Proceedings of the Standing Senate Committee on
Agriculture and Forestry
Issue 23 - Evidence, April 16, 2007
OTTAWA, Thursday, April 26, 2007
The Standing Senate Committee on Agriculture and Forestry met this day at 8:04 a.m. to examine and report on rural poverty in Canada.
Senator Joyce Fairbairn (Chairman) in the chair.
[English]
The Chairman: Good morning, honourable senators, witnesses and to all of those watching our Standing Senate Committee on Agriculture and Forestry.
Last May, this committee was authorized to examine and report on rural poverty in Canada, and last fall we heard from a number of expert witnesses who gave us an overall view of rural poverty in Canada. On the basis of their testimony, we wrote an interim report, which we released in December and which, by all actions, really hit a nerve.
We are now in the midst of our second phase of the study. Thus far, we have travelled in Ontario, the four Eastern and the four Western provinces. Along the way, we have met a truly wonderful and diverse group of rural Canadians, who have welcomed us with open arms into their communities and sometimes even into their homes.
We want to hear from as many people as possible, and that is why we are continuing to hold meetings here in Ottawa in between our travels.
For the first round of witnesses this morning, we are delighted to have Ms. Cynthia Edwards, the National Manager; and Mr. J. Barry Turner, the Director of Government Relations for a very popular organization across this country, Ducks Unlimited of Canada.
J. Barry Turner, Director of Government Relations, Ducks Unlimited Canada: We tried to have this presentation about a month ago, and there was a vote that evening. It was an evening session and the mission was aborted that night. I suspect at 8:00 in the morning in Ottawa, there will be no vote to interrupt us.
Thank you very much for welcoming us back. Ms. Edwards will give our presentation. As you have just mentioned, she is our national manager of industry and government relations. I do government relations for Ducks Unlimited here in Ottawa. We look forward to your discussion and questions.
Cynthia Edwards, National Manager, Industry & Government Relations, Ducks Unlimited Canada: Thank you very much for the opportunity to appear and to present Ducks Unlimited Canada's views on the importance of rural areas to this country. We believe that an increased emphasis on Canada's natural capital can improve the welfare of both rural and urban residents in Canada. I have spent much of my life farming and living in rural Saskatchewan, so this issue is of great importance to me professionally and personally.
Ducks Unlimited Canada is a private, non-profit organization dedicated to the conservation, restoration and management of Canada's wetlands and upland habitats, for the benefit of water fowl, other wildlife and people. For almost 70 years, we have worked with partners to deliver incentives to rural landowners, through leases, conservation easements, payments to convert marginal land to forage and incentives to entice landowners to grow winter wheat.
We have also conducted pilot projects looking at the use of tax incentives to conserve natural areas. Over 17,000 Canadian landowners have conserved habitat in partnership with us throughout our history. We have invested millions of dollars in rural areas to conserve the natural capital in those landscapes. We have an annual budget that approaches $80 million, employ approximately 400 people and enlist the time of nearly 8,000 volunteers, many of whom live in rural areas from coast to coast.
Canada's natural capital includes our natural resources, ecosystems, land and water and is crucial to the viability of our economy and wealth. The value of this capital is based on the quantity and quality of the ecological goods and services that flow from it. Examples of the goods are well understood and include timber and agricultural commodities. The services, however, are not as well understood, are extremely complex, essential in supporting life and are not easily replaced when lost. These include water purification, erosion control and mitigation of greenhouse gases.
We have been working to better understand the environmental and economic value of Canada's natural capital and the goods and services it provides. Our work includes research into carbon sequestration of wetlands, the impact of wetlands on water quality and quantity and environmental and economic benefits of forage conversion.
As indicated throughout your report, many of the rural areas of Canada depend on primary industries such as agriculture for their livelihood. Many of these same areas are also important to waterfowl and have thus been the focus of our programs in the past. This is why we have a vested interest in future agricultural policy.
Anyone who has spent time in the agriculture industry knows that certain activities have negatively impacted our water, soil, fish and wildlife resources.
My focus today is not to highlight the negative aspects of agriculture but instead to speak to the positive environmental benefits that landowners currently provide. Through good management, farmers currently provide clean air, clean water and wildlife habitat; but they are under-compensated for the provision of these valuable goods and services.
As we come to the end of the current Agricultural Policy Framework in 2008 and embark on the next generation of agriculture policy in Canada, the timing is right to expand on programs designed to increase the ecological goods and services our agricultural producers generate. In preparation for discussions on the next generation, Ducks Unlimited developed three key recommendations that, if acted on, could increase the benefits agriculture provides to society while benefiting producers themselves.
The first is to have the recognition of environmental benefits fully entrenched in agricultural policy. The National Farm Stewardship Program should be enhanced and expanded to provide even greater environmental benefits and move the policy discussion from focusing on the risks agriculture poses to highlighting the benefits it provides. As indicated in your interim report on page 62, urban residents need rural land managers to provide things such as clean water. By shifting the discussion to the positive, rural land managers can benefit from the provision of goods and services. Although this is unlikely to save the family farm, it could provide a diversified revenue stream through expansion into areas such as ecotourism, carbon credit markets and the provision of public goods, such as clean water and biodiversity.
