VIEWPOINT

Co-operatives have potential for BC farmers


by CHRIS BODNAR

It’s time for agricultural co-operatives to get some attention in BC.

Co-operatives have a long-standing presence in BC agriculture. Producer co-ops achieve economies of scale for marketing. Consumer co-ops sell groceries to many consumers and many farmers buy inputs through co-ops. Financial co-ops, or credit unions, provide financial services to many rural communities. There is even a sample of land ownership and worker co-op models around the province.

Co-operatives are a unique business model because they serve the interests of their member owners. Their profits remain in the communities where they operate by being reinvested in their local operations or returned to shareholders – their members.

Despite their utility in the agricultural sector, co-operatives get little attention from a policy or business perspective. Co-operatives aren’t even mentioned as a potential business structure in the BC Ministry of Agriculture’s Taking Stock business resources. This needs to change.

There is a lack of food processing capacity in BC, new entrants are challenged in accessing affordable land, and many growers desire to access new markets. Co-operatives are part of a solution to the challenges facing the province’s agricultural sector.

There are some innovative models we can look to that demonstrate how co-operatives could be better utilized in the agricultural sector.

Recently, I had the opportunity to visit and learn about the agricultural co-operative sector in Italy’s Emilia-Romagna region.

Co-operatives play a significant role in the Italian region’s agricultural sector. Co-ops produce 95% of the region's wine. Co-ops pack and distribute much of the region’s produce, meat and dairy. Consumers in the region purchase over 60% of their groceries from consumer co-ops.

At each step of the food system, Italian co-operatives add value to the products being produced, increasing the economic return to their farmer members. The region exports high-value products such as Parmesan cheese, balsamic vinegar, prosciutto ham and high-end wines around the world.

Some co-ops in Italy are large, including up to 1,400 members in some cases. These farmer members are not uniform in size. Some farm a few acres while others grow on 75 acres. The co-ops are open to farmers of all sizes. Many of the co-op members are only able to continue growing because of the market access achieved through their co-ops. Italy’s co-ops also demonstrate that co-ops have the ability to scale up and compete in global markets while supporting small and large farms alike.

Quality control

A key element of the success of Italian co-ops is a focus on quality. Many producer co-ops provide extension services to their members. Co-ops invest in systems and infrastructure to help further this quest for quality. Wine co-ops host labs to test grape and wine samples on a daily basis. Fruit packers have state-of-the-art grading and packaging systems that operate throughout the year.

None of this came about by accident. Italian co-operatives are driven by their members but receive policy support from the Italian government. This includes tax incentives that encourage co-ops to save when times are good by placing profits tax-free into “indivisible reserves.” These funds can be used to stabilize the co-op during economic downturns, but cannot be paid out to members.

BC agriculture stands to benefit from a renewed interest in co-operatives. The provincial government would do well to support this vision in order to develop processing capacity within the sector that serves the broadest interests of local communities.

To accomplish this, a co-op development fund and extension support for co-op development would go a long way toward making information about starting co-ops easier to access. Acknowledging

co-operatives in business advisory resources would help.

Updating the province’s Securities Act would make it easier for co-operatives to raise capital in order to make the business model more useful to new start-ups and investors alike.

Finally, support for co-op succession planning would help new generations of farmers enter the sector while ensuring co-ops are left intact as an older generation retires. Support could also focus on helping existing businesses transition to worker-owned co-ops as owners seek to exit their businesses.

Chris Bodnar owns Close to Home Organics in Glen Valley and mentors new farmers through the Young Agrarians’ BC Business Mentorship Network program.

CLBC September 2017

Vol.103 Issue 10
OCTOBER 2017

Headlines Cranberries

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