COOPERATIVEDEVELOPMENT

POLICYWITH COOPERATION,

EVERYONE IS A WINNER!

HORIZON2005

For information, please contactDirection des coopérativesMinistère des Finances, de l’Économie et de la Recherche710, place D’Youville, 7e étageQuébec (Québec) G1R 4Y4

Phone: (418) 691-5978Fax: (418) 646-6145Email: dir.coop-que@mic.gouv.qc.caWebsite: www.mfer.gouv.qc.ca

© Gouvernement du Québec, 2003

ISBN: 2-550-40610-9

Note: In this document, the word “cooperative” designates cooperatives governed by the Québec Cooperatives Act (R.S.Q., chapter C-67.2) unless otherwise indicated.

TABLE OF CONTENTS

PAGE

Message from the Deputy Premier and Minister of Finance,

the Economy and Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Message from the Minister for Industry and Trade . . . . . . . . . . . . . . . . . . . . . . . . 6

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Summary of measures and courses of action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Budgetary implications. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Chapter 1 The cooperative: A different kind of enterprise . . . . . . . . . . . . . . . . . 12

Chapter 2 Cooperatives: Playing a vital role in the Québec Economy . . . . . . . . 16

Chapter 3 Issues in cooperative development . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Chapter 4 A policy focused on growth. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

List of appendices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

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In December 2002, the Government of Québec launched the En Routeto Full Employment Strategy. The Cooperative Development Policyderives directly from this ambitious, future-oriented action plan.Resulting from a partnership between the cooperative movement andthe Government of Québec, the policy holds considerable promise foreconomic development and job creation.

In adopting the Cooperative Development Policy, the Government ofQuébec recognizes the role these enterprises play in ensuring thedevelopment and cohesion of Québec society. It was essential that thisdemocratic, just, and caring formula, with its important benefits forthe entire population, be given greater importance.

The Québec cooperative movement is recognized as one of the mostdynamic in the cooperative sector, both in North America and world-

wide. It has already proven that it is possible to think and act differently while remaining efficient andmeeting essential needs.

The Cooperative Development Policy will ensure that these enterprises are better equipped to deal with theissues and challenges they currently face. In addition, these enterprises will contribute to the objective setby the Government of Québec in Horizon 2005, i.e., to achieve full employment for all Quebecers.

Cooperatives have always brought people and communities together to work toward a common goal,capitalizing on complementary skills and know-how to carry out major projects and create economicpowerhouses in a number of sectors.

I therefore invite stakeholders from the cooperative sector and all socioeconomic partners to pursue theirefforts by taking an active role in implementing the Cooperative Development Policy.

Together, we can help build a cooperative movement capable of tackling today’s challenges with energyand vigor.

Pauline Marois

MESSAGEFROM THE DEPUTY PREMIER AND MINISTER OF FINANCE, THE ECONOMY AND RESEARCH

Cooperatives operate on principles of solidarity, democracy, and partici-pation. This distinctive foundation creates a need for tools adapted totheir needs. The Cooperative Development Policy outlines the mainchallenges cooperative enterprises face and, most importantly, proposesconcrete measures and courses of action intended to accelerate theirdevelopment and encourage their diversification toward promisinggrowth sectors.

Nonfinancial cooperatives have already experienced remarkable growthin recent years. Between 1995 and 2000, the rate at which new coopera-tives were being established doubled while the number of jobs theseenterprises provided jumped by 46%.

Cooperatives are enterprises that last. A recent study found that coope-ratives had a survival rate nearly twice that of private businesses after

five or ten years in operation. With their democratic structure and virtually inalienable character, coope-ratives have maintained and developed economic activities vital to Québec’s vibrancy and dynamism.

The cooperative movement is changing as it adjusts to new social and economic realities, and new coope-ratives sectors are emerging in response to specific needs.

In my view, this renewed vision, which has led the cooperative movement to diversify its outlook andfocus increasingly on innovation, bodes well for the future.

The Cooperative Development Policy also takes into account the changing environment in which coope-ratives operate by focusing on key strategic orientations and proposing appropriate tools.

Lucie Papineau

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MESSAGEFROM THE MINISTER FOR INDUSTRY AND TRADE

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Throughout the industrialized world, economicdevelopment revolves around three pillars: classicprivate enterprise, the public sector, and collectiveenterprise. Cooperatives are the most common typeof collective enterprise.

Cooperatives, which differ from individual enter-prises, allow for an original form of entrepreneur-ship rooted in the strength and collective interestof a group. However, cooperative entrepreneurshipand individual entrepreneurship complement eachother, because they target specific clienteles andoften meet different needs.

With their mode of operation based on participa-tion, cooperatives mobilize and encourage collec-tive effort. They are, first and foremost, anassociation of individuals. People-oriented, they arealso deeply rooted in their communities.

The various types of cooperatives generate signifi-cant economic benefits in areas where they operate.For example, members of agricultural cooperativesenjoy the best prices for inputs and also benefitfrom lower processing and marketing costs fortheir products. By the same token, workers whoteam up to form workers’ cooperatives create theirown jobs as well as share in business profits.

All cooperatives have an economic and socialdimension, but some of them are more orientedtoward a social mission, such as housing and homecare coops. These enterprises make a direct contri-bution to quality of life by providing the public withessential basic services.

Deeply rooted in their communities, cooperativesare inextricably linked to local and regional develop-ment. Indeed, 75% of cooperative jobs are foundoutside of major urban centers. Moreover, they arelargely concentrated in the manufacturing sector.

Cooperatives thus play a key role in the develop-ment of the resource regions. Forestry cooperativesare a convincing example of how this collectiveform of entrepreneurship has adapted by extendingits reach to primary and even secondary processingof coop-harvested timber.

For decades, the cooperative movement has alsoserved as an incubator for Québec entrepreneur-ship in numerous fields. School cooperativescontinue to play an important role in this regard byproviding young people with a hands-on introduc-tion to the world of cooperative business. Youthservices coops and “Jeune COOP” projects offersimilar opportunities to teens by giving them achance to learn all about operating and managing acooperative microbusiness.

Because the qualities and special strengths of thecooperative formula have consistently benefitedQuébec society, the government would like tocapitalize on these assets to help foster Québec’seconomic and social development even further.

In January 2001, the Government of Québecdecided to draft a Cooperative Development Policy.The main goal of the process was to step up thegrowth of cooperatives by encouraging coopera-tive enterprises to diversify into new sectors,including growth areas1 of the new economy.

Stakeholders from the cooperative movement wereclosely involved in drawing up the new policy.

In September 2001, two documents—a preliminarydraft version of the policy and a briefing paper inpreparation for the review of the CooperativesAct—were officially released for the purpose ofpublic consultations. All cooperatives, cooperative

INTRODUCTION

1 Growth areas are those areas where significant growth is expected over thecoming years and that generate substantial economic spinoffs (e.g., directand indirect jobs).

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associations, socioeconomic partners, and interestedorganizations and government departmentsreceived copies of the draft and the policysummary.2 In addition, all major cooperative, private,and government partners received copies of thebriefing paper.

The four main targets for action and the objectivesidentified in the draft policy drew strong supportfrom the partners involved.3

The Cooperative Development Policy, which isintended first and foremost for cooperativesgoverned by the Québec Cooperatives Act—i.e.,nonfinancial cooperatives—is resolutely modern inits approach, outpacing existing measuressupporting the development of cooperatives invarious other jurisdictions around the world. Itsprimary aim is to reaffirm the distinctiveness ofcooperatives in the face of the new economic andsocial challenges Québec must deal with.

2 A total of 3,500 copies of the Cooperative Development Policy preliminarydraft were distributed. In addition, 3,700 summaries of the draft were sent outto interested people and groups, as well as 800 copies of the briefing paperin preparation for the review of the Cooperatives Act. These documents werealso made available on the MIC Website, where they were consulted nearly2,000 times altogether.

3 The consultation on the preliminary draft of the Cooperative DevelopmentPolicy resulted in—– 23 meetings and presentations– attendance by 324 organizations and over 850 individuals– submission of 77 briefs or letters of comment

The policy is also in keeping with the recommen-dations of the International Labor Organization(ILO), which came out in support of cooperativesin June 2002. The international organizationsuggested that governments “should provide asupportive policy and legal framework consistentwith the nature and function of cooperatives andguided by the cooperative values and principles setout by the International Cooperative Alliance.4”

The Cooperative Development Policy is a first in thehistory of the Québec cooperative movement. Inaddition to new approaches and the financialresources required for their implementation, it alsointroduces support measures adapted specificallyto the cooperative environment.

By acknowledging the central role cooperativesplay in the economy and tackling the specificproblems they face, the Cooperative DevelopmentPolicy takes resolute aim at ensuring the harmo-nious development of cooperatives, marking animportant step in the reaffirmation of Québec’sleading role in this key sector.

4 Excerpt from the Recommendation on the Promotion of Cooperatives adoptedat the last international conference of the ILO, in June 2002

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Summary of Measures and Courses of Action5

STRATEGIC ORIENTATIONS, MEASURES, AND COURSES OF ACTION DEPARTMENTS AND ORGANIZATIONS CONCERNED

AREA 1: Introduce an effective and innovative legal frameworkStrategic orientation: Modernize the Cooperatives Act to step up development of cooperatives� Course of action: Reinforce the distinctive legal character of the cooperative and take into account

the specifics of the cooperative formula MFER and MJUS6

� Course of action: Improve capitalization MFER and MJUS� Course of action: Reaffirm the nondivisibility of the general reserve MFER and MJUS� Course of action: Strengthen sectoral networks MFER and MJUS� Course of action: Improve operation of cooperatives MFER and MJUS

AREA 2: Develop or improve capitalization and financing tools suitable for the cooperative environment

Strategic orientation: Ensure adequate funding for supporting the emergence and growth of cooperatives� Measure: Expand government involvement in the Réseau d’investissement social du Québec (RISQ) MFER� Measure: Set up Capital régional et coopératif Desjardins (CRCD) MFER� Measure: Establish the Programme favorisant la capitalisation des entreprises d’économie sociale and the

Programme favorisant le financement de l’entrepreneuriat collectif at Investissement Québec IQ� Measure: Inject additional capital into the Réseau d’investissement social du Québec (RISQ) MFER� Measure: Create Filaction, the fund to support community funds MFER, MREG, and FondactionStrategic orientation: Increase cooperative equity in order to improve their capitalization� Measure: Partially abolish the limit on allocation and deductibility of patronage dividends MFER� Course of action: Support demands by the cooperative movement regarding federal taxation MFER� Measure: Enhance the Cooperative Investment Plan (RIC) MFER� Measure: Postpone taxation of patronage dividends paid in the form of preferred shares for members

of eligible cooperatives MFER

AREA 3: Improve consulting services available to cooperativesStrategic orientation: Improve consulting services available to cooperative startups� Measure: Renew and enhance the Programme d’aide aux coopératives de développement régional (CDR) MFERStrategic orientation: Strengthen specialized oversight and federated operations� Measure: Set up a specialized coop retention and oversight program for the cooperative federations MFER� Measure: Renew and enhance the Programme de soutien aux regroupements sectoriels en économie sociale MFERStrategic orientation: Increase the quantity and variety of multipliers for the cooperative formula� Course of action: Support the development of regional and sectoral partnerships in the development

of cooperatives MFER and MREG

� Measure to come or course of action� Recently adopted measure

5 See Chapter 4 for the various measures and courses of action.

6 See Appendix 5 for the list of acronyms used.

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STRATEGIC ORIENTATIONS, MEASURES, AND COURSES OF ACTION DEPARTMENTS AND ORGANIZATIONS CONCERNED

AREA 3 (cont’d)Strategic orientation: Enhance the competitiveness of cooperative enterprises� Course of action: Support research and innovation MAPAQ, MRN, and MFER� Course of action: Promote best business practices MFERStrategic orientation: Help strengthen the associational dimension of cooperatives� Measure: Develop and make available a certification tool for cooperatives MFER and CCQ

AREA 4: Acknowledge the role of cooperatives by integrating and harmonizinggovernment action in the area of cooperative development

Strategic orientation: Recognize the Conseil de la coopération du Québec as the cooperative movement’s representative body� Measure: Support specific structuring initiatives by the cooperative movement and the Conseil de la

coopération du Québec MFERStrategic orientation: Enlist the support of the entire government in fostering cooperative development� Measure: Maintain a government mandate in matters of cooperative development Government� Course of action: Take the distinct nature of cooperatives into account in government programs, legislation,

and measures GovernmentStrategic orientation: Promote the cooperative formula and enhance coop visibility� Course of action: Educate socioeconomic actors and agents about the cooperative formula MFER� Measure: Establish “Distinctions Coopératives” awards MFERStrategic orientation: Increase the quantity of cooperative training at every level of the educational system� Course of action: Increase teaching of cooperation at different levels of the school system MEQ

Fédération des cégepsAssociation des collèges privés

du QuébecConference of Rectors

and Principals of Québec Universities

Strategic orientation: Promote partnerships between cooperatives and the government in a variety of areas� Course of action: Promote business partnerships between cooperatives and the government Conseil du trésor� Course of action: Identify key orientations in the cooperative housing sector MFER, SHQ, and CQCHStrategic orientation: Encourage cooperatives to position themselves strategically in relation to major social and economic trends� Measure: Conduct studies on how globalization affects cooperatives MFER, CCQ, and universities� Measure: Identify sectors with good potential for cooperatives MFER, CCQ, and universities� Course of action: Build partnerships between cooperatives and other enterprises in the social MFER, CCQ, and

economy Chantier de l’économie sociale

Youth InitiativesStrategic orientation: Finance and support projects developed by young people� Course of action: Position the Campus Cooperative formula MESS and MRCI� Measure: Establish Audace, a financial aid program for young cooperative entrepreneurs Fonds Jeunesse

in the regions and FCDRQ� Measure: Set up a multipurpose portal on cooperatives in the school community MFER and Fonds de

l’autoroute de l’informationStrategic orientation: Promote the cooperative formula among young people, especially teens� Measure: Develop a measure to promote the cooperative formula MFER, CCQ, and Fondaction

pour l’éducation à la coopération

� Measure: Set up the second student fund for youth services coops (Government of Québec MFER and Solidarityand Solidarity Fund QFL) Fund QFL

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TOTALNEW MEASURES HAVING A BUDGETARY IMPACT (2003-2004) (2004-2005) (2005-2006) (3 YEARS)

($) ($) ($) ($)

CAPITALIZATION AND FINANCING

Operating budget allocation for RISQ7 400,000 400,000 100,000 8 900,000

SUBTOTAL 400,000 400,000 100,000 900,000CONSULTING SERVICES

Creation of specialized coop retention and oversight program for cooperative federations 1,500,000 2,000,000 2,000,000 5,500,000

Enhancement of the Programme d’aide aux coopératives de développement régional — 250,000 250,000 500,000

Development and distribution of a certification tool for cooperatives 100,000 100,000 65,000 265,000

SUBTOTAL 1,600,000 2,350,000 2,315,000 6,265,000

RECOGNITION AND PROMOTION OF COOPERATIVES

Creation of a support measure for structuring initiatives 600,000 600,000 600,000 1,800,000

Creation of “Distinctions Coopératives” awards 15,000 10,000 10,000 35,000

Funding for positioning studies (globalization, growth sectors for cooperatives) 100,000 50,000 50,000 200,000

Creation of a measure to promote the cooperative formula* 300,000 500,000 500,000 1,300,000

SUBTOTAL 1,015,000 1,160,000 1,160,000 3,335,000

TOTAL COST OF NEW MEASURES 3,015,000 3,910,000 3,575,000 10,500,000

RENEWED MEASURES

Renewal of the Programme d’aide aux coopératives de développement régional 9 — 2,500,000 2,500,000 5,000,000

Renewal and enhancement of the Programme de soutien aux regroupements sectoriels en économie sociale 1,500 000 1,500,000 1,500,000 4,500,000

COST OF RENEWED MEASURES 1,500,000 4,000,000 4,000,000 9,500,000

ALL MEASURES (NEW AND RENEWED) 4,515,000 7,910,000 7,575,000 20,000,000 **

BUDGETARY IMPLICATIONS

The government plans to invest $20 million over three years in the initiatives presented in the CooperativeDevelopment Policy.

7 RISQ: Réseau d’investissement social du Québec.

8 The convention governing the agreement between the government and RISQ will expire on March 31, 2005. The parameters of the government’s commitment will therefore be reviewed at that time.

9 The Regional Development Cooperative Assistance Program currently has a budget of $3,577,500 per year until March 31, 2004. Of this amount, $1,077,500 isrecurring as part of the department’s budget. When the current program ends, the policy calls for the amount of $2,500,000 to be renewed for a period of two years.

* Measure affecting youth, among others

** This amount does not include the cost of tax-based measures.

CHAP

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1THE COOPERATIVE:A DIFFERENT KINDOF ENTERPRISE

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WHAT IS A COOPERATIVE?

Cooperation as an economic and business modeloriginated in mid-nineteenth century England inresponse to the abuses of the Industrial Revolution,then spread to countries such as France, Italy, andGermany. The cooperative model was introducedin Québec in the second half of the 19th century.Here it found fertile ground, garnering a strongfollowing unrivaled anywhere else in NorthAmerica.

In Québec, cooperatives are generally favorablyperceived and even enjoy a relatively high profilethanks to the importance of the large financial andagricultural coops. However, most people knowlittle about the cooperative model, its underlyingphilosophy, and the characteristics that set coopsapart from ordinary companies.

