The federal government should use its expected winter budget to offer incentives that strengthen the co-operative sector and give farmers more market power, MPs on the House of Commons finance committee were told last week.
The message came from two different sources as the committee continued hearings into what should be in the 2006 federal budget.
The Canadian Federation of Agriculture and the Canadian Co-operative Association both made the pitch.
The CFA, usually more focused on farmer safety nets and agricultural programming, argued that strengthening co-operatives would be a small step toward giving farmers more market power. Market weakness was identified in the summer report by Liberal MP Wayne Easter as a key factor in low farm incomes.
“Co-operatives and collective action have long been a solution for primary producers to bargain for equitable input prices in market output products,” CFA vice-president Marvin Shauf from Saskatchewan told MPs Oct. 4. “There are some issues that need to be dealt with as far as working with co-operatives in making them more sustainable.”
The CFA’s main proposal was that Ottawa adopt the Quebec policy of offering a tax break to co-op members and employees who invest in co-ops.
The tax benefit cost Quebec $6 million in lost tax revenues in 2002 but led to $36 million in direct capital investment in co-ops and much more investment into rural communities, according to the CFA vice-president.
“Extrapolated across Canada, it is estimated a national (Co-operative Investment Plan) would cost the Canadian government approximately $18 million to $20 million per year and, in successive years generate hundreds of millions of dollars in agricultural co-operative investment into Canadian communities,” Shauf told MPs.
The next day, the co-ops themselves went to Parliament Hill to argue that the government should increase financial support for co-operatives and create a federal cabinet post responsible for co-op policy.
The finance committee is expected to produce a report by the end of the year with recommendations based on what witnesses have said they want in the next federal budget, expected in February before an election call.
In the last budget in early 2005, finance minister Ralph Goodale responded to co-op pleas with some concessions to the sector.
This time, the co-op lobby and Canada’s largest farm lobby are teaming up to suggest that a stronger co-op sector means a stronger farm sector and a stronger economy.
“Canadian farm families are driving forces behind the Canadian agrifood industry and their goal is simply to generate sustainable incomes from the marketplace,” Shauf told MPs. “The Co-operative Investment Plan is a low-cost, efficient and effective tool to take one small step toward achieving that goal.”
He said the investment plan is one practical way to provide farmers with more market power through collective action.