ops, including agricultural co-ops. You have already heard from the CFA about the need for a federal co-op investment plan that would grant tax credits for individuals investing in their agricultural co-ops. We have been proposing this for several years. The time has now come to put this in the next budget.
The co-op investment plan already exists in Quebec and has proven its worth in that province by leveraging some $393 million in new investment from 1997 to 2006. It was supported by Mr. Harper in 2005 and was endorsed by the finance committee last year. This kind of hand-up assistance is preferred by farmers, instead of government payments when they are unable to earn enough from the marketplace.
In closing, we would like to reiterate the need for an APF that recognizes the importance of farmer ownership, provides for specialized co-op development services, and addresses the capital needs of farmers through a co-op investment plan.
Thank you.