The International Cooperative Alliance (ACI), theinternational umbrella group for cooperativesworldwide, defines a cooperative as follows:

A cooperative is an autonomous association of persons

united voluntarily to meet their common economic,

social, and cultural needs and aspirations through a

jointly owned and democratically controlled enterprise.

(International Cooperative Alliance [ICA])

The cooperative is a corporate body comprised of agroup of individuals and corporate entities, unlike acompany, which is composed of capital. Thisdistinction is key, because it constitutes the veryessence of cooperative purpose and function.

The cooperative is also unique and original in thatits principal mission is to meet the needs of themembers who created it. These needs could be toobtain goods and services at lower cost (consumergoods, housing services, social services, cable,funeral services, etc.), to create jobs through a workcoop, or to transform and market products througha producer coop.

Although the coop’s main mission is to meetmember needs, this does not prevent it from gener-ating profits that can be used to support furthergrowth, distribute dividends to its members, or forany other purpose.

The cooperative is a remarkable system that puts

individuals first. Coops belong to their supplier members

and customer shareholders and represent an intelligent

compromise between local situations and global

markets.

(Jean le Vourch, president of the Fédération nationale des coopérativeslaitières in France)

The relationship between cooperatives and theirmembers is based on usage rather than investment.More specifically, people must do business with thecooperative—or act as users, so to speak—tobecome members. Since the performance ofcooperatives depends on the level of use, surplusesare allocated to members based on their participation.

Cooperatives are democratically operated accordingto the principle of “one member, one vote.” It isimpossible for any single individual to take controlof a cooperative. Decisions regarding the coop aremade by the majority of its members at the generalassembly.10

10 The General Meeting of Members pronounces on those matters specified inthe act.

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Because cooperatives, like companies, are corpo-rate entities that are distinct from their members,they have a separate legal existence. The responsi-bility of members to the cooperative is thereforelimited to the value of their subscribed shares. Thisnotion is similar to that which exists for companieswhere shareholder liability is limited to the amountof subscribed shares. (See Appendix 2, Compara-tive Table: Cooperatives, Companies, and NonprofitOrganizations [NPOs]).

COOPERATIVE PRINCIPLES

Cooperatives operate on the basis of values of self-help, self-responsibility, democracy, equality, equity,and solidarity. Here are the seven principles recognized by the International CooperativeAlliance (ACI):– Voluntary and open membership– Democratic member control– Member economic participation– Autonomy and independence– Education, training, and information– Cooperation among cooperatives

(intercooperation)– Concern for community

THE COOPERATIVE: A PARTICIPATORY ENTERPRISE

Cooperatives are, above all, enterprises in whichmembers take part in operations in one of threeways:– Participation in ownership– Participation in control– Participation in surpluses based on usage

TYPES OF COOPERATIVES

Five types of cooperatives are currently authorizedunder the Québec Cooperatives Act, each meetingspecific economic needs:– Consumer cooperatives– Producer cooperatives– Work cooperatives– Worker-shareholder cooperatives (CTAs)– Solidarity cooperatives

All five types operate according to the principles ofthe cooperative model. However, there are signifi-cant differences between them as to their purposesand the sectors in which operate.

Consumer Cooperatives

Consumer cooperatives belong to their members,whom they provide with a variety of products andservices. These coops are usually created to providemembers with goods or services at lower cost byincreasing their purchasing power or simply toprovide access to goods or services not readilyavailable on the market or in the local area.

Consumer coops exist for housing, food, healthcare,recreation, educational goods and services, funeralservices, cable, etc. Financial services coops andinsurance mutuals are also examples of consumercoops.

Producer Cooperatives

These cooperatives belong to their producermembers, to whom they provide goods andservices related to their occupation. They maysupply members with goods and services requiredfor work purposes or process and market memberproducts.

Producer coops are found mainly in the agrifoodindustry, the taxi industry, and the business servicessector. They may also take the form of purchasinggroups and farm equipment and labor pools. Moreand more professionals and specialized workers arealso forming coops to access professional services,including opticians, jewelers, designers, artists,computer specialists, etc.

Work Cooperatives

Work cooperatives belong to their memberworkers, who operate a business in order toprovide themselves with employment. They give

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members the opportunity to control their workingconditions and work environment.

As with all cooperatives, membership is based onthe principle of usage. In the case of work coops,this means that members must be employees of theenterprise.

Work coops are found in the sectors of forestrymanagement, logging and wood processing,ambulance services, consulting, communications,business services, social services, and manufac-turing in general.

Worker-Shareholder Cooperatives(CTAs)

CTAs are work cooperatives made up of theemployees of a company, who collectively own ablock of company shares. CTAs participate incompany administration, management, and profitsharing in the interests of their members.

CTAs are found in a number of sectors, particularlyfood processing, wood processing, generalmanufacturing, new technologies, and transportation.

Solidarity Cooperatives

These cooperatives are characterized by the diver-sity of their membership and their interest inpartnerships. Their members include both—– Users of the services the coop provides– Coop employees

In addition, individuals and corporate bodies thatshare the cooperative’s economic and social objec-tives are eligible to become supporting members.

Solidarity cooperatives are particularly active in theareas of homecare, social services, recreation andtourism, and other services.

COOPERATIVE NETWORKS

In Québec and elsewhere, cooperatives generallyoperate as networks. Long before the notion ofnetworking came into fashion, cooperatives wereable to break their isolation, build synergies, and

take advantage of economies of scale by joiningtogether in sectoral, regional, and nationalnetworks.

Sectoral cooperative federations and associationsimplement joint strategies to support and developcooperatives in their respective sectors. They alsoprovide specialized services that play an importantrole in ensuring the growth and survival of coope-rative enterprises.

In the course of the past 15 years, most coops havealso joined forces regionally in regional develop-ment cooperatives (CDR). CDR member coopsconsult each other, promote the cooperative modelthrough a variety of initiatives, and providetechnical support to coops in startup phase.

CDRs also provide assistance to coop promoters—notably through the Programme d’aide aux coopéra-tives de développement régional—to help them gettheir projects under way under the best possibleconditions.

External Partner Networks

Over the years, Québec cooperatives have builtextensive networks through which they share infor-mation and services with various partners.Depending on the sector, they have also developedties with a number of government departments andorganizations, including Investissement Québec, theMinistère de l’Agriculture, des Pêcheries et de l’Ali-mentation, the Société d’habitation du Québec, andthe Ministère de l’Emploi et de la Solidarité sociale(local employment centers).

Coops also receive strategic information and advicefrom universities with an interest in coop-relatedresearch. University resources include theDesjardins Study Center on Cooperative and Finan-cial Service Management at École des hautes étudescommerciales (HEC Montréal), the Guy-BernierCooperation Chair at Université du Québec àMontréal (UQAM), and the Research and TeachingInstitute for Cooperatives at Université de

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Sherbrooke (IRECUS). CIRIEC, an interdisciplinaryresearch and information center on collective enter-prises, is another institution very active inconducting research on cooperatives and othercollective ventures.

In addition, cooperatives can rely on naturalpartners like economic development agencies(CLDs, CDECs, GRTs, etc.11), unions, and commu-nity organizations to support cooperative develop-ment.

In recent years, partnerships have also been established between cooperatives and various stake-holder organizations in the social economy sector,including Chantier de l’économie sociale and theComité sectoriel de la main-d’œuvre de l’économiesociale et de l’action communautaire. Thesealliances have encouraged diversification in thecooperative sector and helped introduce the coopmodel to a broader audience.

The vitality of Québec’s coop sector is due in part tothe substantial and ongoing partnerships that haveflourished between coops and community organi-zations. The scope of these relationships isunmatched in the rest of Canada.

CONSEIL DE LA COOPÉRATION DU QUÉBEC: A FOCAL POINT FOR COOPERATIVE DEVELOPMENT

Founded in 1940 by Father Georges-HenriLévesque, the Conseil de la coopération du Québecis currently made up of forty-odd organizations,cooperative associations, and mutuals. CCQ is alsothe acknowledged representative organization forthe cooperative movement throughout Québec.

Since its foundation, CCQ has provided a vitalforum for reflection and action on cooperativedevelopment. The Council strives to advance thecooperative cause through dialog, promotion,research, and education and provides support tocooperatives in the startup, consolidation, anddevelopment phases.

11 CLD: centre local de développement (Local Development Center) CDEC: corporation de développement économique communautaire (Community Economic Development Corporation) GRT: groupe de ressources techniques dans le domaine de l’habitation (Housing Technical Resource Group)

CHAP

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2COOPERATIVES:PLAYING A VITAL ROLE IN THE QUÉBEC ECONOMY

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TABLE 1

Statistical Portrait of the Québec Cooperative Movement in 2000Number of Sales Assets Members Jobs

Cooperatives (millions of $) (millions of $) (000)

Desjardins financial services cooperatives 972 5,888 76,117 5,068 36,436

Mutual insurance companies 39 1,554 3,874 1,310 3,483

Nonfinancial cooperatives 2,369 6,621 3,565 848 35,003

TOTAL 3,380 14,063 83,556 7,226 74,922

Source: Cooperatives Branch, Ministère des Finances, de l’Économie et de la Recherche (MFER)

This remarkable [cooperative] movement possesses an

irresistible strength all its own, a force destined to mark

the evolution of the economic sphere.

(Alphonse Desjardins)

Cooperatives have been part of Québec’s social andeconomic landscape for over a century. More thananywhere else in North America, they play a keyrole in the lives of our communities. Born as aresponse to the economic and social isolation offrancophone Quebecers, they have fostered theemergence of a new form of entrepreneurship builton collective strength and solidarity.

Cooperatives that were established to meet thepressing needs of the times have progressivelystructured economic sectors of crucial importanceto Québec, ensuring the viability of sectors thatwere either neglected or poorly serviced by tradi-tional private enterprise.

We have only to think of the caisses populaires andworkers credit unions, which brought financialservices (savings and loans) to the general public

and workers’ groups at a time when such serviceswere reserved almost exclusively for merchants andbusinessmen. Similarly, mutual societies andsavings and credit cooperatives made insuranceavailable to all. And in the agricultural sector,emerging cooperatives had a major impact,sparking a movement to structure and modernizeQuébec agriculture by changing the way farmswere supplied and agricultural products processedand marketed.

THE QUÉBEC COOPERATIVEMOVEMENT IN FIGURES

Today, the Québec cooperative movementcomprises financial services coops, which operateunder the Desjardins Group, as well as insurancemutuals and nonfinancial cooperatives.

As of December 31, 2000, there were 3,380 coope-ratives in Québec. Together, they employed 74,922 people, had sales of over $14 billion (seeTable 1), and possessed assets worth nearly $84 billion, most of them in the form of savingsunder Desjardins Group management.

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Total coop membership was over 7.2 million, whichmeans that Quebecers are often members of morethan one coop.

The Québec cooperative movement is also a leaderin the North American coop sector. Québecaccounts for almost 40% of all cooperatives inCanada, and nearly 50% of coop jobs. Moreover,Québec’s dominance of the sector has actuallyincreased in recent years, due in part to an increasein the number of coops.

Nonfinancial cooperatives are a special focus of thegovernment’s Cooperative Development Policy. In2000, there were 2,369 such enterprises, 2,059 ofthem reporting12 (Table 2). Together they recordedtotal sales of $6.6 billion, had assets of almost $3.6 billion, and employed 35,000 people.

As the following table shows, consumer coopera-tives are the largest group, accounting for 71% ofall coops and 17% of coop jobs. They include alarge number of housing coops.

Although the 266 producer coops only make up13% of all coops, they represent 49%15 of total coopsales. This category includes several large concerns,including Agropur, Nutrinor, Exceldor, andAgrinove.

As for work cooperatives, they have contributedsignificantly to job creation in recent years,accounting for 9% of all coops, but 25% of coopjobs. This result is largely due to cooperatives in theforestry sector.

Most worker shareholder coops (CTAs) have beenestablished during periods of company growth orconsolidation and are primarily found in the indus-trial sector. Companies in which CTAs ownedshares generated an estimated $450 million inrevenues in 2000.

12 Reporting cooperatives are those that supplied annual reports. The difference between active cooperatives and reporting cooperatives can result from severalfactors: recently constituted cooperatives have not completed their first fiscal years, certain cooperatives have failed to produce their annual reports, cooperativeshave temporarily ceased activities, etc.

13 This figure does not include sales by companies in which cooperatives own shares.

14 The concept of solidarity cooperative was consecrated by the Cooperatives Act in June 1997.

15 Excluding groups like Coopérative fédérée de Québec.

TABLE 2

Nonfinancial Cooperatives in 2000Type of Number of Sales Assets Members JobsCooperative Reporting (millions of $) (millions of $)

Cooperatives

Cooperative groups 21 2,081.8 647.7 1,115 8,231

Consumer 1,458 747.2 1,216.8 784,329 5,975

Producer 266 3,237.4 1,298.8 39,393 7,111

Work 189 525.3 360.3 6,641 8,622

Owner worker 58 10.313 30.5 3,780 3,754

Solidarity 6714 19.2 11.5 12,805 1,310

TOTAL 2,059 6,621.2 3,565.6 848,063 35,003

Source: Cooperatives Branch, MFER

18

GROWTH OF COOPERATIVESACCELERATES

Under the [Cooperative Development] policy, the coope-

rative movement intends to acquire new tools to

maintain and even step up its pace of development,

which is measured by the growth of existing coopera-

tives, the increase in the number and stability of startup

cooperatives, and the bolstering of public awareness of

the cooperative model in general.

(Brief presented by Conseil de la coopération du Québec duringconsultations on the preliminary draft of the Cooperative DevelopmentPolicy)

From 1995 to 2000, growth in the coop sector wasup in virtually every respect. The number of newcoops being established increased markedly, from85 in 1995 to 169 in 2000 (Figure 1), doublingbetween the beginning and end of the period.

This strong growth was due in large part to thecreation of new solidarity coops, work coops, andworker shareholder coops, and to a certain extentproducer coops as well.

GRAPH 1

Change in New Cooperative Startups, 1995 to 2000

Source: Cooperatives Branch, MFER

200

150

100

50

01995 1996 1997 1998 1999 2000

85

124 127

188 185169

Solidarity cooperatives have only existed since 1997,but their numbers have been growing very rapidly.There are presently over 160 solidarity coops inoperation compared to only 67 in 2000, most ofthem in the personal services sector.

Lastly, cooperative associations play an importantrole in the dynamics and development of manycoop sectors.

Coopérative fédérée de Québec, a federation ofagricultural coops, is by far the most active of thesegroups in terms of the diversity of its activities andthe size of its affiliates. In its federative capacity, ithelps supply its 100-odd member coops and alsopossesses several large meat processing facilities.The largest nonfinancial cooperative organizationin Québec in terms of sales and employees,Coopérative fédérée de Québec and its network ofaffiliates have over 14,000 people on payroll, makingthe group the sixth largest employer in Québec.

19

Cooperative sales also underwent a marked 32% increase between 1995 and 2000, climbingfrom $5 billion to $6.6 billion (Figure 2). In compa-rison, Québec GDP went up 25.3% over the sameperiod.

As for the assets of nonfinancial cooperatives, theyincreased by 33% during the same period, echoingthe pattern for sales.

Total membership in nonfinancial cooperatives wasover 848,000 in 2000. Consumer coops accountedfor the majority of members because they provideservices intended for the general public and there-fore deal with a very broad clientele. This is thecase, for example, of coop stores, school coops,cable coops, and funeral coops.

GRAPH 2

Change in Sales and Total Assets of Cooperatives, 1995 to 2000 (millions of dollars)

Source : Cooperatives Branch, MFER

7000

6500

6000

5500

5000

4500

4000

3500

3000

2500

20001995

2673

5032

2797

5536

3102

5978

3187

6190

3385

6195

3566

6621

1996

Sales Total Assets

1997 1998 1999 2000

20

GRAPH 3

Change in Employment, 1995 to 2000 (thousands of jobs)

Source: Cooperatives Branch, MFER

36

34

32

30

28

26

24

221995

23,925,2

27,4

30,0

32,2

35,0

1996 1997 1998 1999 2000

Nonfinancial cooperatives also recorded a jobcreation rate five times higher than the Québecaverage for the 1995 to 2000 period. The number ofjobs in nonfinancial coops increased by 46% duringthis period, compared to 9.2% for the economy asa whole (Figure 3). Producer coops and Coopérativefédérée de Québec accounted for much of thisperformance, creating 3,500 jobs, including 2,300 inprocessing-related operations.

Accelerated growth in the cooperative movementis attributable to the revitalization of traditionalsectors (agrifood, forestry, retail, etc.) as well asdiversification into new sectors. Cooperatives havemade breakthroughs in the service industry (e.g., homecare) and, to a lesser extent, in the neweconomy. Available figures suggest that these newfields should account for a significant portion of thenew coop jobs created in 2001 and 2002. The totalnumber of jobs in the sector is estimated to havehit 36,500 in 2001, and 38,000 in 2002.

21

ENTERPRISES WITH A MAJORIMPACT

Cooperatives are especially active in the secondarymanufacturing sector, although they are also verypresent in the primary sector.

As Table 3 shows, on a proportional basis, coope-ratives account for twice as many jobs in themanufacturing sector as Québec businesses as awhole (45.1% vs. 22.4%). In the primary sector, thegap is even wider, with the number of coop jobsnearly six times higher than for the Québececonomy as a whole.

Coops in the manufacturing sector are concentratedprimarily in agrifood, wood processing, and variousindustrial products. In the primary sector, agricul-ture, forestry management, and logging operationsaccount for most of the activity.

