Special Committee on Cooperatives Committee on July 26th, 2012

[The Chair, Conservative, Blake Richards]

Thank you. I'm sorry, but time has well expired.

We'll move to Mrs. Gallant. You have five minutes.

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

Thank you, Mr. Chairman, and through you to our panel.

Mr. Carlson, you mentioned that you are flexible and serve the unique needs of farmers. You may have heard that in eastern Ontario they are reportedly experiencing the worst drought in 50 years. The corn is just a few feet high, but it has tassels, and where there are cobs there's no silk, so pollination is not going to occur. Furthermore, the nitrates apparently are so high that if they feed the silage to the cattle, they'll die. So we have that situation, and then there's the barley, where the pods are so dry that you just have to rub it between your fingers and it turns to dust. With alfalfa, the plants are too short to cut, and the taproots may be lost, so replanting must occur.

With this, the challenge for the cash croppers and the people who grow the grain for the purpose of feeding their livestock is that they just don't have anything. With hay they got one cut. Those who have to buy hay can't find it. They've looked over 300 kilometres, and it just doesn't exist. They're already feeding what hay they do have because the grass has all dried up.

The question they're facing is whether or not they can or should plant something that could be harvested this fall so they've got something to feed their cattle. They have to wait for the crop insurance payment, of course, and what they need to know is whether or not they have the capacity to plant, because they don't have access to the cash for several months when the crop insurance eventually pays out.

So my question to Farm Credit Canada is would Farm Credit Canada use the pending crop insurance claim as collateral to lend money to these farmers who have to plant?

[Lyndon Carlson]

Well, we wouldn't use it literally as collateral, because it's not a security instrument, so to speak, but we would certainly work with our customers on an individual basis to come up with a solution that will work for them.

We know that one weather event—for instance, this summer in southern Ontario—does not change the overall viability of that operation long term. If we need to make a loan to those people so that they can put in a new crop, through our crop input program, which is available to our customers, that's one thing we would do as a normal matter of course.

I also want to let you know about a couple of other things we've done, illustrating flexibility. One of our products that is utilized by farmers across Canada all the time is a thing called a “flexi” feature. What that permits a customer to do, at their choice, if they choose that feature, is to ask for a payment holiday, and we will grant it. We don't have to debate them over that. We build the feature right in. That customer does not have to come to us with hat in hand, asking us about this. It's a feature of the product. If they need to have a payment holiday for this fall, we would grant that payment holiday and they'll make their payment next year.

The other thing we've done, with weather events in particular, whether it be flooding in western Manitoba and eastern Saskatchewan, where crops could not get planted.... Multiple times in the last decade we have proactively sent out letters to our customers granting them a payment adjustment without their having to come in and ask for it. We proactively say that we know what they're facing and we're there to support them in difficult times.

When we look at southern Ontario, we haven't introduced at this point what we call our customer support program, but once we see the impact, if it's across a larger area where we need to take a general action.... We've done that many times in the past.

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

So there are plans in place to mitigate these disasters as they occur. We don't have to lurch, looking for a new program.

[Lyndon Carlson]

Certainly not.

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

You do have some things in place.

My question is with regard to timing. In order to be able to collect the crop insurance, they still have to harvest. And the suppliers, they need to know whether or not to get in some new seed for another planting. All this is contingent upon their access to cash.

How long would it take to process a loan or a line of operating credit for them?

[Michael Hoffort]

Generally that type of request could be turned around fairly quickly. Whether a farmer in Ontario who is experiencing a drought deals with Farm Credit or a bank or a credit union, I'd encourage them to see them very quickly and to discuss what the options are. The sooner you do get involved and set these things up....

I think any of us who serve the industry can turn them around quickly. I know that the FCC would be able to do that quite rapidly and allow them, if they did want to reseed, to be able to move forward with that.

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

Twenty-four hours...a week for new customers?

[The Chair, Conservative, Blake Richards]

Unfortunately, time has expired.

Your answer was yes to that question, correct?

[Michael Hoffort]

Yes.

[The Chair, Conservative, Blake Richards]

Okay, so we'll leave it at that.

Mr. Harris, you now have the floor for the next five minutes.

[Dan Harris, NDP, Scarborough Southwest, ON]

Thank you, Mr. Chair.

Thank you to the witnesses for coming.

Mr. Malli, during your last statement you said that we should be looking to other areas for solutions. Of course in your opening remarks you mentioned other social enterprises and co-ops, in Italy for instance.

