OTTAWA – Estevan, Sask. rancher Brian Ross sounds like a traditional co-operative salesman as he tries to attract members to the new-style beef marketing co-op he is helping to create.
“It’s something cattlemen really should think about,” he says.
“This gives us a bit of power. Otherwise, the money people who own the packing plants will start to integrate downward and we soon won’t even own our own cows. We’ll be tending them for someone else.”
But his dream, Northern Plains Premium Beef co-op is anything but traditional.
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It is what Murray Fulton of the Centre for the Study of Co-operatives at the University of Saskatchewan calls a “new generation” co-op.
It will have limited membership, different membership rules and a place in the value-added end of the cattle business.
“I think we will see the prominence of the traditional marketing co-ops decline,” says Fulton. “I think the future growth is in these new generation co-ops. They are best equipped to adapt to changing economics.”
It is a trend evident across Canada and in the United States.
Co-ops created decades ago to market raw farm produce often find themselves in decline or short of capital. Farmers, meanwhile, are looking at new ways to organize their market clout.
Fulton said the “new generation” co-operatives have some common characteristics.
They extend into processing or value-adding levels of the industry, they have a limited membership based on the capacity of the processing facility to handle deliveries and they raise capital by selling ‘delivery rights’ to their members.
In the northern plains states of the U.S., new generation co-ops have been created to buy and process corn, pasta and bison.
According to Brenda Stefanson from the co-op study centre, Canadian producers of hogs and some vegetables also have been studying the idea.
But the Northern Plains Premium Beef co-op is the closest to getting off the ground. “It is at a very exciting stage, the first.”
Although organizing began in North Dakota, it now has members in 15 American states, Manitoba and Saskatchewan.
It is considering sites for a packing plant, including the possibility of buying the former Burns plant in Brandon, Man.
Ross said potential members are asked to signal their intent by paying $2 (U.S.) for each head of cattle they think they would want to sell through the co-op.
Once fully into the co-op, they would pay a one-time $60 per head fee to guarantee lifetime delivery rights. A producer planning to market 100 head per year would pay $6,000, for example.
These delivery rights will be a tradable commodity.
Members will receive an initial delivery price, based on a percentage of expected retail value of the animal. Excess revenues will be distributed later.
“This will give us more control and a better price,” says Ross, who is Saskatchewan’s representative on the Northern Plains board and who convinced the board to extend the membership drive in Saskatchewan to mid-August. “Right now, buyers offer as little as they can and the value-added profits go elsewhere. This way, we keep them.”