In the years ahead, we can expect rapid growth inthe tertiary sector. Between 1996 and 2000, forexample, an estimated 2,500 jobs were created bydomestic help and social service cooperatives, atrend that will in all likelihood continue as the needsof an aging population increase.

REGIONAL ROOTS, REGIONALGROWTH

Housing cooperatives are found mainly in largeurban centers like Montréal and Québec City, butmost other coops are concentrated in rural andsemi-urban regions, where over 75% of coop jobsare located.

In today’s world, it can be reassuring for countries and

communities to count on cooperatives, inalienable enter-

prises whose structure of ownership protects them

against hostile bids and takeovers. It can be reassuring

to count on enterprises that have long term local

interests at heart and that will plow profits back into

their communities rather than turn them over to share-

holders who may well live thousands of miles away.

(Mr. Alban D’Amours, president of Desjardins Group)

In the agrifood and forestry sectors, the biggestcooperative sectors for sales and jobs, almost allproduction and processing is carried out in theregions.

TABLE 3

Job Breakdown by Economic Sector in 2000 (coop jobs vs. all jobs in Québec)

Cooperatives Québec(%) (%)

Primary Sector 17.8 3.0

Secondary Sector 45.1 22.4

Tertiary Sector 37.1 74.6

TOTAL 100.0 100.0

Source: Institut de la statistique du Québec

22

Cooperatives are also very active in providing localservices in the regions through coop stores, coophardware outlets, homecare services, etc. In fact,tertiary sector coop jobs are linked in large measureto local services. This is the case, for example, forthe vast majority of coop stores located in smallcommunities in the outlying regions. Often, thesecoops are the focal point for local commercialactivity and sell a wide variety of merchandise.

ENTERPRISES THAT LAST

Table 4 shows that cooperatives have a significantlyhigher five-year and ten-year survival rate thantraditional private businesses.

This high survival rate is due to inherent features ofthe cooperative model as well as to the general andspecialized support services provided to coops byregional and sectoral associations.

For a clearer portrait of present-day coope-rative activity, see Appendix 4. It provides anoverview of the main sectors where a criticalmass of cooperatives operate as well as asummary of the challenges and issues facingQuébec coops in the years ahead.

TABLE 4

Cooperative Enterprise Survival Rate in QuébecFive Years Ten Years

Survival Rate (%) Survival Rate (%)

Average cooperative survival rate 64 46

Average private business survival rate (according to Statistics Canada) (all companies combined) 36 20

Institut de recherche sur les PME (UQTR) (manufacturer sector) 47 30

Source: Taux de survie des entreprises coopératives au Québec, MIC, 1999, p.15

CHAP

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3

23

ISSUESIN COOPERATIVEDEVELOPMENT

Cooperatives play a significant role in several keyareas of the economy. However, it is only recentlythat they have begun to turn up in the neweconomy.

Cooperatives also find it difficult to establishthemselves in urban environments. Coop projectsare easier to implement in areas where there is atightly knit social fabric and where ties of solidarityalready exist.

Given their advantages, what prevents cooperativesfrom developing further? Why do they find theirfields of potential endeavor limited? There is noeasy answer to these questions. Many factors areinvolved. To prosper, cooperatives need to be ableto rely on an environment favorable to theiremergence and growth. Certain key elements mustbe present to facilitate their development. Despitethe various measures of government support,consultations on the draft policy clearly revealedthat Québec cooperatives need more tools and leversto fully assume their role in economic development.

Among the changes required, the following prioritiesneed to be addressed:– Establish a modern legal framework adapted to

contemporary circumstances– Facilitate access to the capital required for

growth– Provide startup assistance services and specia-

lized coaching adapted to coop requirements– Promote best business practices and strengthen

the associational dimension of cooperatives– Recognize the special contribution of coopera-

tives to the social and economic development ofQuébec and harmonize government initiatives inthe coop sector

LEGAL FRAMEWORK

Since the early 20th century, nearly all Québeccooperatives have been governed by the Coopera-tives Act. Because this act has undergone onlytechnical changes in recent years, it is in somerespects not as well adapted to the environment inwhich today’s cooperatives operate. A 1998 studyby the Ministère de l’Industrie et du Commerce andUniversité du Québec à Montréal also shows thatthe Québec act is less permissive than legislation inmost Canadian provinces and at the federal level.

Furthermore, the current Québec act primarilyaddresses the needs and philosophy of consumercooperatives, while new areas of cooperative deve-lopment are increasingly focused on work coope-ratives, shareholder worker cooperatives and, morerecently, solidarity cooperatives. The act shouldtherefore be adjusted to reflect this reality.

Briefs received during the consultation on the DraftCooperative Development Policy clearly show thatboth cooperatives and partners agree that whilereaffirming cooperative principles, amendments tothe act should convey the diverse realities of thecooperative movement. In response to requests,amendments should also ease certain regulationsand broaden cooperative powers.

16 The study was called “La réserve générale impartageable : origine, évolution,situation actuelle.”

24

COOPERATIVE CAPITALIZATIONAND FINANCING

Cooperatives have had to make heavy investmentsin recent years to meet the challenges of the neweconomy. Many took advantage of market opennessto launch major projects that generated many jobs.On the whole, cooperatives made average invest-ments of $166 million per year over the past fiveyears. These initiatives created over 11,100 cooperative jobs from 1995 to 2000.

Increased investment by cooperatives has directlyimpacted their capitalization rate, which declinedfrom 40.1% in 1995 to 35.7% in 2000. While coope-ratives are profitable, their profits are not enough tocover all their capital requirements and therebyallow them to effectively face the competition andseize new business opportunities.

The issue of cooperative capitalization is all themore worrisome, given that cooperatives must—like all Québec businesses—continue investing inupcoming years in order to boost their productivity,launch new products, and maintain their marketshare.

Cooperative capitalization and financing havealways been problematic. But they have a greaterimpact on rapidly growing cooperatives—those thatare the most promising and generate the most jobs.

Of course, institutions such as InvestissementQuébec, Fondaction, and Mouvement Desjardins,with its Caisse d’économie Desjardins destravailleuses et travailleurs (Québec), providecooperative financing. However, the vast majorityof finance companies, particularly venture capitalfirms, have little involvement with cooperatives.

The democratic operation of cooperatives and theirprofitsharing method based on use makes themless attractive to venture capital.

GRAPH 4

Change in Cooperative Capitalization Rate, 1995 to 2000 (percentage)

1. Excluding the housing sectorSource: Cooperatives Branch, MFER

414039383736353433

1995 1996 1997 1998 1999 2000

37,136,8

38,7

40,1

35,7

37,3

25

In addition, in cooperatives—unlike in traditionalprivate businesses—outside investors cannot accesstheir returns from increases in share value. Indeed,cooperative shares cannot increase in value overtime, nor is there a secondary market for theseshares. Furthermore, a cooperative cannot grantveto power to a third party, as this might under-mine the very essence of democracy, the founda-tion of this form of business.

Finally, since cooperatives focus on optimizingreturn on use over return on capital, the financialreturn on investment of these businesses is gene-rally lower than in private companies.

Because of the way they operate, cooperativescannot offer what venture capital companies gene-rally seek, i.e., capital gains, veto power, high finan-cial yields, option exercise, etc. To ensure theirdevelopment, they must therefore rely almost solelyon member capital and profits generated by theiroperations.

Up to now, cooperative expansion has been largedfinanced by contributions from members, whopumped $30 million in capital into their businessesin 2000 alone. In fact, member capitalization rose7.9% per year in 1995–2000. Despite the injection ofthis new capital and reinvestment of a large shareof profits, cooperative capitalization has failed toattain the level of five years ago. In strong growthsectors, the slippage has been even morepronounced.

Since its creation in 1985, the Québec CooperativeInvestment Plan (RIC) has channeled over $217 million in capital into cooperatives, includingnearly $25.3 million in 2000. This plan offers a taxdeduction to members and workers who invest in

eligible cooperatives. Currently, the plan targetsproducer cooperatives and work cooperatives. Inthe briefs submitted, the cooperative movement andsocioeconomic partners generally push for anincrease in cooperative types and investors eligiblefor the plan.

For a number of years, Investissement Québec hasrun a financial assistance program for cooperativesconsisting primarily of loan guarantees. Since itsimplementation, this program has resulted inconsiderable cooperative growth. Recently, thegovernment completely reworked InvestissementQuébec’s programs in response to cooperativemovement demands. These changes increasedprogram support, particularly as regards startupand capitalization assistance.

In a number of areas requiring heavy investment(dairy industry, agrifood industry, forestry andmanufacturing sectors, funeral services, etc.),cooperatives must raise considerable funds tocomplete investment projects in new facilities,acquisitions, and production equipment modern-ization.

In recent years, cooperative movement stakeholdershave explored various avenues for increasingcooperative capitalization, particularly that ofchanneling patient capital (10 year average horizon)into these businesses. For cooperatives, this capitalwould play the same role as venture capital forprivate companies, the goal being to obtain capitalwith a real impact on the capitalization rate andthereby leverage other sources of financing.

These efforts by the cooperative movement,combined with those of the government under thispolicy, have recently led to significant gains,

26

including the creation of Capital régional etcoopératif Desjardins, Investissement Québecprogram enhancements, and improvements to theQuébec Cooperative Investment Plan (see Section 4for details). These initiatives and others describedbelow will help to considerably improve coopera-tives capitalization and financeability.

TECHNICAL ASSISTANCE

Foreign experience has shown that cooperativemovement momentum can be reinforced by effec-tive technical assistance and startup services fornew cooperatives, as well as support and consultingservices for existing cooperatives.

Startup assistance

At the startup stage, cooperatives differ fromprivate companies in terms of the large number ofpromoters and the democratic nature of companydecision making. Because of these two factors,general startup assistance and support servicescannot fully meet the needs of cooperatives. Forthis reason, the Government of Québec establishedthe Programme d’aide aux coopératives dedéveloppement régional (CDR).

This program has three main objectives: to promotethe cooperative formula, to foster cooperationamong cooperatives in a region, and, above all, toprovide technical assistance attuned to the needsof cooperatives at startup. It provides financialsupport to regional development cooperatives andto MCE Conseils, a group affiliated with Confédéra-tion des syndicats nationaux (CSN).

In existence since 1985, this program was onlyrecently extended to all of Québec. Most coopera-tive startups enjoy the support of the 11 regionaldevelopment cooperatives. Certain federations alsoprovide technical services to new cooperatives intheir region.

Since the program began in 1985, CDRs havehelped create or maintain 11,500 jobs. A programanalysis in 2000 showed that 84% of the jobscreated or maintained since the start of theprogram still existed. In addition, 86% of theprogram budget is allocated based on CDR resultsin terms of job creation and maintenance, coopera-tive startup, and self-financing.

The program has helped speed the startup of newcooperatives and create jobs in Québec’s variousregions. However, despite the encouraging survivalrate of supported cooperatives, the program coulddo a better job of following up on these businesses.This would help not only to increase the survivalrate of cooperatives, but also to speed their deve-lopment once they reach the growth stage.

Specialized oversight and networking

The cooperative experience in Québec, as elsewherein the world, shows that businesses need specia-lized sectoral oversight after startup. In sectorswithout a sectoral federation or group to providesuch services, the failure rate of cooperatives ismuch higher, while cooperative liquidations arequite rare in sectors that network and enjoy thesupport of sectoral services.

27

The following excerpt from a paper on cooperative

survival rate published by MIC in 1999 clearly identifies

the types of support provided by cooperative sectoral

groups, as well as their impact.

Cooperative sectoral groups provide many services with

a direct impact on the survival of member businesses.

They develop and distribute administrative management

tools specific to the sector. They develop the market in

their sector and promote the creation of buying and

selling networks. They monitor the sector and lobby for

its businesses. They develop training content and make

it available to businesses. Lastly, they keep a watch

over sector businesses and in more difficult cases

contribute to turnaround efforts. These different types of

specialized support have a major impact, promoting

business survival and development.

Excerpt from Taux de survie des cooperatives, published by MIC in 1999

A point commonly raised in discussions on coope-rative development is that strong networks andregional or sectoral cooperative groups tend to spurgrowth. Italy, for example, is known for its coope-rative networking (consortiums, cooperative plants,etc.) and exhibits the strongest cooperative sectorgrowth. A number of other countries have passedvarious laws and measures to shore up theirnetworks.

In principle, there is consensus on the importanceof networks in promoting cooperative developmentin Québec. In reality, there are enormous discre-pancies among cooperative sectors in terms of thescope and role of networks. On the one hand arecooperative sectors that, through their federation,

have developed a set of strategic business servicesfor their members. On the other hand are sectorswithout a group or federation, due to the lack of acritical mass of cooperatives. In yet other sectors,cooperatives are struggling to identify a commondirection and interests. In such cases, the existingfederation or group has a restricted budget and arole largely limited to representation.

Cooperatives are not immune to the requirements all

businesses must now face. To position themselves

competitively, cooperatives must increasingly network,

share their know-how and resources, and work together

to gain greater visibility.

(Claude Béland, President of Mouvement des caisses Desjardins,1987 to 2000)

Cooperatives that do not or cannot belong to asectoral network are in a troublesome situation.Cooperatives working in isolation suffer in terms ofperformance, due to both competition and theirlimited ability to achieve their economic and socialobjectives.

This situation is easy to explain: These cooperativeshave limited access to strategic business informa-tion and sector expertise. They also benefit fromfew economies of scale from purchasing or servicegroups. And because they receive little support inmanaging their associative structure, they suffermore governance problems and instability in theirdecision making.

Because they are isolated, these cooperatives aremuch more vulnerable to economic fluctuations andturmoil in the economic and social environment.

28

REINFORCING ECONOMIC ANDASSOCIATIONAL DIMENSIONS

For cooperatives to continue growing andimproving their performance, they must reinforcetheir economic and associational dimensions.

Economic Dimension

For several years, the two primary cooperativesectors—financial services and the agrifoodindustry—have been adjusting to new economicrealities, including globalization. This has led to ageneral questioning of the business practices anddirections of businesses in these sectors. Theresulting adjustments have required firm resolveand great effort but have generated major sidebenefits, breathing new life into these sectors.

The concentration of food distribution companies and

the merger of multinational corporations in the areas

of seeds and crop protection are further examples of the

changes we must address. This unprecedented concen-

tration of stakeholders in the sector has put farmers in

a more precarious position.

Faced with this rapidly changing environment, Coopéra-

tive fédérée de Québec must review its business

strategy and adapt its approach in order to continue

fulfilling its mission.

(Paul Massicotte, President of Coopérative fédérée de Québec,1992 to 2003)

Generally speaking, a certain conservatism may benoted in the cooperative movement, particularlywith regard to the appropriation of better businesspractices, although the two largest cooperativesectors have made a strong push in this direction.In other sectors, the degree of penetration of these

new business practices varies greatly according tosector. A number of cooperatives—like the majorityof small businesses—have limited access to strategicinformation. Although they are increasinglyconcerned with being connected to major manage-ment trends and new practices, these cooperativeshave nearly no strategic support, except in largesectors.

Rapidly growing small businesses clearly show the

beneficial effects of adopting exemplary business

practices. The number of employees in these businesses

increased by over 100% from 1990 to 1996. In Québec,

these businesses represent only 8% of small manufac-

turing firms but are the source of over 40% of job

growth. They are characterized by

– Heavy reliance on best management practices

and sophisticated techniques

– Significant emphasis on training

– High employee participation

– A customer-centered structure

– Systematic use of local resources (outside consul-

tants, business networks, educational institutions, etc.)

(Institut de recherche sur les PME, Université du Québec à Trois-Rivières, 2000)

Cooperatives—especially cooperative networks—must consider best business practices, such ascomparative analysis, benchmarking, and the kaizenmethod, as well as new value-added productionapproaches. We believe it is important for thesebusinesses and their managers to understand thebenefits of best business practices.

We believe that cooperative groups must acquirethis new know-how as a prerequisite to distributingand integrating it into each cooperative in theirsector and thereby boosting their competitiveness.

29

Associational Dimension

Cooperatives that have rapidly grown intobusinesses with a solid position in their market owemuch of their success to their ability to effectivelymanage their unincorporated associations. InQuébec, unlike in Europe, there is currently nogeneral tool for associational oversight. Thisdeficiency deprives cooperatives of one of their keystrengths—moving their members toward acommon goal.

The cooperative method is based on memberendorsement of a philosophy focused largely on thefundamental values of solidarity and democracy. Itis accepted that this cooperative philosophy is builtmainly through cooperative education, a must forwell-structured, motivated participation in themedium and long term. Despite the efforts alreadyexpended in this area, the cooperative movementmust go much further, particularly in extending acooperative education to new groups of people. Itmust use new methods to better reach youngpeople and better highlight the benefits of thecooperative model. All cooperative sectors mustaddress this need to step up education.

Of course, the key is to ensure that cooperative educa-

tion activities give insiders an understanding of the

distinct nature of cooperatives, of how they work, and

their benefits, role, responsibilities, and requirements.

This will allow insiders to participate fully in the cooper-

ative. One might say that without cooperative education,

there can be no cooperatives.

(Luc Labelle, CEO of Conseil de la coopération du Québec)

The associational dimension has a number of facets,including cooperative education, of course, but alsothe democratic process, communication withmembers, welcoming new members, and settlingdisputes. A more effective tool for associationaloversight, such as the establishment of cooperativecertification, seems essential to optimizing theinternal strengths of cooperatives.

ACKNOWLEDGE THE ROLE OFCOOPERATIVES AND HARMONIZEGOVERNMENT ACTION

To continue growing, cooperatives need thegovernment to harmonize its efforts on their behalfand take concrete action to acknowledge the impor-tance of the cooperative model to Québec’seconomic and social development.

