The Rural Voice, 1992-12, Page 30Back to
its roots
UCO wants to
solve its financial
squeeze by going
back to where it
started —
wholesaling for
independent co-ops
By Keith Roulston
The next few weeks and months
will see Ontario's farm co-operative
movement return to its roots in a
critical move to rid the United Co-
operatives of Ontario of its massive
problems.
The move is already behind
schedule and many of the problems
aren't solved but slowly and surely
UCO is moving toward becoming a
wholesaler of supplies to member co-
ops. The move reverses a trend of the
1960s when UCO moved away from
being a wholesaler and became a
retailer as well, taking over several
member co-ops that were in trouble.
The move, starting in 1965, was
spurred by the same kinds of
changing conditions that are now
pushing UCO to scale down its retail
operations, says Reg Cressman, vice
president of corporate services and
head of the steering committee for
co-operative restructuring. Several
local co-ops asked UCO to take over
their operations when they found
themselves in trouble. In the long run,
Cressman told delegates at the recent
Agricultural and Rural Restructuring
Group conference, the move was a
band-aid solution. It created two
26 THE RURAL VOICE
competing systems within the co-
operative movement — the UCO's
own retail stores and the original
independent member co-ops while
UCO remained a wholesaler to both
systems.
The move, and the subsequent
prosperity of the 1970s on the farm,
masked underlying problems with
some of the co-ops, Cressman said.
When UCO began to examine the
marketplace during the early steps of
its reorganization "It became obvious
in some places that the reason they
merged (with UCO) in 1965 was
because they were not in a viable
market." Many of the co-ops set up in
the 1940s through the early 1960s but
today the market may have changed
and there may not be enough business
left to support them, Cressman said.
Still, the 1970s were good times
and most of the co-ops prospered
despite their underlying weaknesses,
he said. Between 1969 and 1979
UCO made $32 million in profits and
turned $16 million back to its
members in dividends.
But the crisis that has tormented
Ontario farmers throughout the '80s
and into the '90s had its effect on the
co-ops as well. In 1976, Cressman
points out, there were 88,800 farmers
in Ontario. By 1986 the number had
dropped to 72,700 and by 1991 the
number was reduced to 68,600.
At the same time prices for many
farm commodities have actually gone
down. In 1981, Cressman notes, oats
was $2.03 a bushel while in 1991 it
was $1.85. "In any of the
commodities we have not returned to
1981 prices." The result was that of
the $32,153 average income of farm
families in 1990, $29,160 came from
off -farm income.
The result has been a continuing
crisis at UCO as the company tip-
toed the tightrope of insolvency.
Despite its precarious condition,
UCO has some impressive numbers.
Its annual payroll is $33.8 million to
851 employees, most of them in rural
communities. It is the number one or
number two supplier of feed and
many other farm supplies. There are
86 UCO branches as well as 42
independent co-ops. "All of it based
on a $10 bill (the minimum fee of co-
op membership). The imagination of
Ontario farmers has built a good
organization on a small investment."