StatsCan Survey: Need for More Investment in Co-ops

CCA, Canadian Cooperative Association — 3 Dec 2008

The Canadian Co-operative Association (CCA) has called on government and financial institutions to increase their investment in co-operatives in the wake of a Statistics Canada survey on co-op financing.

The Survey on Financing of Co-operatives, which was released today, shows that one-fifth of the Canadian co-operatives surveyed indicated that trying to obtain loans, grants or other forms of financing was a serious obstacle to the growth of their organizations. At the same time, the survey indicated that the majority of co-operatives that applied specifically for new or additional loans, lines of credit and credit cards - particularly those in rural areas - received the full amount that they requested.

Co-operatives are enterprises that are jointly owned by the members that use their services.  They undertake economic and social development activities, such as creating jobs or providing goods.  There are approximately 8.800 co-operatives in Canada, employing more than 150,000 people. The survey, jointly sponsored by the Co-op Secretariat in Agriculture and Agri-Food Canada and Human Resources and Social Development, sampled co-operatives in a wide range of sectors, including agriculture, natural resources and manufacturing, retail, health, economic development, child care and community services, such as arts and recreation.  The survey did not include housing co-ops or financial coops, such as credit unions.

Co-operatives that had requested financing in the three years prior to the survey reported that their main reason for seeking financing was to acquire additional working or operating capital.  The second most common reason was to purchase additional machinery and equipment, followed by buying additional land and buildings.

John Anderson, the CCA's Director of Government Affairs and Public Policy, said he was pleased to discover that the majority of co-ops who request external financing are receiving it, although he is concerned that financing remains a barrier for some co-op businesses.

"It is good to see that financial institutions are increasingly recognizing that co-ops are legitimate business enterprises, and deserve to be treated as such,"Mr. Anderson said. "We are hopeful that this trend will continue, and that an even greater percentage of co-ops will have access to financing in the future.  This is particularly important at a time of financial crisis, when co-operatives offer a low-cost and effective means of creating jobs and revitalizing the economy of our communities."

The survey showed that more than half of the co-ops surveyed had never made a request to the federal government for any kind of financing; and of these, more than three-quarters were not aware of any federal programs under which they would qualify for financing.

Mr. Anderson said the survey shows programs which support co-ops, such as the Co-operative Development Initiative (CDI), which provides business advice, technical assistance and grants to new and emerging co-ops are more than ever needed in this period of economic turmoil. The CDI program is scheduled to expire in March 2009, and the CCA and its francophone counterpart, the Conseil canadien de la cooperation et de la mutualité (CCCM), have launched a campaign to have it renewed and expanded.  The proposal would also include the creation of a $70 million Co-op Development Fund, which would provide loans to co-ops and be self-sustaining after five years.

"The CDI program has helped create over 200 new co-ops and provided assistance to some 1,500 others over the past six years," Mr. Anderson said. "If this program is renewed, the CCA will work with the federal government to ensure that more co-operatives across the country are aware of the kind of assistance that is available."

Mr. Anderson added that he is delighted that Statistics Canada is recognizing the importance of studying the co-op sector by conducting surveys like the one released today.

"Co-ops represent an important but often unrecognized sector of the economy, providing a wide range of products and services to Canadians across the country,"Mr. Anderson said. "While they are organized differently than other types of businesses, they play a key role in both the generation of wealth and the development of our communities.  Providing statistical data on co-operatives is valuable not only for the co-op sector itself, but it also helps familiarize the public with the extent of co-operative activity in Canada."

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Category: Business, Community