Coordinating and HarmonizingGovernment Action

The entire government must become more awareof cooperatives’ specific development needs, whichare not always given full consideration in thedrafting of acts and the preparation of programsand measures.

The integration and harmonization of governmentaction on behalf of cooperative development is vitalfor the cooperative model to grow. The formulamust also receive greater government acknow-ledgement and support for its special contributionto Québec’s social and economic development.

30

Teaching Cooperation

Teaching about the cooperative model helpshighlight and increase understanding of thisformula, especially by young people. In this regard,one of the major concerns of the cooperativemovement is the seemingly limited attention paidthe cooperative model at the secondary, college, anduniversity levels. Cooperation in general seems toreceive much less attention than the corporatemodel. This situation appears to indirectly impactthe choices young people make when they enterthe business world.

Promoting Cooperatives

Promotion of the cooperative formula has oftenbeen described as discreet. The push to increase itsvisibility has intensified in recent years. Coopera-tives are looking to the government and its partnersto join in awareness campaigns to promote thecooperative model to the general public, particu-larly by celebrating the successes of cooperativesin the various sectors in which they operate.

Cooperatives are also less prevalent in urbansettings. This presents stakeholders with the specialchallenge of better informing and reaching urbanresidents.

Furthermore, it has been observed that the profes-sionals who advise promoters interested in esta-blishing a business have little understanding of thecooperative model. Consequently, they rarely thinkto present the cooperative as an attractive formula.Ways must be found to better reach this clientele.

Strategic Positioning

Strategically, businesses need a better under-standing of their current and future environment.Analyzing globalization and its impact on coopera-tives could prove vitally important.

The place cooperatives occupy in the future willdepend on their ability to meet the challenges theyface. With such an analysis to guide them, they wouldbe better equipped to develop suitable strategies.

Sectors with high cooperative development poten-tial in Québec must also be identified. The results ofthis research or analysis might be useful in deve-loping targeted strategies for seizing new businessopportunities or meeting special public needs.

If collective enterprises are reconfigured solely to mimic

capitalist enterprises, they risk losing their uniqueness,

their purpose, and their legitimacy. For this reason, they

have a duty to redefine themselves and make their new

mission a comparative advantage.

(Brief by Centre interdisciplinaire et d’information sur les entreprisescollectives [CIRIEC] presented at the consultation on the preliminarydraft of the Cooperative Development Policy)

31

This proactive approach to development based on amedium and long term vision has already yieldedpositive results in certain cooperative sectors, suchas funeral services, where the introduction of asuitable strategy has led to significant growth.

Partnership and Policy Support

Success in disseminating the cooperative model isclosely tied to the expansion of partner networks,which can provide exposure for this form ofbusiness. New avenues must be explored forstrengthening ties between cooperatives andeconomic development bodies, dovetailing theiractions and efforts, and creating new opportunitiesfor cooperation.

Given its mission and the support of its members,the Conseil de la coopération du Québec (CCQ) isthe best-positioned organization to promote thecooperative model and encourage partnershipswhere potential exists.

This policy and all the efforts it will entail to imple-ment it will require a considerable investment ofresources and energy by CCQ. We must ensurethat the organization is an effective advocate of thecooperative movement and able to push for imple-mentation of the various aspects of the policy.

Long Term Support for CooperativeDevelopment

Official acknowledgement of the importance ofcooperatives is vital for the cooperative movement,which wants to make sure it has long term deve-lopment support it needs. The experience of anumber of European countries shows that withoutthis acknowledgement, government efforts insupport of cooperative development may fluctuategreatly over time and become beholden to politicaltrends or the economic situation.

Collective enterprises, particularly cooperatives, hold

enormous potential to meet aspirations of better distri-

bution of wealth, better public control of the economy,

and a better balance between economic and social

concerns.

Although these aspirations of economic democratiza-

tion are growing stronger and clearer, it is obvious that

the cooperative model has not yet been fully

recognized as a development tool of value.

(Brief by Chantier de l’économie sociale presented at the consultationon the preliminary draft of the Cooperative Development Policy)

Ongoing government support for cooperatives isessential to promoting consistent departmentalinvolvement and supporting cooperative develop-ment. Cooperatives must become a concern of theentire government.

CHAP

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4A POLICYFOCUSED ON GROWTH

In these times when community commitment and

partnership with civil society are considered crucial, it is

clear that there is growing potential for worldwide

cooperative development and revitalization.

(Kofi Annan, Secretary General of the United Nations)

The cooperative model presents a number ofspecific benefits that must be put to better use inbuilding the Québec of tomorrow. The prosperityand wellbeing of Quebecers depend on expandingthe entrepreneurial base, and the cooperative—bypromoting the direct involvement in the economyof a large number of citizens—would appear to bea promising solution.

In the current situation, maintaining responsiblelocal businesses that play an active role in importanteconomic and social sectors is becoming crucial.With the Cooperative Development Policy, theGovernment of Québec has demonstrated its firmresolve to support cooperatives so that thesebusinesses may position themselves solidly withrespect to the major challenges they face, especiallyso that they can contribute even more to thecreation of jobs and wealth.

The policy aims to expand the place of cooperativesin Québec’s economy.

AMBITIOUS OBJECTIVES

The Cooperative Development Policy targets thefollowing ambitious objectives:

– Achieve a net increase of 20,000 cooperative jobsover 10 years, a majority of them in Québec’sregions

– Improve the main development indicators,specifically• Sales• Assets• Number of new cooperatives established• Number of cooperative members• Penetration of sectoral markets

– Accelerate cooperative growth and diversifica-tion by increasing cooperative investment by25% over the next five years

– Expand large cooperatives and keep keydecision-making centers in Québec

– Support the emergence of new critical massesof cooperatives in various sectors, especiallypromising sectors and those that cater to specificneeds

– Maintain a high cooperative survival rate inorganized sectors and improve this rate inemerging sectors

Not only does this policy target precise, measu-rable economic results, it is also aimed at encou-raging authentic, sustainable, high qualitycooperative development.

The success of this policy should not be measuredby quantitative indicators alone. It should also bebased on social benefits, a dimension inseparablefrom the cooperative model.

This policy is also aimed at involving the variousgovernment departments and bodies able topromote cooperative development within theirrespective areas of jurisdiction. By combining the

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efforts of all, the Cooperative Development Policyaims to create a ripple effect and make cooperativedevelopment a long term concern.

MAJOR AREAS OF ACTION

To achieve the objectives of the Cooperative Deve-lopment Policy, four major areas of action wereselected and received unanimous support in theconsultations.1. Introduce an effective and innovative legal

framework2. Develop or improve capitalization and financing

tools suitable for the cooperative environment3. Improve consulting services available to coope-

ratives4. Acknowledge the role of cooperatives by

integrating and harmonizing government actionin the area of cooperative development

The policy also includes strategic orientationsspecifically targeting young people.

MEASURES AND COURSES OFACTION

Developing and implementing the CooperativeDevelopment Policy must be a dynamic process.Since the idea for such a policy was raised, anumber of cooperative movement demands havereceived government attention. Thanks to theseefforts, a certain number of these measures wereannounced and passed even before the policy wasintroduced.

This section presents various measures and coursesof action stemming from the four areas of actionchosen. Some measures were announced in thepast year or months and are already being imple-mented. Others will be implemented in the comingmonths.

Some courses of action aimed at future initiativesare also put forward. They will undergo in-depthanalysis by the cooperative movement and/orgovernment partners.

INTRODUCE AN EFFECTIVE ANDINNOVATIVE LEGAL FRAMEWORK

The Cooperatives Act of Québec must be moder-nized in order to create the most conducive condi-tions to starting up new cooperatives and speedingthe development of existing cooperatives whilerespecting and reaffirming the values and princi-ples of the cooperative model.

A new legal framework is being developed basedon proposals submitted by the cooperativemovement and its partners, as well as cooperativelegislation in existence elsewhere. In upcomingmonths, this bill will undergo careful study byvarious government committees and may then besubmitted to the National Assembly for passage.

Strategic OrientationModernize the Cooperatives Act to step updevelopment of cooperatives

Courses of ActionReinforce the distinctive legal character ofthe cooperative and take into account thespecifics of the cooperative formula

Modernizing the Cooperatives Act will involvereinforcing its distinct nature. The government thusintends to enhance provisions that set the coopera-tive apart from other corporate bodies and compa-nies. In particular, the cooperative policies specifiedin the bill will include all the cooperative principlesset out by the International Cooperative Alliance(ICA). In addition, the definition of the cooperativewill better convey certain distinct features of thistype of enterprise, particularly its democratic nature,its collective ownership, and the notion of owner-users.

Provisions will be introduced to better reflect thedistinct realities and diversity of the various cooper-ative sectors.

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As for the internal structure of the act, we would like to

create a legal tool with a body of general provisions

common to all cooperatives and based on the very

principles of cooperation. The new act must also be

consistent with the internal reality of each cooperative

sector and reflect each sector’s specific needs, which

implies special provisions for all cooperative sectors

that so require.

(Brief by Conseil de la coopération du Québec on the preliminary draftof the Cooperative Development Policy)

During the consultation, the cooperative movementdeemed that the forms of partnership currentlypermitted by the five types of cooperative are suffi-cient and suitably address the various situations thatarise in cooperative development.

However, each type of cooperative—consumer,producer, work, shareholder-worker, andsolidarity—will now be clearly identified by the bill,which will include provisions to ensure betteroperation and development. For example, specificprovisions will be introduced for producer cooper-atives in order to include in the act this importantcooperative environment that currently exists onlyat the administrative level.

In the interest of cooperative authenticity, the billwill also include specifics on the shareholder-worker cooperative (CTA) in order to ensure thedevelopment of this formula. Analysis of CTA datareveals the need to better clarify this type of cooper-ative in order to allow workers to participate moreconcretely in the growth of the business thatemploys them. Furthermore, in order to take intoaccount the special situation of minority share-holder-worker cooperatives, specific profitsharingrules are currently being examined.

Provisions on the solidarity cooperative will also bemodified to better adapt this young but promisingformula and make it even more effective. Thus, therules for setting up such a cooperative will be easedin order to allow the presence of supporting

members as founders and to acknowledge theparticipation of these members in the cooperativestartup process.

Currently, the act requires that solidarity coopera-tives include user members and worker membersand allows the presence of supporting members.New proposals call for solidarity cooperatives tohave the power to modify this membershipapproach. The bill could propose allowing theestablishment of solidarity cooperatives consistingof only user members and supporting members or,alternately, only worker members and supportingmembers.

Some special requests by certain sectors and typesof cooperative—such as housing cooperatives,educational cooperatives, and work cooperatives—will also be considered.

In the area of housing, measures aimed at ensuringthe long term viability of cooperative housing willbe added to the bill following work under way bythe Société d’habitation du Québec and theConfédération québécoise des coopératives d’habi-tation. To ensure consistency in the legislation, theRégie du logement will also be invited to contributeto this work.

With regard to educational cooperatives, the bill willmore clearly identify these enterprises and theirobligation to maintain a permanent place ofbusiness and headquarters in at least one educa-tional institution where they provide services.

Finally, the bill will include provisions specific towork cooperatives aimed at better supporting thecooperative dimension of these enterprises.

17 Except for agricultural cooperatives governed by Chapter 1 of Title II of theCooperatives Act

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Improve capitalization

A few years ago, the concept of “participatingpreferred shares” was introduced into the Coope-ratives Act. Designed to attract outside capital tocooperatives, these shares did not attain their objec-tive, as their yield was based on an annual decisionby cooperative members. Investors could thusnever be certain of their yield.

To promote the participation of outside sources ofcooperative financing, some provisions of the actwere recently modified. Thus, cooperatives can nowissue participating preferred shares with featuresand a yield determined once for their entire lifetime.This now more attractive capitalization tool shouldpromote investment in cooperatives by outsidebackers while preserving cooperative autonomy.

Apart from improving participating preferredshares, the cooperative movement is generally satis-fied with the current capital structure. The coope-rative movement did not support the introductionof shares without par value or with a redemptionpremium, as doing so would stray from the coope-rative philosophy. Still, a number of proposals forimproving capitalization tools were set out anddiscussed in the section on capitalization andfinancing.

Lastly, also in the interest of supporting coopera-tive capitalization, the bill will clarify shareholders’rights with respect to access to information on theirshares (copy of share features and access to finan-cial information on the cooperative). In addition, amodification to the rules prohibiting share redemp-tion to outgoing members will be proposed tospecify that the board of directors must henceforthdemonstrate that share redemption might harm thefinancial stability of the cooperative.

Reaffirm the nondivisibility of the general reserve

The general reserve in a cooperative is the equiva-lent of retained earnings in a joint stock company.This general reserve—the asset base the coopera-tive accumulates over the years—is nondivisibleamong members for as long as the cooperative is inoperation. It is also subject to devolution17 or remit-tance to the cooperative movement in the event ofliquidation.

The issue of general reserve nondivisibility hassparked a complicated debate in which opinionsare fairly divided. Yet, the briefs received reveal aclear majority in favor of the establishment of anondivisible general reserve with minimum contri-butions subject to statutory requirements.

The briefs also revealed an openness to specialarrangements for producer and work cooperatives.In addition to building up a collective asset base, itwas generally agreed to allow these cooperativesto establish individual asset bases to take intoaccount the considerable financial efforts expendedand risks incurred by their members, as well as thespecial objective of these enterprises. The bill wouldthus allow producer and work cooperatives topartially share profits with nonmembers undercertain conditions through the issuing of preferredshare dividends, but set up in such a way as toensure the ongoing capitalization of the enterprise.

This more flexible approach will, however, requirereaffirmation of the need for a nondivisible generalreserve as a financial base, a leverage to financing,a complement to member-supplied capital, and adistinct feature of the cooperative structure.

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Strengthen sectoral networks

The government is concerned with strengtheningsectoral networks. The cooperative movementshares this concern, and particularly wishes tosolidify existing networks. However, the coopera-tive movement does not believe a cooperativeshould be required to join a federation, as this goesagainst the cooperative philosophy of freedom ofmembership. Instead, the movement suggests thatnonaffiliated cooperatives contribute financially tothe development of their sector, as these enterprisesalso benefit from the efforts of the group workingin their sector.

Regional and sectoral cooperative groups supportthe creation of an associational oversight tool(cooperative certification) aimed at promoting bestcooperative practices. They also recommend thatthis tool not be mandatory but encouraged throughincentives such as technical assistance with imple-mentation and greater promotion of tool use. Thegroups that took part in the consultation have askedthe government to participate technically and finan-cially in the creation of such a tool.

Some demand that the powers of federations bestrengthened in order to ensure sectoral cohesion.In particular, they call for inspection and auditingpowers with respect to affiliated cooperatives thatdo not seem to be operating according to coopera-tive rules. The idea of allowing federations topursue a more diverse membership is also beingconsidered. Such an avenue, if chosen, could allownoncooperative enterprises to join a federationaccording to terms that ensure cooperative control.

Improve operation of cooperatives

The various cooperative stakeholders haveexpressed general satisfaction with the Coopera-tives Act in terms of cooperative operating mecha-nisms. In addition, with its flexible legal framework,

the bill will give cooperatives more room for self-regulation in various areas, such as the esta-blishment of dispute settlement mechanisms andthe ability of a producer cooperative to specify aprobationary period as a prerequisite to producermembership.

The cooperative movement and the government—an increasingly significant partner in cooperativedevelopment—must be able to ensure that effortson behalf of development benefit cooperatives thatare truly operating according to cooperativepolicies. To this end, new provisions for verifyingcooperative authenticity in case of dispute will bediscussed with the cooperative movement.

In terms of amending the Cooperatives Act, thepartners consulted are in favor of maintaining theprimary rules of cooperative operation, as well asthe instructional nature of the act. They also call foradministrative easing.

In accordance with government objectives of easingregulations, the regulations for act implementationwill be substantially reduced, particularly withregard to required forms and notices. The bill willalso specify that administrative requirements besimplified to eliminate duplication, particularly asregards the legal advertising of enterprises.

Lastly, the bill will present a number of amend-ments aimed at simplification, clarification, andharmonization. Thus, it will propose continuancemechanisms for businesses moving from nonprofitto cooperative status in order to meet demands tofacilitate such changes. The bill will contain provi-sions for the merger of a nonprofit and a coopera-tive. Reworking the Cooperatives Act will alsoprovide an opportunity to clarify topics that havegiven rise to contradictory interpretations, such asthe exclusive powers granted to boards of direc-tors. Finally, modernization of the legal frameworkapplicable to nonfinancial cooperatives will becompleted upon passage of a bill to this effect inthe National Assembly.

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DEVELOP OR IMPROVECAPITALIZATION AND FINANCINGTOOLS SUITABLE FOR THECOOPERATIVE ENVIRONMENT

Cooperatives must have access to capitalization andfinancing tools in order to obtain the capital theyneed to increase their investment in upcomingyears.

By making special financing tools available tocooperatives, the aim is also to promote the expan-sion of large cooperatives and keep key decision-making centers in Québec.

This area includes two strategic orientations:

1 Ensure adequate funding for supporting theemergence and growth of cooperatives

2 Increase the equity of cooperatives in order to improvetheir capitalization

Strategic OrientationEnsure adequate funding for supporting theemergence and growth of cooperatives

Measure to ComeExpand government involvement in theRéseau d’investissement social du Québec(RISQ)

The Réseau d’investissement social du Québec(RISQ) is a fund established in 1997 to providefinancing support to social economy enterprises,including cooperatives. RISQ has two missions—capitalization and technical assistance.

