Special Committee on Cooperatives Committee on July 25th, 2012

[The Chair, Conservative, Blake Richards]

It certainly is, and I appreciate your indulgence there.

We will now move to Mr. Preston for the next five minutes.

[Joe Preston, Conservative, Elgin—Middlesex—London, ON]

Thank you very much.

Thank you for coming. We continue to learn more and more about cooperatives, credit unions, caisses populaires, mutual insurance. It's not all one thing. It's a collective group of a bunch of great things.

I asked a question of our witnesses yesterday, and I'm going to start off with that. Cooperatives seem to have a greater success rate. They don't “seem to”; they have a far greater success rate than standard operating corporations or sole proprietorships or any other start-up businesses. You do a better job; you last longer; you're more likely to be successful. I'm trying to catch that lightning in a bottle. What is it? Why are cooperatives more successful?

[Brigitte Gagné]

First of all, they are rooted in the community. Second, they answer the direct needs of the community. Third, they're democratic, in the sense that it takes so much time to have a consensus among the people who want to start the cooperative that, when it's done, it not like a shooting star. These are, I think, the three major reasons why they last longer. Through different periods I would say, different times, where difficulties emerge, all together they have an expertise that multiplies each other's knowledge. So they bring different alternatives, different points of view, and because of that they bring a certain capacity to go further than just saying “we'll let go because we are not strong enough”, or whatever.

[Joe Preston, Conservative, Elgin—Middlesex—London, ON]

Desjardins is among the largest of the financial institutions in Canada. It started off as a grassroots organization in one place and grew. As Madame Gagné just said, you recognized a need. You didn't go places you weren't needed. You went to where you were needed and became successful that way.

Please correct me if I'm not stating correctly something you said, but I believe you said you're democratic and that's how it works, and you take less risk because of that, because you must have commitment from your members to move forward on items. Did I paraphrase you correctly, even if I didn't quote you properly?

[Bernard Brun]

I probably wouldn't say we take fewer risks. I would say we are more prudent in the way we approach things. Of course, we will take some risks as we are a financial institution also, but we are members and service-oriented to the members. That's our first purpose. So profit comes, but it comes later. Some financial institutions probably go first to the shareholders; for us, it's service for the members, and, of course, profit is somewhere in the equation.

[Joe Preston, Conservative, Elgin—Middlesex—London, ON]

As Mr. Allen said—and I agree—it is about the members. The mission statement doesn't change. It may grow bigger, the activities going against that mission statement may be different, but you start off with saying “I'm serving the members”, or as somebody said yesterday, “I'm helping others. I'm serving others by being part of a cooperative.”

But your decisions come from a broader scale. In a standard corporate structure one person may very well make billion-dollar decisions—right or wrong. In a cooperative situation it's about the group making the decision for the risk, right? It's one vote, one person, and that's how we get there.

Something that came up earlier in one of the other panels was about small credit unions, caisses populaires. You're the biggest, so I'm going to pick on you. You are run by the same rules as all financial institutions across Canada. But some were saying that some of the rules are a bit onerous for a one-off shop, for a very small caisse populaire or credit union.

What are your views on that? Should you be forced to follow different criteria or procedures from the smaller guy's, because it's harder for him?

[Bernard Brun]

That's an excellent question. The credit unions or the caisses populaires don't have to have special treatment. It's more that the rule needs to be adapted or just thought of in a way that's fitting, for example, for a smaller credit union or a caisse populaire.

I'll give you a clear example that comes up even for Desjardins right now. As I mentioned, we are not one big organization. We are a federation of small financial institutions. So when you're talking, for example, about money laundering, what do you do? I don't have one centralized company where I can grab all the information from everywhere. I have to visit every place. So sometimes the rules could be just thought about and adapted to the reality of cooperatives.

[Joe Preston, Conservative, Elgin—Middlesex—London, ON]

Thank you very much for that.

[The Chair, Conservative, Blake Richards]

Thank you.

There's a point of order.

