Co-operative responsibilities change hands

Thursday, January 31, 2013

by SUSAN MANN

A federal decision to transfer responsibility for co-operatives to Industry Canada from Agriculture and Agri-Food Canada this year reflects how much this business form has outgrown its agricultural roots. And industry groups are supporting the change because it offers access to the same programs and services as other business types, including a place on government trade missions.

“It makes sense that the federal responsibility for co-operatives be in the same department as federal responsibility for other businesses,” says Donna Balkan, communications manager with the Canadian Co-operative Association based in Ottawa.

She says the association recommended the shift in responsibility because the co-operative sector is made up of a wide range of different types of co-ops, not just agricultural ones. But this “will not in any way reduce the government’s interest in or emphasis on agricultural co-ops.” Both the association and the federal government recognize agricultural co-ops are “a very, very important part of the co-operative sector,” she says.

An exact date for the transfer hasn’t been set yet. The transfer involves an agreement between the two departments but doesn’t require legislative changes.

Stéfanie Power, a spokesperson with Industry Canada, said in an email Friday that funding details are yet to be worked out by the two departments.

The resources dedicated to co-operatives in Agriculture and Agri-Food Canada shrank dramatically in 2012 when the federal department cancelled the Co-operatives Development Initiative and laid off staff with the Rural and Co-operatives Secretariat.

The federal government subsequently decided to transfer responsibility for co-operatives to Industry Canada from Agriculture and Agri-Food Canada in response to recommendations by the federally appointed Special Committee on Co-operatives.

The House of Commons created the special, all-party committee on May 30, 2012 in recognition of the International Year of Co-operatives to study the Canadian co-operatives’ situation and recommend ways to foster their development. During five days of hearings last year, the committee listened to 46 presentations and received 60 briefs. It tabled a final report with eight recommendations to the federal government in September.

Anne Marie McInnis, acting director of the rural and co-operatives secretariat at Agriculture and Agri-Food Canada, says the committee was “looking to identify what tools the government could use to provide greater support and a greater role to Canadian co-ops.”

The committee recommended consolidating responsibility for co-ops within Industry Canada, she says. That department was suggested because it’s responsible for the Canadian Co-operatives Act. Federal responsibility for co-ops has been with the federal agriculture department for more than 30 years.

Michael Barrett, COO of Gay Lea Foods Co-operative Ltd., says it made sense to place the responsibility for co-ops under the federal agriculture department 30 years ago because at that time most of them were agriculturally based. But “the co-operative model has changed so much in the last 30 years and especially in the last decade.”

Most co-ops now are no longer farm based and they must be recognized and supported as an industry, he says, noting he wouldn’t want to lose the social justice aspect of co-ops but “we (co-ops) are certainly an economic force to be reckoned with in industry.”

Being under the federal agriculture department, co-ops never really received recognition as the economic powerhouses they are, he explains.

One way co-ops will benefit from the change is being included in Industry Canada trade missions to countries around the world. Barrett says currently co-ops aren’t invited on trade missions “because we’re lost in that perspective.”

Canada’s two national co-operative associations, the Canadian Co-operative Association and the Conseil canadien de la cooperation et de la mutualite strongly urged the government make the change.

McInnis says the change would involve moving the policy and research support functions that are currently done by the federal agriculture department to Industry Canada. That makes sense because then there will be a single, consolidated focal point in government to support the co-ops’ development, she explains.

The change means legislation, regulations and the promotion of co-ops would be under one department instead of two. “It gives non-financial co-ops a single window to the federal government,” she says.

The Canadian Co-operative Association says in a Jan. 28 press release that legislative and regulatory responsibility for financial co-operatives, such as credit unions and mutual insurance companies, stays with Finance Canada.

The change also doesn’t affect co-ops, such as Agris Solar Co-operative Ltd., governed under the Ontario Co-operative Corporations Act. Jim Campbell, Agris general manager, says to be regulated federally a co-op must do business in several jurisdictions. But Agris’ operations are only in Ontario.

Balkan says putting co-ops under Industry Canada’s wing will provide more of a level playing field between co-ops and other kinds of businesses “in terms of government policies and programs.”

She notes the new arrangement will hopefully lead to co-ops forging a new way to relate to and work with the federal government. The association sees the federal government as a partner in helping and developing co-ops.

One major issue co-ops face is access to capital and the association hopes they can use Industry Canada’s programs related to capitalization, Balkan says. Even though responsibility for agricultural co-ops are part of the package being moved, they will still be able to benefit from Agriculture and Agri-Food Canada programs under the new arrangement, she says.

The association will also be looking to Industry Canada to develop policies that are beneficial to co-ops. BF