The amounts granted for capitalization usually donot exceed $50,000 per project, while those fortechnical assistance are generally under $5,000. In

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the latter case, RISQ makes loans to help collectiveenterprises bear the cost of specialized technicalassistance services tailored to their needs. As ofMarch 31, 2002, RISQ had invested nearly$3,500,000 in 178 projects.

To help RISQ fulfill its role of providing capitaliza-tion support, the government is allocating$900,000 over three years to offset the organization’soperating costs.

Measures Passed RecentlySet up Capital régional et coopératifDesjardins (CRCD)

The projected growth of cooperatives in upcomingyears will require considerable capital. Direct contri-butions by members will continue to be a keysource of capital. However, to achieve expectedperformance objectives with regard to investment,massive injections of outside funding will be necessary.

Mouvement Desjardins and the nonfinancialcooperative community thus set about to buildbridges, which led to the 2001 establishment ofCapital régional et coopératif Desjardins, a fund thatcan collect up to $150 million per year from indivi-duals, or $1.5 billion over 10 years.

A minimum of 60% of the fund capital must beinvested in eligible enterprises or cooperatives. Ofthis portion, at least 35%—just over 20% of the totalcapital—must be invested in resource regions orthroughout Québec in the case of cooperatives18.

Fund subscribers benefit from a tax credit equal to50% of the amount they invest, up to $1,250. To helplaunch the fund, the Government of Québecgranted it a $5 million subsidy.

18 From the 2000–2001 budget (Resource Region Economic DevelopmentStrategy), p. 126

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Establish the Programme favorisant lacapitalisation des entreprises d’économiesociale and the Programme favorisant lefinancement de l’entrepreneuriat collectif atInvestissement Québec

La Financière du Québec runs two programs forcooperatives and nonprofits. The primary focus ofthe Programme favorisant le financement del’entrepreneuriat collectif is providing loan guaran-tees to financial institutions.

However, the cooperative movement would like LaFinancière du Québec to focus more on financialproducts that can improve the capitalization orequity of cooperatives.

To meet the demand of cooperatives and nonprofitsin the social economy sector, creation of theProgramme favorisant la capitalisation des entre-prises d’économie sociale was announced in the2002–2003 Budget Speech. This program currentlyin effect has a budget of $15 million. An additional$1.25 million is earmarked for partial waivers ofinterest.

With the advent of the Programme favorisant lefinancement de l’entrepreneuriat collectif, La Finan-cière du Québec is now able to provide generalguarantees to funds that finance social economyentreprises. This new option allows it to work withbusinesses directly, based on their needs, evenwhen these businesses are too small to meet thecooperation’s regular criteria.

Inject additional capital into the Réseaud’investissement social du Québec (RISQ)

In the 2001–2002 Budget Speech, the injection of anadditional $2.6 million into RISQ was announced.This was in addition to the $4 million alreadygranted by the government and the $4.3 millioninjected by private subscribers. A tax deduction of150% of the amount invested in RISQ by corpora-tions was also established.

Create Filaction, the fund to supportcommunity funds

Fondaction, a workers’ fund, has supported thedevelopment of collective entreprises since itsinception. To meet the needs of small scale projects,Fondaction created a nonprofit—Filaction. Filaction’sinvestments range from $50,000 to $150,000 and it provides services to the clientele ofcooperatives and nonprofits.

In order to get Filaction off the ground, the Minis-tère des Régions authorized a $1.5 million grant tocover its operating costs. This grant will be paid inyearly installments of $300,000 for fiscal years2001–2002 to 2005–2006. Fondaction will invest $7 million during this period and anticipates thatthis new financial instrument will help it reach over1,000 businesses and create or maintain over 3,000 jobs in five years.

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Strategic OrientationIncrease the equity of cooperatives in order toimprove their capitalization

Measure to ComePartially abolish the limit on allocation anddeductibility of patronage dividends

The government intends to amend the rules limitingprofitsharing with nonmembers, taking anapproach that strikes a balance between improvingthe financial structure of cooperatives and achievingbetter financial returns for members.

Thus, for producer and worker cooperatives only,the bill amending the Cooperatives Act will suggestmodifications aimed at allowing partial profit-sharing with nonmembers under certain conditions.

As regards Québec tax law, amendments will makethe patronage dividend amount deductible from theincome of such cooperatives equal to the amountof profits it would be authorized to distribute underthe Cooperatives Act. More specifically, for allocatedpatronage dividends, a cooperative may deductmore than the profit achieved with its members, upto an amount equal to the partial profitsharingamount permitted under Québec law.

Current modernization of the Cooperatives Act willthus include proposals for reorganizing the capitalstructure of producer cooperatives and workcooperatives in order to promote increased invest-ment by members of these cooperatives.

Course of ActionSupport demands by the cooperativemovement regarding federal taxation

In recent months, the cooperative community hasmade various representations to federal tax autho-rities aimed at introducing special measures on thetaxation of cooperatives and their members.

In February 2002, the Secretary of State for RuralDevelopment and Agriculture and Agri-foodCanada announced the completion of a three-partstudy on cooperatives covering capitalization,technical assistance, and governance and leader-ship. This study should allow federal authorities toflesh out a position with respect to the tax demandsformulated by the cooperatives.

Work cooperatives in Québec outside the agrifoodsector have on several occasions asked that acooperative investment plan be established at thefederal level. Cooperatives in other provinces haveechoed this demand. The issue is still pending.

Given this situation, the Government of Québecintends to monitor the federal government’sprogress in this area and take action as necessary tosupport cooperatives in terms of the special taxationmeasures it will have already implemented itself forQuébec cooperatives.

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Measures Passed RecentlyEnhance the Québec Cooperative InvestmentPlan (RIC)

Cooperatives will need substantial injections offresh capital in upcoming years in order to attaintheir full growth potential.

The RIC is aimed at increasing the invested capitalof cooperatives by providing tax breaks to themembers and workers of eligible cooperatives.Because member-supplied capital is the capital baseof these enterprises, the RIC must be allowed toplay a greater role in cooperative capitalization. Inthe 2001–2002 Budget Speech, an increase in theannual eligible investment cap for plan participantswas announced. This cap was raised from 10% to30% of personal income.

More recently, the Ministère des Finances alsoannounced eligibility for the RIC deduction underthe simplified tax system. This decision will givemembers and workers of eligible cooperatives whoearn less than $30,000 a year an incentive tocontribute more to the capitalization of their coope-ratives. This demand also met with consensuswithin the cooperative movement.

Postpone taxation of patronage dividendspaid in the form of preferred shares formembers of eligible cooperatives

Profit reinvestment is another way to build coope-rative capitalization. Yet, up to now, the patronagedividends paid to members in the form of preferredshares in the cooperative were included inmembers’ income for the tax year in which thesedividends were paid.

The negative impact of this taxation on memberliquidities directly reduced member interest in thistype of investment. Because of this, cooperativescould not objectively expect significant capitaliza-tion from their members.

In order to encourage members of work andproducer cooperatives to contribute to the deve-lopment of their enterprises, a new tax measureannounced on February 21, 2002, now makes itpossible to postpone the taxation of patronagedividends paid in the form of privileged shares inan eligible cooperative until the member laterdisposes of these shares.

This postponement of taxation is allowed for eligiblepatronage dividends received by members of aneligible cooperative over the next 10 years. For acooperative to benefit from this measure, its capita-lization rate must not exceed 50% at the end of thefiscal year preceding the tax year in which apatronage dividend was paid.

Recent concrete government actions and new initia-tives will help promote the development, financing,and capitalization of Québec’s cooperatives. Thanksto these efforts, the cooperative community will bebetter equipped to continue its growth.

IMPROVE CONSULTING SERVICESAVAILABLE TO COOPERATIVES

The objectives of improving the consulting servicesavailable to cooperatives are to promote theemergence of new critical masses of cooperatives innew sectors—including promising sectors—tomaintain the high survival rate of cooperatives infederated sectors, and to improve this rate in othersectors.

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Area 3 includes five strategic orientations:

1 Improve consulting services available to cooperativestartups

2 Strengthen specialized oversight and federated operations

3 Increase the quantity and variety of multipliers for thecooperative formula

4 Enhance the competitiveness of cooperative enter-prises

5 Help strengthen the associational dimension ofcooperatives

Strategic OrientationImprove consulting services available tocooperative startups

Measure to ComeRenew and enhance the Programme d’aideaux coopératives de développement régional(CDR)

Since the mid-990s, the pace of new cooperativestartups has skyrocketed in Québec. TheProgramme d’aide aux coopératives de développe-ment régional was largely responsible for thisgrowth, by better promoting the cooperative model,increasing regional cooperation between coopera-tives and community partners, and above allproviding assistance and support services topromoters wishing to launch cooperative projects.

Since its inception, the Programme d’aide auxcoopératives de développement régional has helpedcreate or maintain 11,500 jobs. It was renewed untilMarch 31, 2004, with an annual budget of$3,577,500.

Despite the program’s encouraging results in termsof cooperative survival rate and jobs created ormaintained, other avenues will be explored forensuring better CDR oversight of cooperativestartups. This approach focused on post-startupassistance should help further strengthen newcooperatives, especially those active in emergingfields.

Thanks to these positive results, the governmenthas announced a grant of $7,655,000 over two yearsto continue this program beyond March 2004.

Strategic OrientationStrengthen specialized oversight andfederated operations

Measures to ComeSet up a specialized coop retention andoversight program for the cooperativefederations

Regional development cooperatives, CLDs, andcertain other organizations provide post-startupservices to enterprises. These fairly general servicesare crucial for helping promoters successfullylaunch and consolidate their enterprises. In addition,experience has shown that these services must besupplemented by specialized services at the sectorallevel. The availability of these services has beenobserved to have a direct impact on cooperativesurvival rate and growth.

Sectoral cooperative foundations are able to providethis specialized oversight and play a key role indisseminating and sharing know-how. In sectorswhere they are well established, these organizationshave shown their skill in terms of both businessturnaround and prevention initiatives, providingspecialized assistance and oversight methods invarious business areas.

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Since existing cooperatives will generate a largeshare of future cooperative jobs, a new measurewill be established focusing on the retention andspecialized oversight efforts of cooperative federa-tions. This measure will specifically target struc-turing activities, including– Support services for cooperatives in difficulty or

in need of consolidation (organizational andcooperative diagnosis, assistance with streng-thening decision-making structures, strategicpersonnel hiring assistance, turnaroundconsulting, etc.)

– The sharing of know-how and expertise amongcooperatives in the same or different sectors

The government is granting $5,500,000 over threeyears for this new program.

Renew and enhance the Programme desoutien aux regroupements sectoriels enéconomie sociale

Participants at the 1996 Economic and EmploymentSummit stressed that social economy enterprises,including cooperatives, develop more readily andquickly in the presence of sectoral networks. Aprogram for cooperative groups and nonprofitgroups was therefore created in 1999–2000 tosupport the structuring activities of existing groupsand promote the emergence of such groups in newsectors.

Sectoral groups may receive financial assistance forprojects involving the development and implemen-tation of specific management tools, commonadministrative tools, networking instruments,marketing tools, and buying groups.

The program also encourages projects involving thedevelopment and application of standards ofquality, the broadening of management expertise,and the completion of feasibility studies prior togroup creation.

According to March 31, 2002 data, this programhelped support 19 groups by financing 51 projects,20 of which were cooperative in nature. The finan-cial assistance provided helped reach over 2,500 enterprises employing 34,300 persons,including 11,900 in cooperatives.

It should be remembered that this program is notfocused on direct action, business by business. Itsobjective is to support network initiatives or servicesthat can, for example, foster economies of scale,increase the competitiveness of businesses, or helpthem penetrate new markets.

Given the general satisfaction expressed by cooper-atives and partners during the consultations, thisprogram will be renewed and adapted based onthe results of the assessment under way. Thegovernment will therefore grant $4,500,000 overthree years to help continue this program.

Strategic OrientationIncrease the quantity and variety of multipliersfor the cooperative formula

Course of ActionSupport the development of regional andsectoral partners in the development ofcooperatives

The presence of the cooperative model in neweconomic activities, with new client groups, and incertain regions depends heavily on partnershipswith strategic business development players.

The Conseil de la coopération du Québec recog-nizes this situation and has already entered into anagreement with the CLD association to help coordi-nate the efforts of CLDs and cooperative organiza-tions that support cooperative development. Eachdevelopment organization possesses special exper-tise or personal networks that can be used tocommon benefit.

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In fall 2001, the Ministère de l’Industrie et duCommerce launched the Stratégie québécoise pouraméliorer la compétitivité des entreprises on thetheme “Building the businesses of tomorrow today.”This strategy proposes an approach and specifictools aimed at the various functions of businesses.

The government undertakes to make a special effortto sensitize sectoral federations, CDRs, and coope-ratives to best business practices in order to spurthe introduction of these tools that can help boostcompetitiveness. It further undertakes to promotethese tools and tailor them as required to thevarious cooperative client groups.

Strategic OrientationHelp strengthen the associational dimensionof cooperatives

Measure to ComeDevelop and distribute a certification tool forcooperatives

The cooperative movement is exploring variousavenues for better structuring the associationaldimension of cooperatives—the very backbone ofthese organizations. Unlike companies, cooperativesrequire active member participation in order tofunction and grow. This participation must beencouraged, structured, and focused on concretecommon objectives.

Some cooperatives have developed winning strate-gies for managing the associational aspect of theirbusiness through various means of action andmonitoring. Experiments are under way in somenetworks to validate a new cooperative certificationtool that could be transposed to all cooperativesectors. This tool would be aimed at betterhighlighting the associational dimension (e.g.,improving member participation, better informingand training members, improving regulation of thedecision-making process, etc.).

To enhance synergy in cooperative development,the government intends to promote new partner-ships both sectorally and regionally betweencooperative players and the various socioeconomicpartners.

Strategic OrientationEnhance the competitiveness of cooperativeenterprises

Courses of ActionSupport research and innovation

Cooperatives are more concentrated in basiceconomic sectors. Like many Québec businesses,cooperatives face the challenge of enhancing theadded value of their products in upcoming years.

They must expend a great deal of effort to developnew markets or retain existing ones by launchingnew products, e.g., niche products and secondaryand tertiary food or lumber products. To supporttheir efforts, the government undertakes to– Promote new product research and development– Publicize and apply existing research and innova-

tion programs– Encourage the formation of business partner-

ships in production and marketing

Promote best business practices

The new business environment, characterized byincreasing competition in all sectors, requires theemergence of businesses that can quickly adjust tomarket imperatives.

The businesses of tomorrow must be on the lookoutfor major trends and ride the cutting edge of newproduction, marketing, and management methods.Cooperatives in all sectors must therefore haveaccess to this strategic know-how that can givethem a comparative advantage.

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Considering the cooperative movement’s substantialinvolvement in the project, the governmentsupports creating such a tool and making it avai-lable to the entire cooperative movement. Anamount of $265,000 spread over three years hasthus been earmarked for the implementation of thispromising initiative.

ACKNOWLEDGE THE ROLE OFCOOPERATIVES BY INTEGRATINGAND HARMONIZING GOVERNMENTACTION IN THE AREA OFCOOPERATIVE DEVELOPMENT

The government intends to actively promote,support, and foster the growth of the cooperativesystem through various programs, acts, and initia-tives.

All government departments and organizations areinvited to help draft the policy’s main orientationsand particularly to suggest ways of promoting thecreation and growth of cooperatives in their fieldsof jurisdiction. To this end, a variety of governmentrepresentatives will be invited, in cooperation withthe cooperative movement, to take part in specialinitiatives that will have a direct impact on coope-rative development.

At various times in the past, the Government ofQuébec has implemented measures to help coope-ratives thrive and meet their members’ social andeconomic needs. Like other businesses, coopera-tives, especially those in emerging fields andeconomically depressed regions, require specialhelp to grow.

The six strategic orientations of area 4 are

1 Recognize the Conseil de la coopération du Québec asthe cooperative movement’s representative body

2 Enlist the support of the entire government in fosteringcooperative development

3 Promote the cooperative formula and enhance coopvisibility

4 Increase the quantity of cooperative training at everylevel of the educational system

5 Promote partnerships between cooperatives and thegovernment in a variety of areas

6 Encourage cooperatives to position themselves strate-gically in relation to major social and economic trends

Strategic OrientationRecognize the Conseil de la coopérationdu Québec as the cooperative movement’srepresentative body

Measure to ComeSupport specific structuring initiatives by thecooperative movement and the Conseil de lacoopération du Québec

Under the terms of this policy, the Government ofQuébec officially recognizes the Conseil de lacoopération du Québec (CCQ) as the representativeof the Québec cooperative movement. This organi-zation, which was founded in 1940, is dulymandated to represent all cooperatives acrossQuébec.

In order to help the cooperative movement and itsrepresentative CCQ efficiently provide input onhow the Cooperative Development Policy is imple-mented, concrete support will be provided forcertain structuring activities arising from the policy’sorientations. This support is not intended to financeCCQ operations.

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The structuring activities to receive support will be those in the following three areas:– Coordination of strategic initiatives and

promotion of partnerships– Strategic intelligence and research– Training of cooperative managers and

cooperative education

Coordination of strategic initiatives and promotion of partnerships

A number of new initiatives are required to helpcooperatives expand into new economic areas andconclude new partnerships. Clear steps must alsobe taken to get the cooperative movement to worktogether and share expertise. Financial help appearsnecessary to support such initiatives, which are adirect result of the policy.