Thank you for being a sponsor of the Imagine 2012 summit happening in Quebec City. I only wish that we as a committee were going to that so that we, ourselves, would be able to look to other areas for solutions. There are many solutions available in the world and we should be looking at them to improve our cooperative sector here in Canada.

I want to discuss Vancity, which is largely contained within urban areas, and the unique needs that urban areas have compared with the different needs that often exist in rural areas, even as they might parallel.

Now, with residential cooperatives, of course many of them that have been in existence for a long time are dealing with some infrastructure needs, whether it be new roofs, replacement of pipes, buying new boilers, or other things like that. What kinds of services does Vancity offer to co-ops that are looking to perhaps blend and extend mortgages or to seek new financing?

[Rob Malli]

Sir, you're referring to housing co-ops, those types of things?

[Dan Harris, NDP, Scarborough Southwest, ON]

Yes.

[Rob Malli]

First of all, our flexibility in offering product solutions, whether the blend-and-extend or flexible mortgage payment options for teachers, and all these things, are offered to our whole membership. Specifically, in the housing co-ops we are promoting that sector within all of our areas of reach. What we do is we help people get together to educate them around different ways for home ownership, especially in Vancouver, because Vancouver housing prices, as you're aware, are extraordinarily high, and for people to get into housing is a big issue. Right now we're really looking at this in terms of seniors as well.

So how do we help people educate themselves on different ways they could get into the housing market? Cooperative housing is one way, and there are a lot of benefits to that. So we promote that; we support it by offering financing options to them. Some of our options, when we're promoting areas, we to look at that and specifically see how flexible we need to be to make sure it's a viable option, not just something we promote, but economically viable by our credit criteria. We look at that holistically. So we do offer different solutions to be able to make that happen.

We also have flexibility in terms of different ways we set up the covenants, etc. If there are issues around housing, roofs, etc.--for instance, we had the leaky condo issues in Vancouver way back when.... We worked with the government agencies that were involved, but we also did a lot to try to support residents, making sure they could get loans to keep their houses without going into foreclosure bankruptcy as a result of that. We helped them deal with the issue at hand, because we knew the value would come back in the long term.

[Dan Harris, NDP, Scarborough Southwest, ON]

I think we can all agree, because of the close ties that credit unions have to their communities, that it's naturally in their own best interests to make sure that those communities stay viable so that the business model keeps going.

[Rob Malli]

Absolutely.

[Dan Harris, NDP, Scarborough Southwest, ON]

That's something that we think should definitely be expanded.

One of my colleagues was mentioning briefly the CDI. When that program was in existence, did you see a spike in the creation of new cooperatives in and around the areas Vancity operates in?

[Rob Malli]

I'm not sure in terms of the specifics of how that impacted us, because our focus is overall on the communities and the cooperatives. A lot of them are non-profits. Irrespective of the type of organization they are, as long as they're doing something good for the community, are positive, that's what we're focused on, the positive impact.

I can't speak specifically to the impact of the CDI just because I don't have the data with me. I could follow up, definitely.

[Dan Harris, NDP, Scarborough Southwest, ON]

Certainly. If you have data available on that, I think it would be very useful for this committee to receive that information--of course, before August 7, at 5 p.m.

Mr. Carlson, during your remarks you mentioned the unique financing needs that co-ops have. This seems like information it would be useful for this committee to hear about. What kinds of unique—

[The Chair, Conservative, Blake Richards]

Mr. Harris, the time has expired, but I will—

[Dan Harris, NDP, Scarborough Southwest, ON]

—financing needs do you see that should be shared with this committee?

Sorry. Thanks.

[The Chair, Conservative, Blake Richards]

And I'll ask that the response be quite brief as well.

[Lyndon Carlson]

One of the things that we see with the co-ops, especially some of those smaller co-ops that I mentioned, like the cattle breeder and feeder co-ops for cattle purchases, is that there's no obvious structure on a normal lending program. I mentioned that one co-op with 18 members. We've been able to lend them millions of dollars by saying that individually they might present a high risk, because the down payments are low on cattle purchases, but collectively, with them willing to share the risk and us willing to take on some risk, we say we can put together a model that works for the co-op and works for FCC so that together their loans are successful.

[The Chair, Conservative, Blake Richards]

Thank you, and I appreciate you keeping it brief there.

We'll move now to Mr. Lemieux. You have five minutes.