New Generation Co-operatives Pilot Project

Executive Summary -- June, 2001

Introduction

In June of 2000, the Government of Canada announced CARD funding to the Canadian Co-operative Association (CCA) and Le Conseil Canadien de la Coopération (CCC) for the delivery of programming related to co-operative development in rural Canada. Specifically, Agriculture and Agrifood Canada agreed to invest in action research and policy development on the future of agricultural co-operatives, and in an assessment of the potential for value added co-operatives in two regions, Ontario and Saskatchewan and south-western Manitoba. The pilot project activities in the Saskatchewan and south-western Manitoba region were undertaken by the Centre for the Study of Co-operatives, University of Saskatchewan. This report outlines the objectives, strategies, observations, actions, and outcomes of these efforts (The Pilot Project). The report also offers recommendations for further research and development efforts related to value-added "new generation" co-operatives (NGCs).

Project Deliverables

The following is a list of deliverables taken directly from the contract between CCA and the Centre for the Study of Co-operatives.

• Preparation and delivery of presentations and workshops to interested farmers on the new generation co-operative model, its application and requirements; and provision of follow-up referral action (e.g. consultant services, lawyers, accountants) to connect farmers with necessary assistance.
• Preparation and delivery of workshops targeted to business professionals to educate them on the specific financing, legal, business, and governance requirements of NGCs. Through these workshops, presentations and meetings, the consultants will determine the current level of knowledge and develop or recommend/identify appropriate programs/materials and partnerships to fill the knowledge gaps identified.
• Development of resource materials such as detailed start-up guides, including information on capital requirements, incorporation, governance, management, etc. This material would build on existing NGC information kits and would have generic and tailored sections (relating to each jurisdiction).
• Development of an inventory of professional expertise required by farmer-producer groups.
• Assessment of the project results.

The project deliverables were to be targeted to three separate groups: producers exploring the use of the NGC model, producer groups in the process of forming NGCs, and professionals working with such producer groups.

An important element of this project was an assurance that all efforts would be pursued in collaboration with any provincial and federal government staff already involved in providing information assistance to farmer-producers with respect to new generation co-operatives.

Thematic Issues -- Producers

This section of the report is organized around the themes of issues encountered while working with the producer groups. The themes reflect the issues which most frequently emerged.

• General understanding of the NGC model
• Structural considerations
• Control
• Financial considerations
• Development support
• Advantages over other organizational models

Thematic Issues &endash;Business Development Professionals

The project began with an assumption, based on anecdotal evidence from producers, that professional infrastructure was lacking. Therefore, an important early step in the project, was confirmation of this assumption and a determination of the specific gaps that might exist. Such information was gathered through interviews with representatives from specific professional disciplines. In each case, meetings, interviews and discussions were held with individuals currently practicing in their respective fields. Care was taken to choose individuals from large, small, rural and urban firms. The results of the survey exercise indicated that there was little to no awareness of the NGC model among these groups.

For smaller firms the key areas of interest included:

• the NGC concept &endash; general explanation of the model;
• the benefits of an NGC over another model; and
• experts to whom they could refer clients.

For larger organizations the key topics of interest were identified as:

• NGC legislation;
• taxation considerations; and
• the issuance of securities and their subsequent trade.

General Awareness Outcomes

Efforts around general awareness were simply that -- an attempt to spread information fairly broadly so that people would at least be introduced to the topic and they could then choose to pursue further information if it interested them. The information provided was typically tailored to suit the particular audience. The following are examples of the outcomes of this general awareness campaign.

• Web site Design and Maintenance
• Presentations to Local Bar Associations
• Presentation to CARDS Value Chain Workshop
• Hosted NGC Experts Workshop
• Published Resource Materials for Business Development Professionals and Agricultural Producers
• NGC Experts Workshop video
• Highlights sheet to members of Institute of Chartered Accountants of Saskatchewan
• Presentation to Alberta Agriculture, Food and Rural Development Seminar
• Seat on advisory board of CARDS Value Chain Initiative
• Met with Saskatchewan Securities Commission on NGC related issues
• Lecture at College of Law, University of Saskatchewan
• Lecture at Department of Agricultural Economics, University of Saskatchewan
• Article in Making Waves, CED Magazine
• Lobbied for online access to NGC legislation
• NGC Workshop development for Saskatchewan Legal Education Society Inc. (SKLESI)
• Hosted Saskatchewan Economic and Co-operative Development Officers Workshop
• Presentation to Saskatchewan Agriculture and Food extension staff
• NGC Resource Materials Development in Collaboration with Saskatchewan Economic and Co-operative Development
• Creation of a New Generation Co-operative Development Network

Recommendations

Given the experiences and observations accumulated during the course of the Pilot Project, the following list of recommendations is offered. The list is in no particular order, but is organized under broad thematic headings.

Long term development support needs to be available in various forms

• provide visible support with capacity to promote general awareness;
• offer first response to inquiries — there must a good single source of information with all necessary contacts;
• provide ongoing technical and development assistance to producer groups;
• broker relationships among various agents and contacts;
• work with, refer to, and advise professionals (lawyers, accountants, engineers, business consultants, financiers, etc.);
• make contacts and develop relationships;
• pursue ideas and leads (which may or may not lead to NGC start-ups); and
• respond in appropriate fashion to the wide range of issues that arise in emerging producer groups.

Delivery mechanisms must be established recognizing that:

• NGC development is done most effectively through a network of expertise that is easily accessible;
• a network model is more useful than a hierarchical or linear model;
• development capacity must exist at the provincial or sub-regional level (It can't be too local or the advantages of a broader network of contacts is unavailable. On the other hand, it cannot be one person for the entire country because it becomes too difficult to establish and maintain contacts at the local level.);
• it is important to strike a balance between something over-arching (regional) with something that has solid connections to the on-the-ground development work;
• capacity at the provincial or sub-regional level could accomplish all of the above and serve as a nexus point for an effective network;
• such mechanisms should not replace any existing development capacity (eg. Saskatchewan Economic and Co-operative Development), and that such agencies should be incorporated into part of the network;
• NGC development capacity should not be a direct service of or take direction specifically from government, the existing co-op sector, or universities. Rather, such development capacity should have an arm's length relationship with each of those stakeholders and be closely linked with each of them (i.e. an advisory committee comprised of representatives from each of those parties);
• such mechanisms could be based on some medium or longer term contract with one of the stakeholders (e.g. in Saskatchewan it might be housed with the Centre for the Study of Co-operatives yet not be a formal part of the Centre); and
• such development service would not require and should not establish a significant bureaucracy.

Regulatory mechanisms must be in place that:

• protect the interests of the producers and investors, but must not be so restrictive as to prevent development;
• are clear and which have information about them readily available to the public at little or no cost; and
• allow cross-jurisdictional harmonization.