Strategic intelligence and research

Cooperatives have been more active in recent yearsin seeking out strategic information, both in termsof business practices and learning about howcooperatives are run in other parts of the world.Mutually beneficial partnerships have notably beenestablished between large cooperatives and Québecuniversities.

The constant need to be more competitive demandsthat cooperatives have easy access to relevant,targeted information. Strategic intelligence willtherefore be undertaken in order to identify allfactors that could positively influence cooperatives’development.

Training of cooperative managers and cooperative education

A government assistance program for the trainingof cooperative managers existed for almost fifteenyears. Cooperatives wish to see a similar programreinstated, as a large number of cooperativemanagers have little to no experience when firststarting out. Training like this would strengthen andimprove their decision-making skills.

Various cooperative sectors and the Fondation pourl’éducation à la coopération devote considerabletime and effort to cooperative education, an essen-tial task given the unique philosophy and operatingmode of cooperative businesses. The high turnoverrate of members and administrators in certain fieldsand the emergence of cooperatives in new areascreate a need for high-caliber cooperative educa-tion that is suited to the times.

The government has earmarked a sum of $1,800,000 over three years for the cooperativemovement and CCQ to carry out structuring acti-vities in accordance with the terms of the Coope-rative Development Policy.

Strategic OrientationEnlist the support of the entire governmentin fostering cooperative development

Measure to ComeMaintain a government mandate in mattersof cooperative development

The government’s commitment to fostering thegrowth of cooperatives was reconfirmed onDecember 19, 2002, with the adoption of the Actrespecting the Ministère des Finances, de l’Économieet de la Recherche. The Act explicitly lays out thegovernment’s duty to foster and support the growthof cooperatives.

Under the Act, the department administers theCooperatives Act as well as related measures andprograms like the Programme d’aide aux coopéra-tives de développement régional and the Coopera-tive Investment Plan.

As the department responsible for cooperatives, it isinvolved in all issues affecting them and thus liaiseswith the main departments and governmentorganizations that have regular dealings with thecooperative movement. The department alsoprovides information, research, and many othersupport services to cooperatives across Québec.

46

The cooperative movement would like to see thegovernment step up MFER’s interdepartmentalliaison and monitoring role as well as its ongoingsupport to individual cooperatives and specificcooperative sectors. The Cooperative DevelopmentPolicy will help the department address theconcerns of cooperatives in a consistent and longterm way.

Course of ActionTake the distinct nature of cooperatives intoaccount in government programs, legislation,and measures

Quebecers and government bodies do not alwaysunderstand the cooperative model, which meansthat its needs are not always adequately addressedin new programs, acts, or measures. To solve thisproblem, all departments will be urged to takecooperatives’ special concerns into account whenchoosing a course of action.

This means– Cooperatives will be invited to participate in

round tables or on government committees whosework will impact cooperative development

– Concrete measures will be proposed to ensurethat cooperatives are represented on the boardsof directors of public or publicly supportedbodies with a vested interest in cooperatives

– Each department that deals regularly withcooperatives will assign an employee to dealwith their concerns

– Cooperatives will be taken into account whenpolicies are drafted that affect cooperatives orthe cooperative model

Strategic OrientationPromote the cooperative formula andenhance coop visibility

Course of ActionEducate socioeconomic actors and agentsabout the cooperative formula

For socioeconomic agents to give a more thoroughpicture of the cooperative model to projectpromoters, they must first know exactly what it is.It is thus essential that agents be made aware ofthis business formula.

Regularly providing special training to all socio-economic agents across Québec would increase thecooperative model’s profile.

In order for the model to reach a wider audience, itmust also be promoted to professionals who workwith companies.

An awareness campaign targeting the main profes-sional groups that provide advice to companies(accountants, lawyers, notaries, etc.) would beappropriate. The campaign could stress theconcrete advantages of the cooperative formula fordealing with problems such as transferring owner-ship in SMEs.

The government will support the steps taken toincrease awareness of cooperatives among socio-economic agents and professionals providingadvice to companies.

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Measure to ComeEstablish “Distinctions Coopératives” awards

The adoption of best business and associationalpractices by cooperatives should be encouragedand supported. Such practices are essential forrealizing cooperatives full development potential.

The creation of Québec-wide cooperative awardswould turn the spotlight on cooperative successstories. These awards could complement thosealready handed out by CCQ to recognize indivi-duals in the cooperative sector.

The government intends to support the implemen-tation of cooperative awards to promote theadoption of innovative practices.

Strategic OrientationIncrease the quantity of cooperative trainingat every level of the educational system

Course of ActionIncrease teaching of cooperation at differentlevels of the school system

The division of responsibilities between the Minis-tère de l’Éducation du Québec and the variousteacher groups varies according to the level taught.The general thrust of programs at the primary andhigh school levels are mainly MEQ’s responsibility,while learning institutions have more autonomy atthe college and university level. The differencesbetween primary and high school instruction onthe one hand and higher education on the othermean that different teaching methods are required.

Primary and High School Instruction

– The new training program already in place inprimary schools and coming soon to highschools puts the emphasis on learning activities.Cooperatives are one of the things students willlearn about and textbooks will reflect this fact.

– As part of the Youth Action Plan, assigningcredits to young people who serve on the boardof directors of a cooperative is being considered,among other things

– To meet schools’ growing need for training andinformation on a teaching method known as“cooperative learning,” a cooperative learningcenter has been established. The university-based center offers courses on cooperativelearning and advanced instruction and is respon-sible for evaluating the efficacy of cooperativelearning training strategies and measuring theirimpact.

MEQ and CCQ will be examining various optionsto determine their future involvement in themeasures cited above and others.

Higher Education

Approaches will be made to the main organizationsresponsible for higher education—the Fédérationdes cégeps, the Association des collèges privés duQuébec , and the Conference of Rectors and Princi-pals of Québec Universities—to encourage concreteaction to increase the focus on cooperatives at thecollege and university levels.

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Strategic OrientationPromote partnerships between cooperativesand the government in a variety of areas

Course of ActionPromote business partnerships betweencooperatives and the government

In many European countries, governments andcooperatives form close business partnerships, withcooperatives providing certain kinds of services thatgenerally have a social value.

In Québec, cooperatives and NPOs are specificallytargeted by the Financial Assistance Program forDomestic Help Services, which provides a frame-work for the homecare industry and has enabledits 103 companies to grow substantially.

The feasibility of creating new business partner-ships between cooperatives and the Governmentof Québec will be carefully analyzed.

Identify key orientations in the cooperativehousing sector

The talks begun with the main partners in coope-rative housing will be continued to determine keyorientations and select which methods would bestmeet their needs.

In the short term, the discussions will focus onharmonizing the work of the various partners andproviding additional support to cooperative housinggroups and the Confédération québécoise descoopératives d’habitation so that these organizationsmay offer cooperatives greater organizational, finan-cial, and housing assistance without compromisingtheir autonomy.

The viability of cooperative housing, the precondi-tions to its success, and its ability to meet futureneeds will also be examined.

Strategic OrientationEncourage cooperatives to positionthemselves strategically in relation to majorsocial and economic trends

Measures to ComeConduct studies on how globalization affectscooperatives

Up to now, studies on the role of cooperatives havemainly focused on their place in the Québececonomy. However, it seems increasingly importantto broaden the discussion to include the challengesof economic globalization. A better determinationof the issues at stake and identification of theconstraints and problems cooperatives face areessential if cooperatives are to overcome the futurechallenges they will face.

The government has earmarked a sum of $150,000 for conducting studies on globalization andits impact on cooperatives.

Identify sectors with good potentialfor cooperatives

At the same time that globalization is studied, itwould also be advisable to perform an analysis ofsectors where the cooperative system could spurdevelopment. The study should also identify specificstrategies to help cooperative businesses gain afoothold in these new sectors.

The joint efforts of the cooperative movement andthe government will help orient cooperativebusinesses towards promising sectors and make iteasier for them to diversify.

The government intends to provide technical andfinancial support for the study.

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Course of ActionBuild partnerships between cooperatives andother enterprises in the social economy

In areas of mutual interest, cooperatives haveenjoyed the support of other social economy enter-prises in requesting that the government implementmeasures addressing their special needs. It was thecombined efforts of cooperatives and NPOs, as wellas the Conseil de la coopération du Québec and theChantier de l’économie sociale, that led to initiativesconducive to collective entrepreneurship in Québec.

The government intends to further promotepartnerships between the main organizations thatwork with cooperative businesses with the aimof fostering their growth while respecting theirdifferences.

INITIATIVES SPECIFICALLY AIMEDAT YOUNG PEOPLE

Certain measures or actions in the CooperativeDevelopment Policy are specifically aimed at youngpeople. The measures have been grouped togetherto better illustrate what assistance and support thepolicy will give this clientele, which is receptive tothe cooperative model19 and represents the future oftoday’s movement.

Two strategic orientations

1 Finance and support projects developed by youngpeople

2 Increase awareness of the cooperative system amongyoung people, especially adolescents

Strategic OrientationFinance and support projects developedby young people

Course of ActionPosition the Campus Coopératives formula

The Campus Coopératives formula is similar inconcept to small business incubators. The formula,which was developed in France, has met withparticular success in getting work cooperatives offthe ground. Completed in three stages, CampusCoopératives is an entrepreneurial exercise thatlasts around eight months. For the last three years,it has been tested in Montréal and various regionswith the financial support of the Fonds de luttecontre la pauvreté.

The Campus Coopératives formula reaches youngentrepreneurs, especially those in urban areas, byproviding them with specialized advice on startingtheir businesses.

The Ministère de l’Emploi et de la Solidarité socialeand the Ministère des Relations avec les citoyens etde l’Immigration are studying how they can worktogether to pursue the Campus Coopérativesformula over the next few years.

Measures Recently AdoptedEstablish Audace, a financial aid program foryoung cooperative entrepreneurs in theregions

During the Québec Youth Summit in February 2000,a financial measure was devised to keep moreyoung people in outlying regions. The Audaceprogram is managed by the Fédération descoopératives de développement régional.

19 A survey commissioned by Conseil de la coopération du Québec revealedamong other things that 62% of young people aged 13 to 35 have very greatconfidence in cooperatives.

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The objectives of this initiative, which is aimed atyouth aged 18 to 35, are the following: – Create permanent jobs and enterprises in the

regions– Recreate a vibrant economy outside of main

urban centers– Counteract the exodus of young people from

rural regions

This measure, which was launched in fall 2001 withfunds from the Fonds Jeunesse, provides fundingon top of young peoples’ startup capital to helpthem undertake cooperative projects. With thisfinancial support, youth will be encouraged tocreate exciting new businesses in outlying areas.

The measure has a budget of $2.4 million lastinguntil October 2004.

Set up a multipurpose portal on cooperativesin the school community

Because of their young clientele, student coopera-tives have been on the front line of the electronicbusiness revolution. In 2001, the Fédération québé-coise des coopératives en milieu scolaire (FQCMS)therefore announced plans to create a multipurposeportal.

The portal will provide an e-commerce gateway forFQCMS in the student product market (books,computer equipment, various supplies, etc.).

By creating a transactional platform, studentcooperatives will be able to offer a wider array ofproducts and services and compete on a moreequal footing with their mainly foreign competitors.The platform will also make numerous servicesavailable to student cooperatives, making themmore competitive and networking them moreclosely together.

The creation of the portal was made possible thanksto the Fonds de l’autoroute de l’information and theProgramme de soutien aux regroupements sectorielsen économie sociale.

Strategic OrientationPromote the cooperative formula amongyoung people, especially teens

Measure to ComeDevelop a measure to promote thecooperative formula

The cooperative formula draws strength from itsdeep roots in certain communities, particularly ruraland semi-urban regions. But the cooperativemovement also wishes to reach a greater numberof people in urban regions and cultural communi-ties.

To do so, it intends to increasingly focus its effortson promoting the cooperative formula to youngpeople in these settings. The positive experience ofyouth services coops and student coops in urbanareas shows there is potential to tap if propermeasures are taken.

Though it is up to the cooperative movement topromote the cooperative model, the governmentcan help it reach a wide audience by giving it thenecessary support. Using new informationtechnologies to reach young people is one avenueworth exploring.

The government will also support broader effortsaimed at promoting the cooperative formula (massad campaigns, partnerships with various economicagents, presentation of cooperative success stories,etc.) and expanding cooperatives’ customer base,particularly among youth. To this end, the govern-ment has set aside a sum of $1,300,000 over threeyears.

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Measure Recently AdoptedSet up the second student fund for youthservices coops (Government of Québec andSolidarity Fund QFL)

During the Québec Youth Summit, the youth servicescoop concept was recognized as contributing to theoverall development of adolescents.

The youth services coop (YSC) model was deve-loped in Québec by the Regroupement québécoisdes coopérateurs et coopératrices du travail(RQCCT). The model is intended for young peopleaged 13 to 18. It helps them start a small scalecooperative business and assume all principal duties(marketing, accounting, personnel management,production, etc.). For a fixed period (generallyduring the summer vacation), they learn how tomanage a business that provides them withseasonal work. YSCs provide various services to thecommunity like lawn mowing, painting, gardening,repairs, general maintenance, etc.

The number of YSCs has grown rapidly. There were59 in 1998, 76 in 1999, and 104 in 2002. Each YSCemploys some 15 young people, who are generallytrained by two supervisors and sponsored by twocommunity organizations.

In 2000, the FTQ Solidarity Fund and the Ministèrede l’Industrie et du Commerce joined forces tocreate a fund whose interest payments financesupervisors’ YSC work placements.

The amounts invested by the two partners over tenyears serve to provide students at the college anduniversity level with valuable work experience aswell as provide training and supervision to youthat each YSC to give their projects a better chance ofsuccess. Studies are also ongoing to determine howthe YSC support structure can be made permanent.

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It is due to the forward thinking and enlightenedinput of socioeconomic partners, the cooperativemovement itself, and the departments and organi-zations consulted that the Cooperative DevelopmentPolicy will achieve its ambitious objectives. Thepolicy is a perfect example of how working togetherand sharing resources can advance the develop-ment of the Québec corporate model.

Cooperatives are businesses that are here to stay,

rooted in their fields and attuned to the needs of their

members and communities. They are unique tools that

let Quebecers retake control of the economy, an

endeavor worthy of our support.

(Excerpt from a speech by the Minister for Industry and Trade,Ms Lucie Papineau, at the annual banquet of the Conseil de lacoopération du Québec, March 18, 2002)

The Cooperative Development Policy creates a newdynamic in the cooperative world, one that willprovide cooperative enterprises with immeasurableassistance in meeting the challenges of the next fewyears.

These challenges are notably those of capitalization,diversification, competitiveness, and training. Byclearly enunciating the support the governmentintends to provide in these areas, the CooperativeDevelopment Policy opens up new developmentperspectives for all cooperatives.

With the courses of action it suggests and themeasures it puts forward, the policy will help theQuébec cooperative movement use all availableresources to take its place in the economy oftomorrow and remain an example to all Quebecers.

By having new support measures, cooperatives arenow better equipped to take advantage of businessopportunities as they arise, diversify their activitiesinto new sectors, and contribute even more activelyto the social and economic development of Québecand its regions.

CONCLUSION

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PAGE

Appendix 1 List of organizations or businesses that submitted briefs or letters

of comment during the consultation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

Appendix 2 Comparative table: Cooperatives, companies, and nonprofit

organizations (NPOs) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

Appendix 3 The cooperative principles of the International Cooperative

Alliance (ICA). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

Appendix 4 Cooperatives: Key players in many spheres of

economic activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61

Appendix 5 Acronyms used . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70

LIST OF APPENDICES

54

COOPÉRATIVE MOVEMENT

LIST OF ORGANIZATIONS OR BUSINESSESTHAT SUBMITTED BRIEFS OR LETTERS OF COMMENT DURING THE CONSULTATION

APPENDIX 1

Agropur, agrifood cooperative

Association coopératived’économie familiale Rive-Sudde Québec

Club coopératif d’alimentationde Mont-Brun

Conférence des coopérativesforestières du Québec

Confédération québécoise descoopératives d’habitation

Conseil de coopératismeétudiant de la région de Québec

Conseil de la coopération du Québec

Coop de vie communautaire La Chaîne

Coop de services de santéRobert-Verrier

Coop du collège de Limoilou

Coopérative de développementrégional de la Montérégie“l’Intercoopérative”

Coopérative de développementrégional du Bas-Saint-Laurent

Coopérative de développementrégional Montréal-Laval

Coopérative de développementrégional Outaouais-Laurentides

Coopérative de développementrégional Québec-Appalaches

Coopérative de solidarité d’aidedomestique La Maison Nicolet-Yamaska

Coopérative de travail Aténa

Coopérative des artisans etcommerçants du Quartier Petit Champlain

Coopérative des techniciensambulanciers du Québecmétropolitain

Coopérative fédérée de Québec

Exceldor, poultry cooperative

Fédération des coopérativesd’alimentation du Québec

Fédération des coopératives dedéveloppement régional du Québec

Fédération des coopératives detravailleurs actionnaires du Québec

Fédération des coopérativesfunéraires du Québec

Fédération des coopératives deservices à domicile du Québec

Fédération des coopérativesquébécoises en milieu scolaire

Fédération québécoise descoopératives de travail

Habitat urbain de l’Outaouais

La Coopérative de solidarité Le Groupe Info-Vision

L’Actif, financial education andtraining cooperative

LOS PAJAROS, leisure, recre-ation, and travel solidaritycooperative

Mouvement des caissesDesjardins

Mutuelle des fonctionnaires duQuébec (La Capitale financialgroup)

Orion, research and consultingcooperative

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PARTNERS

Association des centres locauxde développement du Québec

Association des groupes de ressources techniques du Québec

Association des professionnelsen développement économiquedu Québec

Association des régions du Québec

Barreau du Québec

Centrale des syndicats du Québec

Centre interdisciplinaire derecherche et d’information surles entreprises collectives(CIRIEC)

Chambre des notaires du Québec

Chantier de l’économie sociale

Confédération des syndicatsnationaux (CSN) et MCEConseils

Conseil du patronat du Québec

Corporation de développementéconomique communautaireCentre-Nord

Fondaction, a CSN developmentfund for cooperation and jobs;Filaction, a local investment andcommunity development fund,and Caisse d’économieDesjardins des travailleuses etdes travailleurs (Québec)

Groupe C-G-O

Institut de recherche etd’enseignement pour lescoopératives, Université deSherbrooke (IRECUS)

Ordre des comptables agréés du Québec

Regroupement québécois descoopérateurs et coopératrices du travail

Réseau québécois du créditcommunautaire

Solidarité rurale du Québec

GOVERNMENT

Investissement Québec

Ministère de l’Agriculture, desPêcheries et de l’Alimentation

Ministère de l’Éducation

Ministère de l’Environnement

Ministère de l’Industrie et duCommerce :– Deputy Ministers’ Office– Market Development Branch– Industry Branch

Ministère de la Culture et desCommunications

Ministère de la Famille et del’Enfance

Ministère de la Justice

Ministère de la Recherche, de laScience et de la Technologie

Ministère de la Santé et desServices sociaux

Ministère des Affaires munici-pales et de la Métropole

Ministère des Finances

Ministère des Régions

Ministère des Relations avec lescitoyens et de l’Immigration

Ministère des Relations internationales

Ministère des Ressourcesnaturelles

Ministère des Transports

Ministère du Conseil exécutif

Ministère du Revenu

Régie du logement

Société d’habitation du Québec

Tourisme Québec

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APPENDIX 2

COOPERATIVE

R.S.Q., C-67.2 Cooperatives ActThe Act is administered by theCooperatives Branch of theIndustry and Commerce Divisionof the Ministère des Finances, del’Économie et de la Recherche.

