Tough times in the rural economy don’t seem to have hurt Western Canada’s retail co-operative system.
Even as farm income plummeted last year, Federated Co-operatives Ltd.’s bottom line continued its inexorable upward climb.
At its annual meeting of delegates last week, FCL reported net earnings of $162.2 million on sales of just over $2.3 billion for the year ending Oct. 31, 1998.
That’s up $7.1 million from the previous year’s $155.1 million and marks the seventh consecutive year of increased earnings, which totaled $87.4 million in 1991.
FCL president Dennis Banda said the co-op system has done a good job of convincing people in small towns to stay home to do their shopping.
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“We’re not immune to the economic downturn,” he said in an interview. “But we’ve been able to keep our customers satisfied and committed.”
He said co-ops are able to offer their members both economic benefits and a sense of being involved in a locally owned business that is helping to keep their community going.
Last year FCL returned more than $141 million in cash payments to more than 300 local retail co-ops across Western Canada.
“Our members see that and they say, ‘this is a good deal,’ ” said Banda, adding the return of patronage dividends can make an important difference, especially in communities dependent on unpredictable farm incomes.
The 1998 annual report presented to delegates attending last week’s annual meeting showed that for the first time in seven years, sales declined slightly, to $2.33 billion from $2.41 billion the previous year.
Chief executive officer Wayne Thompson said the decline was due mainly to deflation in the petroleum market. Sales volumes of petroleum products were actually higher, but lower prices resulted in an $86 million decline in gross sales.
The organization is budgeting for record sales in 1998-99 of $2.44 billion and net earnings of $153.1 million. That would represent a decline in earnings, but Thompson said that in recent years earnings have tended to come in above budget.
“It’s a relatively conservative budget and if some of the extra things we’ve experienced the last few years happen, we should end up about the same as last year,” he said.
Thompson added that a healthy bottom line for Federated is good news for the rural economy. Retail co-ops have invested more than $450 million in new and upgraded facilities over the past 10 years, which provides a wide range of benefits to local communities.
It brings people into town to do their shopping, which can translate into more business for other local firms, he said.
It means more employment for construction and related services and it expands the tax base allowing the community to improve its physical infrastructure and perhaps expand its recreational and educational services.
The co-op system also injects cash into the local economy through patronage dividends to members.
Over the past 10 years, more than $500 million has been returned to members in cash, said Thompson.
