Special Committee on Cooperatives Committee on July 10th, 2012

[Bob Friesen]

Again, in my case, I'm very focused, but to the extent that a co-op gives farmers a leg up in being more cost-competitive...I believe they should facilitate or pave the way as much as possible for co-ops and other organizations to empower farmers, yes.

[Ruth Ellen Brosseau, NDP, Berthier—Maskinongé, QC]

Mr. Barrett, you said:

In the cooperative sector we don't ask for special treatment, just equality of opportunity. We ask not for favours but for fairness, and we look not for unqualified support but for qualified investment.

I agree with you. This being the International Year of Cooperatives, we are doing this great work. We are learning so much, and I'm actually quite happy to be here. I think the time is flying fast.

We do have the upcoming international cooperative meeting in Quebec. To do this report and submit it...don't you think it's a little bit sad in a way that we're not able to be exposed to what's happening on an international level, to see best practices and try to apply them here when it comes to maybe even agriculture, health care, and housing? Do you think it would be a good idea if we attend that?

[Michael Barrett]

I guess I would have somewhat of a different opinion, in the sense that I certainly support the concept of the Quebec summit. I'm going to be there for a week of my life. There is actually a pre-symposium in which all the dairy cooperatives across Canada are getting together for two days as well. So that's part of it, and I certainly see the value in that.

But I also see the value in not always waiting for a singular event. I think there's a need to visit all the cooperatives in your neighbourhood, the day care cooperatives, the agriculture cooperatives—regardless of the Quebec summit. I think there's a need to do this all the time, so that there's a greater knowledge of what cooperatives are and what they do. Attending is certainly positive, and I will be there as well.

[The Chair, Conservative, Blake Richards]

Thank you very much. Time has expired for that section.

We're moving to Mr. Hoback for five minutes.

[Randy Hoback, Conservative, Prince Albert, SK]

Thank you, Chair.

Thank you, witnesses, for being here today. It's great to see you out in the middle of July, coming here to talk about your associations and your businesses and how they function, and giving us some insight on how they work.

I come from Prince Albert, Saskatchewan, and we have lots of cooperatives in the area. The Saskatchewan Wheat Pool used to be one of the cooperatives in Saskatchewan, so there's definitely a history of cooperatives and of how they worked, and worked very well, in our province for sure.

In my hometown of Canwood, the co-op is the mainstay, if you want to get eggs and milk and groceries and stuff like that. You can go to Canwood and go to the co-op and you know all that stuff is there, readily available, always fresh, always good. And it employs local people, so it's always positive too. Plus, they also have fuel and stuff like that.

I find interesting the business models you have both chosen to operate your associations.

Mr. Friesen, your model is a little different from that for an average cooperative. I have a couple of questions that come from the last witnesses we had before regarding demutualization in the insurance sector. I wish there had been a question on that, because one of the concerns I've heard about is with regard to cooperatives merging. You see one co-op merge with another co-op, and there is a loss of that independent or local flavour on the board.

Mr. Barrett, maybe I'll start with you on that. Your cooperative is province-wide, is it not? You have representation right across the province? How do you go about selecting your delegates, and who sits on your board?

[Michael Barrett]

Certainly it's a totally democratic process. We have the province divided into four zones. Each of the four zones elects 15 delegates, so we have 60 delegates. Each of the zones elects two directors, and there are two elected at large, so we have a board of 10 directors. It's geographically very much like the House of Commons. It's determined by population and the amount of milk that's produced in each county.

[Randy Hoback, Conservative, Prince Albert, SK]

So it's pro-rated based on the volume of milk out of that county, for example?

[Michael Barrett]

It is, and on how many members are within each zone as well.

[Randy Hoback, Conservative, Prince Albert, SK]

That makes sense.

Mr. Friesen, your business model is very different from that. You're not necessarily running as a cooperative. You're running more as, let's say, a private entity that's offering very cooperative-type services. Is that fair to say?

[Bob Friesen]

Yes, that's correct. You're right—we aren't like a co-op model in that we don't retail. For example, together with an input supply partner, we registered a generic pesticide and negotiated a price that was 50% of the price for the original product in the market. The savings from that go directly back to members. Those are not contingent on what the savings might have been on a fertilizer or an inoculant. Those savings specifically for that pesticide accrue back to the members.