Common ShareCommon shares are registered.Section 39.

Common shares have a parvalue of $10, except in studentcooperatives. Sections 41 and 221.5.

Common Shares May Be Bought Back.The cooperative may repay,subject to certain conditions, thesums paid by the member inrespect of common shares.Sections 38, 38.1, 44 and 202.

Liability of MembersThe liability of members islimited to the amount of theirsubscription in respect ofcommon shares. Articles 309 and 315 of the Québec Civil Code

COMPANY

R.S.Q., Section C-38, Companies Act, Part IAThe Act is administered by theCompanies Branch of theInspector General of FinancialInstitutions (IGFI).

Bearer ShareA bearer share warrant entitlesthe bearer of the warrant to theshares specified therein. Section 54 (par. 1 and 2). Share capital is without parvalue unless otherwise stated.Section 123.38.

Shares May Be Bought Back.The Act contains certain specialprovisions regulating thepurchase and buyback of sharesat market value. Sections 123.52 and s.

Duties ofShareholdersThe duties of shareholders arelimited to capital stock. Section 41.

NONPROFITORGANIZATION (NPO)

R.S.Q., C-38 Companies Act Part IIIThe Act is administered by theCompanies Branch of theInspector General of FinancialInstitutions (IGFI).

Capital Stock or Share CapitalNonexistent

Section 224

Does not apply

Duty ofmembersThe duty of members is limitedto making a contribution fixedby regulation. Section 222Members are not personallyresponsible for the organiza-tion’s debts. Section 226

COMPARATIVE TABLE: COOPERATIVES, COMPANIES, AND NONPROFIT ORGANIZATIONS (NPOs)

SHARING OWNERSHIP

57

COMPANY

One Share, One VoteShareholders are entitled to asmany votes as they hold sharesin the company. Section 102.

Voting by Proxy IsPermitted. Each shareholder may vote byproxy through an authorizedintermediary. Sections 102 and 103.

Duties of Boards of DirectorsRole and duties of companymandataries. Section 123.38, Sections 2130 and ss. C.C.Q.

Duties and responsibilities ofdirectors of legal persons.Sections 321 to 330 C.C.Q.

Duties in certain cases. Sections 96, 123.58, 123.64,123.69, 123.71, etc.

Duties under other acts.

NONPROFITORGANIZATION (NPO)

One Member, One VoteMembers may only cast onevote. However, the regulationsmay limit the right of certainkinds of members to vote.Section 225

Voting by Proxy IsProhibited.A member may not vote by proxy. Section 224

Duties of Boards of DirectorsRole and duties as the organiza-tion’s mandatary. Article 321 C.C.Q., Articles 2130 and s. C.C.Q.Duties and responsibilities ofdirectors of a legal person.Articles 321 to 330 C.C.Q.Duties in certain cases. Section 95

Duty under other acts

SHARING RESPONSIBILITY

COOPERATIVE

One Member, One VoteNo member is entitled to morethan one vote, irrespective of thenumber of shares held. Sections 4 and 68.

Voting by Proxy IsProhibited. No member may vote by proxy.Section 4.Unless otherwise provided for inthe by-laws, a member may berepresented by a non-memberspouse or child of full age.Section 69.

Powers of the Board ofDirectorsPowers and duties of thecooperative board of directors.Article 91, Articles 2130 and ss. C.C.Q.

Powers and duties of directorsof a legal person. Articles 321 to 330 C.C.Q.

Duties in certain cases. Section90 (par. 1 and 2)

Duties under other acts

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COOPERATIVE

Interest on CommonSharesThe Act decrees that no interestmay be paid on common shares.However, it allows interest to bepaid on preferred shares andlimited by decision of the boardof directors. Lastly, interest maybe paid on participatingpreferred shares but must belimited by cooperative by-laws.Sections 4 (par. 3), 42, 46, 49.1and 49.4

Common Shares May NotHave a Surplus Section 147 decrees that in nocase may the reserve be dividedbetween members and auxiliarymembers. Section 38.1 stipulatesthat only the sums received aspayment for common shares ofmembers that have resigned orbeen expulsed may be repaid. Anon-member generally has noreason to pay a higher issueprice to members for his or hershares as they can be bought atthat price at the cooperative. Thevalue of the reserve and theprofitability of the cooperativehave no influence on the valueof its shares.

COMPANY

Payment of Dividends onShares Is Not Limited, provided

• The company is not insolvable• The payment of dividends

would not render it insolvableor diminish its capital

Section 123.70

Common Shares May Have a SurplusShareholders may sell theirshares to another person afteragreeing on a price. Theprofitability of the company andthe value of retained earningsinfluence share price.

NONPROFITORGANIZATION (NPO)

Does not apply

Does not apply

SHARING EARNINGS

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COMPANY

Allocation of ProfitsProfits may be distributed in the form of dividends by boards of directors according to the regulations for the various share categories. Theymay also be reinvested in thecompany. Section 123.70

Winding UpIn the case of a winding-up, the holder of a common shareparticipates in the distribution of net assets. Section 123.40

The liquidator first pays the debts of the company as well asthe costs of winding it up, thendistributes the balance of theassets among shareholdersaccording to their rights andinterests in the company. Section 12 of the Winding-Up Act,R.S.Q., c. L-4

COOPERATIVE

Allocation of OperatingSurpluses and SurplusEarningsAnnual operating surpluses areallocated to the reserve ordistributed to members or auxiliary members in the formof patronage dividends inproportion to the business doneby all members of the coopera-tive once the interest allocated to participating preferred shareshas been deducted as participa-tion in the operating surplus orsurplus earnings, as the casemay be. Sections 4, 143, and 149.

Winding UpIn the case of a winding-up, theshareholder only has the right tothe amounts paid on the shares.The liquidator shall first pay thedebts of the cooperative as wellas the costs of winding up andrepay members for the price oftheir shares according to thepriorities established by the by-laws.

Once payments are made, thebalance of the assets are transferred to a cooperative,federation, confederation, or the Conseil de la coopération duQuébec by means of a resolution adopted by a majorityof votes cast. Section 185.

This condition does not apply toagricultural cooperatives. Section 208.

NONPROFITORGANIZATION (NPO)

Allocation of SurplusMembers of a nonprofit organization are not entitled tothe organization’s assets orrevenues. In addition, theorganization does not pay itsmembers dividends.

Winding UpIn the case of a winding-up,members do not generallyparticipate in the distribution ofthe organization’s assets.

The letters patent of mostnonprofit organizations requirethat residual assets be turnedover to another organizationworking toward the same ends.In such cases, members are notentitled to the organization’sassets.Sections 28(2), 31(Q) and 224

However, if the letters patent aresilent on the matter, membersare entitled to proportionatelydistribute the assets amongthemselves.

SHARING EARNINGS (cont’d)

FIRST PRINCIPLEVoluntary and Open Membership

Cooperatives are voluntary organizations open toall persons able to use their services and willing toaccept the responsibilities of membership, withoutgender, social, racial, political, or religious discrimination.

SECOND PRINCIPLEDemocratic Member Control

Cooperatives are democratic organizationscontrolled by their members, who actively partici-pate in setting their policies and making decisions.Men and women serving as elected representativesare accountable to the membership. In primarycooperatives, members have equal voting rights(one member, one vote), and cooperatives at otherlevels are also organized in a democratic manner.

THIRD PRINCIPLEMember Economic Participation

Members contribute equitably to and democrati-cally control the capital of their cooperative. At leastpart of the capital is usually the common propertyof the cooperative. Members usually receive limitedcompensation, if any, on capital subscribed as acondition of membership. Members allocatesurpluses for any or all of the following purposes:developing their cooperative, possibly by setting upreserves, part of which at least would be indivi-sible; benefiting members in proportion to theirtransactions with the cooperative; and supportingother activities approved by the membership.

FOURTH PRINCIPLEAutonomy and Independence

Cooperatives are autonomous, self-help organiza-tions controlled by their members. If they enter intoagreements with other organizations, includinggovernments, or raise capital from external sources,they do so on terms that ensure democratic controlby their members and maintain their cooperativeautonomy.

FIFTH PRINCIPLEEducation, Training, and Information

Cooperatives provide education and training fortheir members, elected representatives, managers,and employees so they can contribute effectively tothe development of their cooperatives. They informthe general public—particularly young people andopinion leaders—about the nature and benefits ofcooperation.

SIXTH PRINCIPLECooperation Among Cooperatives

Cooperatives serve their members most effectivelyand strengthen the cooperative movement byworking together through local, national, regional,and international structures.

SEVENTH PRINCIPLEConcern for Community

Cooperatives work for the sustainable developmentof their communities through policies approved bytheir members.

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THE COOPERATIVE PRINCIPLES OF THE INTERNATIONAL COOPERATIVE ALLIANCE (ICA)

APPENDIX 3

61

FINANCIAL SERVICESCOOPERATIVES

In 2000, Mouvement des caisses Desjardins was thelargest cooperative network, financial institution,and private employer in Québec, with over 36,400 employees. The network had $6 billion inrevenues and managed assets worth $76.1 billion.

Mouvement des caisses Desjardins in 2000 included972 affiliated financial services cooperatives whosemain activities centered on loans and personalsavings. These cooperatives also provided servicesto business members through 51 business financialcenters (BFC). The high profile of Desjardins in theQuébec market is borne out by a number ofimpressive statistics. Mouvement des caissesDesjardins manages 47.1% of all deposits, 21.6% ofRRSPs, and 15.2% of securities in Québec. In termsof financing, Mouvement Desjardins holds a largechunk of the market with 38% of mortgage loans,30.2% of personal loans, and 41.2% of agriculturalloans. Moreover, it is important to stress thatMouvement Desjardins is by far the most activefinancial institution in financing cooperatives inQuébec.

Mouvement Desjardins is made up of a number ofunits, including Caisse centrale Desjardins,Investissement Desjardins, Société immobilièrePlace Desjardins, and Société financière Desjardins-Laurentienne with its numerous subsidiaries thatare particularly active in insurance and specializedfinancial services (Desjardins Financial Security,Groupe Desjardins assurances générales, FiducieDesjardins, etc.). For health and life insurance,Mouvement Desjardins is number one in Québec; ithad 16.6% of the market in 2000. In damage insu-rance, it holds 12.1% of the market. Its fiduciaryactivities are also very big, with 41.3% Québecmarket share.

In 2001, Desjardins launched a number of develop-ment initiatives, two of which deserve specialmention. One was the first phase of construction ofE-Commerce Place, a highly structuring project.The other was the debut of the financial activities ofCapital régional and coopératif Desjardins.

Because of its presence in many markets,Desjardins faces multiple challenges. However, thebiggest challenge—implementing a single federa-tion—was successfully overcome. The reconfigura-tion of Desjardins’ network of caisses, whichinvolved numerous mergers, is also far along. Thesuccessful transformation of Mouvement Desjardinshas yielded record financial results and universalacclaim, with the organization being named“Business of the Year” in 2002 by the businessjournal Les Affaires.

The Corporate Renewal project is anothernoteworthy endeavor by Desjardins, one aimed atreaffirming its cooperative nature, adding newvigor to its caisses’ associational and democraticpractices, and doing its utmost to help caisses carryout their mission (results will be presented at anorientation meeting in March 2003).

Among Mouvement Desjardins’ many challengesis that of continuing to improve its competitivenessto maintain and increase its market share whilekeeping and emphasizing its cooperative unique-ness. Another big challenge is to increase itspresence in certain niche markets and marketsoutside Québec.

COOPERATIVES: KEY PLAYERS IN MANY SPHERES OF ECONOMIC ACTIVITY

APPENDIX 4

This section describes the main cooperative sectors and the challenges each will face over the next few years.

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MUTUAL INSURANCE

Some of the biggest players in Québec’s insurancemarket are mutuals, including large institutionssuch as Mutuelle SSQ, La Capitale20, as well asGroupe Promutuel, which is made up of 35 mutualinsurance companies across Québec. GroupePromutuel has just celebrated its 150th anniversary,which makes it the oldest enterprise in the cooper-ative sector.

Mutuals mainly offer life, accident, and health insur-ance (personal insurance). Groupe Promutuel andLa Capitale, however, specialize more in damageinsurance.

In 2000, mutuals provided coverage to over 1.3 million insureds and employed some 3,500 people. They generated revenues in excess of$1.5 billion per year from managed assets totalingover $3.8 billion. Some mutuals have big marketshare, like Mutuelle SSQ, which ranks first inQuébec in group insurance and fourth in life andhealth insurance. What’s more, Groupe Promutueland La Capitale are respectively ranked fifth andseventh in Québec in damage insurance.

The mutual insurance sector has undergone majorchanges over the last decade. These changes haveled to the demutualization of certain companies. Thetight insurance market has placed heavy pressureon small and medium-sized insurance companies,mutuals included. In some cases, companies havebeen obliged to enter into partnerships to increasetheir capitalization, or even restructure to stream-line operations and better target promising sectors.“Targeting” special markets and improving compe-titiveness will be ongoing for the next few years.

AGRIFOOD SECTOR

The agrifood sector is by far the largest one outsideof financial services. In 2000, the sector hadrevenues of $5.2 billion and included 194 compa-nies and 32,928 members, employing 15,093 people.It is at the very heart of Québec’s economy.

Agrifood cooperatives can be divided into fourgroups: 1) Processing cooperatives (dairy, meat, and other

agrifood products)2) Farm supply cooperatives3) Farm equipment and labor pools4) Other cooperatives (the majority of which are

in new areas of initiative)

The agrifood sector is dominated by two hugeorganizations: Coopérative fédérée de Québec andAgropur. Coopérative fédérée de Québec is activein three main areas: meat processing, farm supply,and the sale of petroleum products. As a federa-tion, it serves as a wholesaler for numerous agricul-tural inputs. As for Agropur, it is the Canadian coopleader in dairy products. This cooperative, whichhas recorded nearly $2 billion in sales, includesalmost half of the dairy farmers in Québec and isrenowned for its serious commitment to researchand developing new products in the field. It hasalso been very active for a number of years inorganizing events and training for cooperatives,which has fostered a sense of belonging and mademembers feel they contribute to the enterprise.

Québec agrifood coops are key players, if notleaders, in major areas of production. In 200021, theyprocessed and brought to market 59% of all milk,55% of all pork, and 85% of poultry products inQuébec. They accounted for over 40% of mapleproducts, mainly through the Citadelle cooperative,and were also leaders in exporting the aboveproducts, except for poultry. For example, in 2000,Coopérative fédérée de Québec exported over $500 million in agrifood products.

20 La Capitale is owned by Mutuelle des fonctionnaires du Québec, a management corporation. 21 Data obtained from Coopérative fédérée de Québec

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Farm supply coops and farm equipment and laborpools (FELPs) aim to reduce production costs foragricultural producers. The former supply inputs toproducers at the lowest possible price and the latterprovide shared machinery, and, in some cases,labor. Though supply coops date back to the turn ofthe century, FELPs appeared just over ten yearsago. Inspired by the French model, there are nearlysixty of them. These cooperatives help agriculturalproducers save money by substantially reducingtheir investments in farm machinery.

Lastly, cooperatives for producers of specialtyproducts help increase the number of new offer-ings by providing technical support and marketingservices.

