SASKATOON – Vern Leland said his remarks weren’t aimed at any particular co-operative.
But by the time he was finished, some Saskatchewan Wheat Pool officials were on their feet defending the pool against the criticisms they felt Leland had directed at their organization.
During a conference here last week on the future of co-operatives, Leland, president of Federated Co-operatives Ltd., presented a spirited defence of what he called the traditional method of financing co-ops.
That means relying on the members who use the co-op’s services to invest the necessary capital to keep it in business. It definitely doesn’t include going to the stock market to raise money, as Sask Pool has proposed to do.
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“My greatest fear is that as co-ops look to alternate sources of capital, they will eventually lose their focus on providing services to members,” Leland said.
When the people who provide the capital to run the co-op are not the same as the people who use the services, “then the bond is broken,” he said. When that happens, the organization will either disappear or cease being a co-op.
Leland had prefaced his remarks by saying he didn’t wish to criticize what any specific organization has done. His message, he said, was that the traditional method has stood the test of time and still works.
But Don Dean, a pool delegate from Langbank, Sask., took issue with the notion that there is a “traditional” method of financing.
Co-ops must have flexibility to figure out the best way to finance their operations, whether by raising money from members or government, borrowing or going to the public money markets.
“As long as the members want to do it,” then any method of financing should be acceptable, he said.
Ensure survival
Maurice Kostichuk, a pool delegate from Insinger, said the first responsibility of the board of directors of a co-op is to ensure the organization survives.
If the organization needs large amounts of capital in order to provide the services members want and expect to receive, the choice becomes simple, he said: “Do you stand by and let the co-op die or do you look for alternatives?”
Leland said in his experience, if members really want a service they will invest the money needed to pay for it. “If they’re not willing to do that, to put up the money, do the members really want the service?”
In the early 1980s, the retail co-op system was in dire straits. But rather than going to outside sources for more money, the organization found out exactly what services members wanted and were willing to pay for and restructured accordingly.
The results speak for themselves, he said. In 1982, FCL had member equity of $229 million, representing 32 percent of assets. In 1994 member equity was $800 million, or 76 percent of assets.
