Special Committee on Cooperatives Committee on July 24th, 2012

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

In terms of decreasing input costs for the fishermen, how willing are they to embrace new technology?

[Jeff Malloy]

Our members—and that is all I can speak to—are very interested. We've spent a lot of money.... As I said, we're the only lobster processing plant now left in eastern Canada that is BRC-approved—British Retail Consortium approved—which allows us to sell into the U.K. retail business. It also allows us into the retail of a lot of Asian countries. It's a lot higher standard than our CFIA, for instance. We probably spend $50,000 a year on that alone, just to keep upgrading our plant year over year to keep ahead of it.

Our members are very interested in getting ahead of it, because we could never play with the big boys as far as the volume game is concerned. We can't do 100,000 pounds a day. Our plant isn't that size, so we do a lot of specialty packs and try to get into the markets that create a better margin for our product.

Our fishermen have recognized that and have spent a tremendous amount of their money, at the end of the day, in order to achieve that.

[The Chair, Conservative, Blake Richards]

Thank you. The time has expired for this round.

I will move next to Mr. Bélanger for five minutes.

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

Thank you, Mr. Chairman.

Mr. Chairman, you didn't need to do this, but I want to thank you for having moved the committee into the riding of Ottawa—Vanier, which I have the honour of representing.

Welcome, folks, to Ottawa—Vanier. It starts at the canal, as you know.

Mr. Inglis, you said that you operate in five provinces. I presume that's P.E.I., Nova Scotia, New Brunswick, and Newfoundland. Which is the—

[Bryan Inglis]

The Magdalen Islands, Quebec.

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

Quebec, thank you. That's what I wanted to know.

You also gave us an example of Newfoundland and Labrador, where the government provides training so that co-op businesses can have equal access to funding programs.

[Bryan Inglis]

Yes.

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

Does that mean there is not equal access to federal funding programs or to provincial funding programs in the other provinces?

[Bryan Inglis]

Yes. In our experience, we find it very difficult, as cooperatives, to access the federal and provincial programs. It's very similar to the capitalization that Tom talked about. Governments have a real difficulty understanding how co-ops are capitalized, and they are basically very uncomfortable with allowing us to have access to their programs.

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

I want to make sure I'm not headed the wrong way here. I would imagine—and please confirm if I'm right or tell me if I'm wrong—that the capital needs of large co-ops such as yours and such as the ones we've heard from, The Co-operators or Gay Lea or others, are somewhat different from start-ups.

[Bryan Inglis]

Yes, exactly.

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

Okay. Are you talking about large co-ops or start-ups?

[Bryan Inglis]

I'm talking about a little bit of both. I'm talking mainly about start-ups, but I know that in our particular case, Co-op Atlantic just finished an $8 million investment in a feed mill in Atlantic Canada. We didn't get any support from the province or the federal government on that project.

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

Where would you have had support, or where would you have expected to get support from the federal government?

[Bryan Inglis]

On the going-forward projects, there are a number of what I call subagreements—I don't think they're called that anymore—where they encourage investment in new technology in agriculture. They encourage moving-forward modernizations, and we could not get any support.

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

I have limited time, so I will try to go a little more quickly.

I've said this to others, and I hope you won't mind, but may I ask you to do a bit of homework and send to the clerk, so that all members will get it, some examples and specifics, either for large co-ops or for start-ups, where the access to capital on the federal side—because that's our bailiwick—is not equal. That would be very useful.

[Bryan Inglis]

I'd be happy to do that.

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

For Mr. Webb, I have to agree with you about the return on capital. I was just meeting with the Alberta farmers' union last week, and they had a program of return of 5%, 6%, and 7% for investors. I asked what it took to become a member. It was a very minimal amount of money but you have to be in Alberta, so I'm excluded from that, and I'm not a farmer. But 5%, 6%, or 7% these days is not a bad return at all. I have to agree.

I want to go to the same kind of question in terms of capital needs. I presume you're in agreement that the capital needs for large, established business co-ops are not the same as for start-ups.

[J. Tom Webb]

That's right, but I think it's equally difficult for both of them.

I'd like to just clarify one thing. I realize the government is not in the business of purchasing land mines, and that's not what I was trying to suggest. What I was trying to suggest is that I can invest with my self-directed RRSPs in land mines but I cannot invest in co-ops nearly as easily, and that's really the problem.

In terms of start-ups and existing co-ops—

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

I'll just cut you off, sir, because you're in the habit of giving homework to students, I presume, so I would like to turn that around and ask you the same. I would like to ask if you could supply the committee with some examples of where the access to capital is difficult or unequal for large, established business co-ops or for start-ups. I'm aware of one, the workers' co-ops, and I'm hoping we will get to hear from them. Let's say they start up with 20 members and there's a 10% restriction or limit on RRSP investments. At 20 members, then, they're limited, and they're excluded therefore; there is a definite unequal access to capitalization by virtue of that 10% rule. I'm aware of it, and I'm hoping we'll have a chance to deal with it as a committee. Are there examples of that nature you're aware of?

[J. Tom Webb]

I chair the board of a start-up co-op called Knowledge Atlas—

[The Chair, Conservative, Blake Richards]

Pardon me, Mr. Webb, your time has expired. I will allow you briefly to answer the question, but I will ask you to keep it brief, please.

[J. Tom Webb]

Sure.

I sit on the board of a start-up co-op. It is called a “solidarity co-op”, where there are investor members, individual members, worker members, consumer members. It's a very interesting co-op. It's very high tech, and I can't invest in it because of the rule that you referred to. So it gets very difficult to finance that co-op from its worker members and its board members and its other members.

So you're right, and we can provide you with some examples.

[The Chair, Conservative, Blake Richards]

Thank you very much.

We'll now move to our second round of questioning. Up first we have Mr. Payne.

You have the floor for up to five minutes.

[LaVar Payne, Conservative, Medicine Hat, AB]

Thank you, Chair, and thank you to all the witnesses for coming. Thank you, Dr. Webb, for being on video camera with us. It is important to get all the information from you folks that we can.

First of all, I would like to start off by asking Mr. Malloy some questions in terms of the cooperative.

Mr. Malloy, has your cooperative ever received any federal funding?