There are a number of challenges in the agrifoodsector. The main ones are the fierce competitionbetween grocery stores and the presence of largechains. Indeed, three large chains control 80% ofthe Québec retail food market. A decreasingnumber of buyers, combined with an increasinglyconcentrated market for competing processors, hasled to stiff competition, which directly affects profitmargins.

In order to keep their processing costs competitive,cooperatives intend to be on the lookout for acqui-sitions22 or mergers (with other cooperatives) andinvest in researching new value-added productswhile optimizing their production facilities. Thesebig challenges will require a great deal of effort andnew sources of capital over the next few years.Coopérative fédérée de Québec and its network ofaffiliated cooperatives thus plan to invest a billiondollars over ten years to become more competitiveand improve their entire production system. In

addition to its economic initiatives, the federationalso intends to actively encourage all forms oftraining with the recent creation of its AcadémieCoop.

As for farm supply coops, competition is alsoincreasing in this sector. Expanding product lines,after-sales service, and systematic cost control arethe main issues.

As for FELPs, the need to reduce farm costscoupled with the excellent reputation that FELPsenjoy should lead to a steady increase in theformula’s popularity. The FELP model can also beexpected to spread, especially the labor sharingaspect, given the growing shortage of qualifiedagricultural workers in certain areas of production.

Lastly, producer coops in specialized areas shouldalso continue to grow apace, especially specialtyfarmhouse production. These coops will givemember farmers an opportunity to share theirexpertise, make group purchases, and developniche markets for their products.

FORESTRY SECTOR

Forestry cooperatives are active in four main areas:harvesting, forest management, processing, andproduction of seedlings for reforestation. They arealso involved in forestry-related activities such aswildlife management and work involving variousforest techniques.

In 2000, Québec’s 69 active forestry coops and theirsubsidiaries generated sales of $423 million, a 44% increase over 1995. These enterprises areprimarily active in public forests and hold a signif-icant share of the forest management andharvesting markets. They perform nearly 50% of

22 For example, Coopérative fédérée de Québec recently acquired a leadingpork slaughterhouse and processing plant in Alberta and Agropur made afirst acquisition in the United States in the fine cheese industry.

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the silvicultural work in public forests23, 50% of it inreforestation. They harvest 20% of the timber onpublic lands and produce 16% of the seedlingsused in reforestation. They also produce 412 mmbf24 of wood per year, 5% of Québec’s totalproduction.

Between 1995 and 2000, these enterprises saw theirworkforce increase by 29%, from 5,259 to 6,826.From 1996 to 2000, they invested nearly $100 millionin new secondary processing projects.

After several years of rapid growth, the coopera-tive forestry sector is traversing a difficult period.The industry has been seriously disrupted by thesoftwood lumber dispute with the United States,which has affected the lumber market as well asharvesting and forest management operations.

At present, the cooperative forestry sector is theonly large cooperative sector that is not organizedalong federative lines. Current difficulties havedrawn attention to how isolated forestry coops arein the face of economic cycles and competitors. Anumber of promising joint initiatives have beenimplemented to foster greater cooperation,including an environmental certification project forforestry practices, measures in workforce qualifica-tion and training, and sharing of forest manage-ment expertise. In addition, coops are beginning toshare their knowledge about coop operations. Apartfrom these positive steps, however, the weaknessof the network prevents forestry sector coops frombenefiting from the coaching services normallyoffered by coop federations. This is an alarmingsituation for coop survival. A closer examination ofnetworking opportunities in the forestry sectorwould be most timely.

Aside from the matter of network operations,forestry cooperatives will have various otherchallenges to face in the years ahead. With theimplementation of the new forest managementsystem, these enterprises will have to try to capturea significant share of the market for intense forestmanagement operations, the goal of which is tomove from sustained yield to increased yield. Theywill also have to consolidate their position in theprocessing sector. Lastly, solidifying their coopera-tive foundations is another major challenge facingthe sector.

HOUSING SECTOR

Housing cooperatives form the largest group ofcooperatives in Québec for their number. The 1,086 cooperatives reporting as of December 31,2000, represented 23,417 members, managedhousing stock valued at $882 million, and gener-ated revenues of $142 million. Housing cooperativesare found throughout Québec, but are concentratedin urban areas.

Québec housing coops are, with rare exceptions,rental coops that operate on a continuous posses-sion basis. They do not pay dividends to theirmembers and, to ensure sustainability and inter-generational equity, members never becomeindividual owners of their units. Almost all housingcoops have benefited from funding programs runby the Canadian Mortgage and Housing Corpora-tion (CMHC) or the Sociéte d’habitation du Québec(SHQ), and sometimes both, to conduct theirprojects.

These cooperatives are designed for people whocannot afford home or condominium ownershipand who want democratic, community-based

23 Public forests represent 90% of Québec’s total forest lands.

24 Million board feet

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control over their housing. A diversity of tenants isone of the key characteristics of these coops, andeven a prerequisite to their success.

Housing coops are characterized by their small size(20 units on average), intense user relationship(exclusive service, daily and family use), a signifi-cant volunteer commitment by member residents,and in consequence, a small number of employees.Member participation results in lower rent and alsooffers benefits from a personal developmentperspective (training in financial, real estate, andassociational management). Despite its size, thisnetwork is still largely managed and administeredby volunteers.

Given the size of these coops and the interest oftheir members in maintaining low rents, housingcooperatives have not generally sought outindependent means of development. Growth in thesector has been tributary to social and communityhousing programs set up by SHQ and CMHC, aswell as by technical resource groups.

Through its federated and confederated bodies, thecooperative housing movement intends to get moreactive and involved in the development of thesector. The long-term survival of cooperativehousing stock and various associational, financial,and real estate issues encountered over the yearsare among the concerns that call for consolidationin the sector. To this effect, the Confédérationquébécoise des coopératives d’habitation (CQCH)and its members plan to take on a greater role indefining development in the sector.

An important challenge is to develop and maintaindynamic, thriving cooperatives that are bothfocused on the needs of their members and open tosolidarity with cooperatives as whole. Finding a

balance between these two concerns will obviouslyentail respecting cooperatives’ autonomy whilerecognizing the contributions of cooperativenetworks.

The cooperative housing movement will also haveto shore up its sectoral organizations as well asconsolidate and harmonize their services. The hopeis that these organizations will be more able to worktoward the long term viability of the housing stock,both from a physical and legal ownership perspec-tive, and the continuance of measures providingaccess to housing to all members regardless ofincome while ensuring intergenerational equity.

Certain scenarios should be explored to see howthe cooperative housing model could meet theneeds of an aging population, which sometimes hasthe wherewithal for greater capitalization. Theability of the formula to meet the needs of othergroups or compensate for a lack of nearby servicescould also be explored. This sector will also face thechallenge of gauging its potential for self-develop-ment and the measures that could encourage it.

GROCERY SECTOR

In 2000, 68 cooperatives were active in generalfoods (ten of which operated as clubs), and twelvewere active in specialty foods. In the past twentyyears, the grocery sector has been the one hithardest by market conditions. While over 200cooperatives were in operation in the late seven-ties, only a third of them still exist today. Thisdecrease is strongly tied to the bankruptcy of theFédération des magasins coop (FMC) in the earlyeighties, the exodus of people from rural and semi-urban regions where most businesses were concen-trated, and improved transportation links to citieswith their larger stores. In addition, the sharpincrease in competition in the sector has leftcooperatives with very little room to maneuver.

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These enterprises recorded sales of $356 million in2000 and controlled some 2% of the Québec foodmarket. Though they have no presence in all ofwestern Québec (including Montréal), theynonetheless have a large market share in certainregions like Gaspésie and Îles-de-la-Madeleine(24%), Bas-Saint-Laurent (18%), and Chaudière-Appalaches (12%). They employ over 2,000 people.

The arrival of the Fédération des coopératives d’ali-mentation du Québec, even though it was not awholesaler, stopped the hemorrhage the sector hadbeen experiencing for a number of years. Somesmall towns even saw new coop stores open.However, the future of the sector remains preca-rious for largely demographic reasons, whichexplains why sales in the sector have been stagnantin recent years.

Through their federation, grocery cooperatives facethe challenge of developing or consolidating whole-sale purchases of goods and service to cut costsand remain competitive. The concept of a multiser-vice cooperative offering different services underthe same roof (post office, cleaner, Internet access,etc.) could also prove promising, especially for smalltowns wishing to consolidate certain local services.

SCHOOL SECTOR

School cooperatives are a great entrepreneurialtraining grounds and a big source of future coopmanagers and administrators. These businesseshave grown rapidly over the last 15 years and havebecome fixtures in high schools, colleges, anduniversities. In 2000, there were 90 school coopsthat recorded sales of $117 million. They have alarge member base and employ close to 1,000people, a substantial number of them students.

School coops are found in teaching establishmentsand sell school materials, textbooks, computerequipment, clothes, and other goods. Many alsooffer management services for driving schools,parking lots, or cafeterias. These businesses—especially those in colleges and universities—arepart of the Fédération des coopératives québécoisesen milieu scolaire. This federation began in the mid-eighties and has created greater cohesion amongcoops, bringing them together in a solid andinnovative network.

School coops face major challenges, including fiercecompetition from book and computer e-tailers. Infact, they are the first coops to have ventured intothe world of e-commerce on a broad scale, and aretaking action to become nimble, versatile players inthis new domain. Many coops also intend tobroaden the scope of their activities over the nextfew years (managing cafeterias and parking lots,selling school notes, providing IT services, etc.).

ABORIGINAL COOPERATIVES

Aboriginal cooperatives were formed in 1959 and1982. There are 16 coops in as many communities inNouveau-Québec. These mixed cooperatives(consumer and producer) supply their memberswith a variety of products and services, such asbasic foodstuffs, gas, transportation, restaurantmeals, and recreational services. Through theirfederation, they are also responsible for marketinghandicrafts from Northern Québec.

The Inuit and Amerindian cooperatives in theFédération des coopératives du Nouveau-Québecrecord annual sales of close to $102 million andhave over 5,600 members. They employ 300 peopleand are by far the largest private employer in

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Northern Québec. These businesses are an exampleof people successfully taking charge of their destiny.Run by members of the community, they havehelped train Inuit and Amerindian managers andgenerate structured economic activity in near-totalisolation from main centers.

The main challenge for these businesses is toremain competitive and prepare for the eventualarrival of new forms of competition. Modernizingtheir petroleum facilities is another item that willrequire substantial investment. Lastly, broadeningtheir activities into other areas is another optionthese businesses could explore over the short andmedium term.

FUNERAL SECTOR

Funeral coops have been very active in Québecsince 1996. These enterprises, which are groupedtogether under the Fédération des coopérativesfunéraires du Québec, have adopted an ambitiousaction plan aimed at substantially boosting theirmarket share. To this end, they invested over $27 million in 1996 and acquired some dozenprivate firms.

In recent years, the Québec funeral sector has comeunder very intense pressure from foreign multina-tionals. These organizations have made a number ofmajor acquisitions and now control a significantportion of the Québec funeral market.

Not only have funeral coops resisted this foreigntakeover, but between 1995 and 2000 they actuallysaw the number of deaths they handled rise 58%.They boosted sales from $10 million in 1995 to $21.5 million in 2000 through acquisitions and theopening of new funeral complexes.

Funeral coops have had an obvious moderatingimpact on prices in the sector, particularly since the1970s. Whereas in 1972 the average cost perdeceased was 20% higher in Québec than in therest of Canada, in 1993 average funerals were 13%less expensive in Québec than in Canada. Inaddition, funeral coop users pay 43% less onaverage than Quebecers as a whole. The introduc-tion of funeral coops has also had a direct impacton the casket and funeral product industry, as thecoops buy almost exclusively from Québecbusinesses through a buying pool.

The first challenge for funeral coops is to makeinroads in the Greater Montréal area, from whichthey are currently absent. Moreover, funeral coopsmust remain on the lookout for family enterprisesthat come up for sale for lack of family membersto take over the reins. They must also pursue theirefforts to achieve greater visibility and mustincrease their promotional efforts to grab newmarket share, particularly in the prearrangedfuneral market, which will be the cornerstone offuture success.

TABLE 5

Change in Funeral Cooperatives, 1995 to 20001995 2000 Variation

Number of cooperatives 31 34 10.0%

Sales $10 million $21.5 million 115.0%

Estimated Market Share 7.0% 11.9% 70.0%

Sources: Fédération des coopératives funéraires du Québec, Analyse de la situation financière des coopératives funéraires, March 2000.Cooperatives Branch, MFER.

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AMBULANCE SECTOR

There are only six ambulance cooperatives inQuébec, but they serve broad and heavilypopulated geographic areas: Gatineau, Trois-Rivières, Sherbrooke, the Montérégie area, GreaterQuébec City, Rivière-du-Loup and area, a part ofthe Saguenay, and Témiscouata.

Ambulance cooperatives employ over 670 workersand do over $38 million in business a year. The fieldis not easy to enter and is highly regulated andmonitored. Cooperatives account for over 20% ofthe Québec market and, in each case, enjoy a virtualmarket monopoly. These enterprises, which existedbefore they were turned into cooperatives, areunionized. They are an excellent laboratory for thestudy of unions in the cooperative environment.

Progressive introduction of the measures from theDicaire Report in 2000 should lead to a newapproach to ambulance services and an overhaulof ambulance technician training and interventionmethods. More and more, these cooperatives willbe diversifying their operations and offering othertypes of transport. They should also be on thelookout for acquisition opportunities, seeing ascertain small, private firms are expected to comeup for sale in the coming years. Integrating theworkers from these firms will also presentchallenges in terms of strengthening the coopera-tive nature of the enterprises.

HOMECARE SECTOR

The aging population has created new needs forvarious personal services. The homecare sector hasgrown by leaps and bounds since the Economyand Employment Summit of 1996. In 2000, therewere 48 cooperatives, compared to only threebefore the event. By picking up a part of the cost ofdomestic help services, the Financial AssistanceProgram for Domestic Help Services (FAPDHS)introduced in the Summit’s wake has spurred thedevelopment of this market, much of which wasunder the table before. All told, 42 cooperatives areregistered under the program.

Among the 48 domestic help cooperatives, 29 aresolidarity cooperatives, 13 are consumer coopera-tives, and six are work cooperatives. In 2000, theyhad a total of 20,400 members and annual sales ofover $28 million. This compares to less than $1 million in revenues before 1995. Also in 2000,2,100 people worked for these enterprises,occupying nearly 45% of the market for suchservices. The exponential growth of the coopera-tives was also remarkable. Seventeen alreadyemployed over 50 workers. What’s more, a majorityof the cooperatives were still very young, havingbeen in existence for less than six years.

The whole sector of homecare and related servicesshould grow considerably in the next few years.Domestic help cooperatives, like nonprofit organi-zations in the field, have concluded a number offruitful partnerships with local community servicecenters (CLSCs) and other healthcare and socialservice establishments.

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The primary challenges for these cooperatives willbe to manage fast growth on the one hand andstrengthen their networking on the other via theirsectoral federation in order to achieve economiesof scale and greater efficiency in the services theyprovide. Implementing standards of service qualitythrough a certification process would also beworthwhile. These enterprises will also need to seekout opportunities to diversify their clientele.

INTERNATIONAL DEVELOPMENT

The Québec cooperative movement has beenexporting its know-how to countries all over theworld for years now. Québec organizations involvedin international cooperation are responsible foralmost three-quarters of Canadian contracts in thefield. The total market is estimated at some $40million annually. It is served by organizations such

as Développement international Desjardins (DID),SOCODEVI (Société de coopération pour ledéveloppement international), and CECI (CanadianCentre for International Studies and Cooperation).A prominent role is also played on the educationalside by IRECUS, the research and teaching insti-tute for cooperatives at Université de Sherbrooke.

Québec cooperative expertise in savings and credit,agriculture, and forestry has raised Québec’svisibility in a number of countries, which benefitfrom the helping hand it provides. BroadeningQuébec’s scope of action and establishing newpartnerships are major challenges in the field.

QUÉBEC GOUVERNMENT DEPARTMENTS

MAMM Ministère des Affaires municipales et de la Métropole

MAPAQ Ministère de l’Agriculture, des Pêcheries et de l’Alimentation du Québec

MEQ Ministère de l’Éducation du Québec

MESS Ministère de l’Emploi et de la Solidarité sociale

MRCI Ministère des Relations avec les citoyens et de l’Immigration

MFER Ministère des Finances, de l’Économie et de la Recherche

MIC Ministère de l'Industrie et du Commerce

MJUS Ministère de la Justice

MREG Ministère des Régions

MRN Ministère des Ressources naturelles

MRQ Ministère du Revenu du Québec

MSSS Ministère de la Santé et des Services sociaux

QUÉBEC GOVERNMENT AGENCIES

CDPQ Caisse de dépôt et placement du Québec

IQ Investissement Québec

SGF-Soquia Société québécoise d’initiatives agroalimentaires (a subsidiary of Société générale de financement)

SHQ Société d’habitation du Québec

COOPERATIVE ORGANIZATIONS AND OTHERS

ACLDQ Association des centres locaux de développement du Québec

CCQ Conseil de la coopération du Québec

CDEC Corporation de développement économique communautaire

CDR Coopérative de développement régional

CFQ Coopérative fédérée de Québec

CLD Centre local de développement

CLE Centre local d’emploi

CQCH Confédération québécoise des coopératives d’habitation

CRCD Capital régional et coopératif Desjardins

CSMO Comité sectoriel de la main-d’œuvre, de l’économie sociale et de l’action communautaire

FCDRQ Fédération des coopératives de développement régional du Québec

SADC Société d’aide au développement des collectivités

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ACRONYMS USEDAPPENDIX 5