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A New Generation Co-op Success Story | |
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Westlock farmers did not relish the thought of a wrecker’s ball demolishing their grain elevator.
Yet, in 2002, the talk around town was grim: the local elevator might be permanently shut down.
Luckily for Westlock, earlier that year the Alberta Government had approved a new type of cooperative arrangement, called a New Generation Cooperative (NGC).
“Our investors decided to go with a new generation cooperative, which had all the advantages of the traditional co-op, as well as the ability to raise investment dollars from non-producers,” says Bob Heck, general manager of Westlock Terminals (N.G.C.) Ltd.
That summer, shareholders bought the terminal from Agricore, and became incorporated in August. They made history by becoming the first New Generation Cooperative in Alberta.
“We opened for business in December 2002,” says Heck.
“The economic benefits of pooling resources is becoming more prominent in the agricultural sector,” says Merle Good, provincial tax specialist in the commercialization division of Alberta Agriculture, Food and Rural Development. “With increasing competition and consolidation in the agricultural sector, a New Generation Co-op makes sense,” Good says.
A New Generation Cooperative is governed by the same laws as a traditional co-op, whereby the one-member, one-vote principle is retained.
“However, in a NGC, there is the opportunity to have a ‘closed’ membership option,” explains Good. “This option restricts membership to producers who can participate in the proposed business and have the capital to do so.”
With a NGC, there is a class of shares that has exclusive delivery rights. “These are called designated shares and are available only to members,” he says. “These shares ensure that the co-operative has a stable quality of producer-product.”
Currently, Westlock Terminals has 200 shareholders and nearly 700 farmers and customers. “We process 125,000 tonnes of grain a year, which is our maximum,” adds Heck. “We’re making money, we don’t have much debt and we’re very competitive with other grain companies. “The community has accepted us.” Last year, a $500,000 expansion was added. Another one is planned soon. The key, Heck says, is community support. “A co-op can be successful if it’s managed properly,” he says. “You have to have the commitment from the community.”
Another advantage is the spin-off for the local economy. “Instead of grain flowing into Edmonton, it flows into Westlock,” says Heck. “Our machinery dealers, local stores, businesses and banks all benefit.”
Alberta Agriculture, Food and Rural Development is committed to increasing awareness and implementation of NGCs throughout the province. “To date, approximately 10 NGCs have been incorporated in Alberta,” Good says. “All aspects of agricultural production are represented, from eggs to the marketing of forest seedlings.”
Farmers are looking to add value to their products through investment into a supply or value-added chain, he notes. “As well, they want to capture niche market opportunities,” he says. “A NGC provides the vehicle where a significant number of individuals can combine their efforts, in order to create sufficient equity capital, a substantial commodity base and energy to commercialize new business ventures. “In essence, a NGC structure provides both the flexibility and discipline of a corporation, with a democratic principle of a co-operative.”
For more information, contact Merle Good at (403) 556-4237 or by e-mail at merle.good@gov.ab.ca.
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For more information about the content of this document, contact Wendy McCormick.
This document is maintained by Jackie Majic.
This information published to the web on April 25, 2006.
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