The State of Co-ops in Western Canada

Murray Fulton

Murray Fulton

An American colleague recently asked me and a number of other academics and co-op leaders if we could provide a quick snapshot of large-scale co-operative activity in our geographical regions — consolidations, mergers, the nature of supply chains, and whatever else we felt was important. Here is my response.

Large-scale co-operative activity in western Canada is focused in two areas — retail and finance. In terms of the first, there are currently two retail co-op systems in western Canada — the Co-operative Retailing System (CRS) and the United Farmers of Alberta (UFA). The CRS consists of about two hundred local retails (which operate in many more locations than this as a result of mergers) across western Canada and their wholesaler, Federated Co-operatives Limited (FCL). The CRS specializes in food, fuel, lumber, and farm inputs (fertilizer, chemicals). The UFA functions as an integrated entity, with operations in Alberta and some locations in British Columbia and Saskatchewan. Its activities are focused on fuel, crop and livestock supplies, buildings, and building and automotive supplies.

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The number of locals in the CRS has been falling steadily over the last ten to fifteen years as a result of mergers and amalgamations. Sometimes the mergers were among equals; at other times, they occurred because one of the parties was financially weak. The local retails are divided into those serving large urban markets such as Calgary and Saskatoon and more rural markets, and the mix of products differs as a result. One of the big differences is the sale of farm inputs in the larger rural co-ops, which has been an area of significant growth during the last five years. The urban co-ops are concerned with engaging a membership that is highly diverse (e.g., millennials, local food advocates, and so on) and face considerable competition from major retail chains such as Sobeys and Walmart. The rural co-ops are focussed on attracting the larger farm businesses, which they have been reasonably successful doing, and are confronting major competition with multinationals in the farm supply business, which are consolidating. They have also had to deal with the downturn in the oil industry over the last few years, which has not only affected overall economic activity but also put pressure on the margin of one of their major products — fuel. The rural retail co-ops are not involved in grain marketing.

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There is some concern among members that the co-ops are getting too large, but the issue is typically the degree to which members are still in control and not the loss of competition. The supply chain, which is co-ordinated by Federated Co-operatives Limited, is becoming increasingly integrated, with locals sharing IT systems with FCL that allow the exchange of marketing and sales information. FCL is investing a great deal in the Co-op brand, imposing strict guidelines on the look and feel of retail stores and gas bars.


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The UFA system shares many of the same challenges identified in the CRS, including the downturn in the oil economy in Alberta and Saskatchewan and the consolidation in the farm input sector. It is also dealing with the ongoing effects of previous investment decisions that were the result of a tendency to do too much, too quickly. To deal with these challenges, the UFA is refocussing its efforts on customer service. It has also partnered with CHS Inc., a large US-based agricultural co-operative, in a joint venture in Alberta’s Peace River region that is focused on crop inputs and agronomic expertise.


Image source: http://www.blackstarlinecooperative

Finance is the second major area of co-op activity in western Canada, where credit unions are merging at a significant rate. The pressure is coming from a number of areas, including competition from the commercial banks and a set of policy changes that are removing tax advantages and imposing new regulatory requirements. The main goal of the mergers is to lower costs, while providing an increasing diversity of financial products and services. Members are concerned about the impact of mergers on access to service (e.g., some communities have lost their local credit union) and the loss of member control as the organizations become larger and more decision making flows to management.

Mergers have also resulted in changes in the supply chain. The so-called “centrals,” for many years provincially based and providing back-office services such as cheque clearing and a wide range of financial services, including mutual funds and RRSPs, are reorganizing. At least for now, this restructuring is taking place along functional lines, with new corporate entities performing the different functions (e.g., cheque clearing, financial services). Part of the reason for the restructuring is a desire to spread the cost of these services over credit unions in three or four provinces rather than just one. In other cases, the mergers are creating credit unions large enough to provide a number of these services on their own, thus requiring the centrals to find new “customers” for their services. Some of these large credit unions are looking at reorganizing under federal rather than provincial legislation, which will entail changes in how they are regulated. Credit unions appear to be following one of two broad strategies. Some are focusing on lowering costs and being more bank-like. Others are positioning themselves as values based, with a particular focus on the local economy.

There are, of course, co-operatives in every sector of the economy. However, the largest of these are generally found in retail and finance, mainly because these are the co-ops that have been around the longest. My American colleague was specifically interested in the activity of these larger co-operatives and how they are faring relative to the large multinationals with which they compete. As mentioned, my colleague is collecting responses from a number of people across North America regarding the state of co-ops in their region. Once more details become available, we will share them on this blog. And we welcome your own comments in the box provided below.

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