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

In reality, Mr. Chairman, it's not a point of order—

[The Chair, Conservative, Blake Richards]

Okay, well then....

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

—but a point of pride.

[The Chair, Conservative, Blake Richards]

Okay.

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

I make it a point, Mr. Chairman, to make sure that members realize that Desjardins was founded by a clerk of the House of Commons at the turn of the 19th century.

[Joe Preston, Conservative, Elgin—Middlesex—London, ON]

I'm glad he found good employment.

[Voices]

Oh, oh!

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

Indeed. His name was Alphonse Desjardins.

[The Chair, Conservative, Blake Richards]

I think I saw some anger on Paul's face there.

But anyway, we have time for one last round of questioning for Mr. Butt, for five minutes.

[Brad Butt, Conservative, Mississauga—Streetsville, ON]

Thank you very much for being here, all of you. I appreciate it. I'm certainly learning a fair bit more about cooperatives and how they operate.

I am interested a little bit in the following, and I know Alterna will be here later. They're a major player in the village of Streetsville, which I'm very proud to have in my constituency.

I'm curious about the credit union system and to get a little bit more specific information on how it works, and how it works when you are operating in different provinces and under different regulatory regimes. Mr. Brun, maybe you could explain.

How do you manage to operate when there are provincial regulatory requirements that you must fulfill if you want to operate in different provinces, even though you term yourself as a national organization? What are the differences? Are there some barriers because of the fact that there's really not a significant federal role in terms of the regulatory aspects of day-to-day operations in a cooperative model, other than that you're a financial institution and you have to meet some of those federal regulatory barriers?

Are there things the federal government and the provinces could be doing to mirror or better align some of the regulatory challenges under which you have to operate?

[Bernard Brun]

Let me add, first, that when we say financial services, it's the banking services that we have. Desjardins will operate in every province, but through the other types of services, life insurance, etc. For the banking-type services, of course, since it's provincial and you have your caisses populaires, you do those through your caisses.

Desjardins is acting in the other provinces, but it's done through affiliation, for example, the caisses populaires federation of Ontario. The other ones can be clients of Desjardins. They can buy some services, for example, in compensation, or some products, as we also do with the credit unions. It is an ongoing challenge because it's provincial everywhere. That's why Alterna constituted a federal bank, so it could serve its member clients in other provinces.

This is an ongoing challenge. Right now the federal government has put forward a new piece of legislation to allow a federal financial cooperative, which is nice, but it also has some challenges. It doesn't allow one to work in a network or a federation, like Desjardins is doing, which we believe is essential to remaining grass-rooted in your community. You want to remain really connected to your community and loyal to your members, and you ask that from your members in return. This is one of the challenges.

Also, the reserve, which is possible to share, is another challenge.

We need a lot more discussion, of course, because I believe the caisses populaires and the credit unions are tightly connected with our provincial authorities. That's part of their success, too.

[Brad Butt, Conservative, Mississauga—Streetsville, ON]

Mr. Adams, just for me to glean a bit more information about your organization, are there any other regulatory barriers that you see operating in Canada that we could be considering, as a committee? Or would you generally say that you're successful in the way you're presently operating and that as far as the federal regulatory regime is concerned, you probably don't want any more government interference in how you are operating?

Do you have any ideas for us, other than what you shared with the committee earlier?

[Kip Adams]

We were incorporated in Canada in 2006 and received charitable status a year or two later. That was a big hurdle for some of the educational opportunities we like to provide. But since we've been able to get that charitable status, we've been able to do a bunch of educational opportunities. There are seminars, events, and workshops that teach a lot of people about wildlife management and, obviously, the value of cooperatives.

From that end, we're now pretty free to do what our mission is, and that is essentially to teach people. I don't think there's any additional federal oversight on the regulatory end that could help us to meet our mission any better.

You probably don't get to hear that a lot in Canada.

[The Chair, Conservative, Blake Richards]

Thank you. The time is up.

We did go a little over time. We started a little late as a result of some of the technical difficulties, so I thought I would allow that.

I thank all the witnesses.