[Randy Hoback, Conservative, Prince Albert, SK]

Actually, FNA, for the benefit of my colleagues in the prairie provinces, just with the Roundup factor alone, has changed the landscape in Saskatchewan, if not all the prairies. On the price of Roundup, for example—and I know you're doing it with fertilizer now too—the concept you are using is very interesting. It shows two different concepts that actually can work. They're different, but they work, and that benefits the farmers at the end of the day.

Have you found, Mr. Barrett, that there have been any restrictions on your growth because you are a cooperative? Have you found any limitations? That's one of the things we heard from some of the mutual companies that wanted to demutualize. They were saying that system restricted their growth and they couldn't go to the next level. Do you see any of that in your situation?

[Michael Barrett]

Certainly one of the primary issues that we have is financing growth. As I said earlier, we've invested $170 million, which has come primarily from my members. We have some very aggressive growth targets, and the element we have difficulty with is being able to have the cooperative sector and the credit union sector fund that. It's an issue for us. The opposite side of that is that the banks don't understand cooperatives and don't understand what it means to have members investing in them, and therefore they are very reticent, suspicious, and reluctant to do what I would say is a normal business loan case. So we have a bit of an issue with that.

We are under the Ontario Co-operative Corporations Act. We've looked at being able to change ourselves to “Canadian” under the Canada Cooperatives Act. We've had some difficulties just in the sense that the business model, as illustrated by Frank Lowery, doesn't really represent us. It's the class of membership and the voting class of membership and membership shares that kind of disrupts the one member, one vote principle that we want to live by. So we have stayed under the Ontario Co-operative Corporations Act. That is limiting for us, because we see ourselves being able to grow.

[Randy Hoback, Conservative, Prince Albert, SK]

It comes back to the business philosophy you operate under.

With your members, ease of access for membership, to become members of your board—

[The Chair, Conservative, Blake Richards]

Mr. Hoback, your time has expired, if you want to just quickly put your question.

[Randy Hoback, Conservative, Prince Albert, SK]

Actually, why don't I stop right there?

Thank you for your time, gentlemen.

[The Chair, Conservative, Blake Richards]

All right. Thank you very much.

We will now move to Mr. Bélanger.

[Mauril Bélanger, Liberal, Ottawa—Vanier, ON]

Thank you, Mr. Chairman.

Mr. Barrett, could you, either now or through some homework, give us some specific examples, and how they relate to the various acts or regulations, of where the playing field is uneven between businesses, especially with a share structure, versus co-ops?

[Michael Barrett]

I could certainly provide that for you. I could specifically point out the pieces in what I call the Canada Cooperatives Act and how it restricts us. I could certainly provide that to you.

[Mauril Bélanger, Liberal, Ottawa—Vanier, ON]

Do you have any idea of when?

[Michael Barrett]

Well, I'm at a camp this week with my kids, but I could probably do it when I'm back in the office next week.

[Mauril Bélanger, Liberal, Ottawa—Vanier, ON]

I'm not talking about tomorrow.

That would be great. If you could send it to the clerk, he will make sure that everybody gets it. Thank you.

Speaking of which, I wanted to ask the clerk or the chairman a question. At a number of co-ops I've been visiting they have asked me if they will be able to appear before the committee. I said that it may be doubtful. If they can't, they ask where they can send a submission and until when. I'm relaying the question to both of you gentlemen for an answer as to when. If co-ops in Canada want to send in some written material, until when can they do that?

[The Chair, Conservative, Blake Richards]

I would assume, given that this committee has set aside time to write its report, it would be prior to that. I suppose that we could discuss it further at committee business, if members chose. That would be my assumption at this point.

[Mauril Bélanger, Liberal, Ottawa—Vanier, ON]

I'll bring that up at that time, then.

Mr. Friesen, I must admit, and I apologize for my ignorance, that I was not familiar with the FNA, so I'm going to ask some questions to understand.

Is there a share structure to FNA?

[Bob Friesen]

No, there's no share structure.

[Mauril Bélanger, Liberal, Ottawa—Vanier, ON]

So who owns FNA?