Mr. Adams, we didn't get much of a chance to question you, and I know there were some questions that Mr. Payne had about the membership and structure of your organization. If you could provide some information in writing for the committee, that would be very helpful for us.

I know the other two organizations we had today have both been able to submit written briefs. I would strongly encourage your organization to do the same. We are requesting more written information by August 7 at 5 p.m. eastern time.

With that, I thank all of our witnesses today for your great testimony. I will now suspend until 10:45, when we'll begin our next panel.

The meeting is suspended.

[The Chair, Conservative, Blake Richards]

I'll reconvene the meeting.

We have our second panel all set up and ready to go.

We have with us, by video conference, from Ag Energy Co-operative Ltd., William Ravensbergen and Rose Marie Gage. And here in person, from La Coop fédérée, we have Denis Richard and Jean-François Harel, and from the Conseil québécois de la coopération et de la mutualité, Hélène Simard.

We will follow the order we have on our agenda.

I'm not sure who is making the presentation from Ag Energy Co-operative Ltd., but I will turn the floor over to you for 10 minutes to make an opening statement to the committee. The floor is now yours for the next 10 minutes.

[William Ravensbergen, Chairman, Board of Directors, Ag Energy Co-operative Ltd.]

Thank you.

We will both be presenting.

It's a privilege for us to be here with other cooperatives as change agents for growth and sustainability of cooperatives and to be representatives of a viable alternative to standard Canadian business models.

My name is William Ravensbergen and I'm the chair of the board of directors for Ag Energy Co-operative Ltd. I've held the position of chair for the last three years and the position of director for an additional three years. P. Ravensbergen & Sons Ltd. is a founding member of Ag Energy, is a user of its services, and has been since its inception in 1988. Therefore I have an intimate knowledge about our governance and the mechanics of the organization, a member's/user's perspective. I have personally invested my time, energy, and funds to ensure that Ag Energy is a successful member-based service organization that deals with solutions that are sustainable for our members and customers.

Ag Energy is an Ontario-based cooperative representing members in Ontario and serves more than 1,000 customers in Ontario, Quebec, and British Columbia. We are a services-based cooperative that provides natural gas and electricity solutions to its members and customers.

We were incorporated in Ontario 24 years ago. Our beginnings served as cost-effective procurement of natural gas for greenhouses as a result of energy deregulation, as energy typically is one of the largest input costs for our sector.

Ag Energy is a for-profit cooperative with annual sales in excess of $20 million. Our primary focus is to provide cost-effective energy commodity and investment opportunities to our membership.

We are a lean organization of 10 employees, serving agriculture, agritech, and agrifood. We are expanding our offering to include managed cooperative services for other co-ops. Our board of directors is accountable for our governance and is currently eight directors and two trainees, all of whom are from member organizations or are members. Our board represents entrepreneurs, owners, and member staff with ties to the ag sector.

For our members, we operate on a break-even philosophy so that they may procure their energy at wholesale prices. For our other consumers—that is, non members—we provide competitive solutions. Our focus is the delivery of natural gas solutions of greater than 50,000 metres cubed and 150,000 kilowatts of electricity consumption per year.

We are a member of and actively participate in the Ontario Co-operative Association and depend on policy and support from federal and provincial governments to ensure that co-ops are a supported business alternative.

We expect that government will support its constituents and embrace the cooperative principles to ensure growth and sustainability of the co-op sector as a means of investment, employment, job creation, tax base, etc.

Some of the obstacles we have faced are limited policy reform and education; affordable financing structures or reasonable financial covenants; grant structures or government funding, which sometimes excludes co-ops as a standard; and excessive red tape in dealing with government or support services.

At this point I'd like to pass on the presentation to Rose Marie Gage, the CEO of Ag Energy and the chair of Guelph Energy Co-operative, a co-op established by three founding members, one of which is Ag Energy. The Guelph Energy Co-operative was created to provide green energy solutions in the community of Guelph, Ontario, where Ag Energy is headquartered.

Thank you.