Our second recommendation is to enhance the current Greencover Canada program that provides a broad suite of environmental benefits such as greenhouse gas emissions reductions and improvements in the availability of habitat for fish and wildlife. Converting marginally productive lands will also help producers lower their input costs on cropland. From a waterfowl perspective, expanding this program to convert up to 2 million acres in the Prairies over the next five years would help address the needs of waterfowl while providing direct benefits to agricultural producers, especially those looking to expand further into the livestock industry.
Our final recommendation is that Agricultural and Agri-Food Canada, along with provincial and territorial governments, continue to promote wetland restoration through enhanced or even preferential funding as an eligible activity within the National Farm Stewardship Program. Recognizing the valuable contribution landowners make when restoring wetlands will help ensure these areas are both restored and then retained on the landscape.
Landowners, who maintain or restore natural areas, may also be able to capitalize on land that has been taken out of agricultural production through increased tourism and recreation opportunities. Your interim report touches briefly on the need to promote rural tourism and we agree that bed and breakfasts, nature trails and guiding services are potential sources of value-added revenue for rural residents.
Also identified in your interim report is the multifunctional concept, which recognizes the role that agriculture plays in society and is an area where more emphasis and research is needed in this country. The conservation of natural areas should be part of the new approach to farm policy. Multiple benefits can be capitalized on, providing new opportunities for rural residents and can lead to attracting new residents, including immigrants, to these special places.
The Canadian government has an opportunity to shift away from the traditional views that have helped form the economy of this country toward a new vision for the rural areas of Canada. We have a choice: We can continue to let our rural areas erode or we can capitalize on their inherent wealth. I am not willing to leave rural Canada to its fate. We need to broaden our policy approach to recognize the value of our natural capital beyond the traditional market-based industries and to take a strategic approach to building on these assets.
In conclusion, an effective ecological goods and services policy that recognizes and rewards the contribution of rural landowners and managers is an important component of an integrated strategy for addressing rural poverty. A focus on our natural capital and the goods and services it provides can help diversify income, improve agricultural sustainability and improve the quality of life for all Canadians.
Ducks Unlimited Canada is grateful for the opportunity to present its thoughts to this committee, and I welcome any questions you may have.
Senator Peterson: Thank you very much for your presentation. To help us a bit, under the present circumstances, could you walk us through what happens to the landowner now who wants to, say, donate 100 acres of marginal land or wetland? It could even be grassland. What benefit does the farmer get? What happens in the municipality? Who pays the taxes? What are the inherent issues that we are facing in this?
Ms. Edwards: Currently through our own Ducks Unlimited Canada programs, we do accept things such as conservation easements, donated conservation easements, for example, where the landowner would get a tax benefit for the value of that land. We also have paid conservation easements wherein if someone wants to conserve the natural features of their land, we will pay them a certain percentage of the fair market value of that land to essentially keep it in its natural state. That allows for continued agricultural use, so they can still hay or graze those areas.
Those are the two main programs that we have. We have also leased land in the past, where we would lease out cultivated land and seed it out to forage and manage it for wildlife. In most of those cases, if we purchased the land — which is the other option — then we pay the taxes based on the agricultural use so the tax base in the municipality does not go down. At least, that is the general practice in the Prairies.
If it is a conservation easement, the landowner still bears the tax burden on that; they would still pay the taxes. With leases, the landowner pays the tax as well.
Senator Peterson: To make it more attractive, then, we really need a comprehensive plan, with these new carbon credits possibly coming in, with other departments involved, to make it more attractive for a farm owner to do this for you.
Ms. Edwards: Now there are other organizations such as ours, the Nature Conservancy of Canada and others, who do conservation easements. In order to have a real landscape effect and help conserve a broader landscape, it is a policy shift that needs to happen, where people have an incentive to maintain those natural areas through either increased programs through Agriculture and Agri-Food Canada to which Environment Canada could contribute or Habitat Stewardship Program fund monies et cetera.
Mr. Turner: It is important to keep within this policy framework. The recent decisions by the government, in particular, to reduce the capital gain to zero on the donation of ecologically sensitive land — that in some cases could be marginal land, land that is unique or land that is harbouring endangered species — has increased the incentive for landowners to protect those lands.
For years, there was a capital gain charged on donations to Ducks Unlimited or the Nature Conservancy. That has now been reduced to zero.
Senator Peterson: We would appreciate any suggestions you could give this committee on how we can help you achieve your objectives.
Senator St. Germain: We have heard presentations about how the economy can be diversified for the rural population. Birdwatching was a suggestion by a chap for an area — I cannot remember the name — in Ontario, up by North Bay. He was talking about having travelled to Europe, where apparently this is a developing industry.
I drive by many of the Ducks Unlimited sites. Has there been any thought about developing viewing points, small interpretive centres, at these locations? Has any thought gone into trying to encourage the agriculture industry to develop these on their lands with the possibility of generating a small amount of income?
In some of these rural areas, as you well know, it is not like being in downtown Toronto or Vancouver, where everyone makes $300,000 a year. They make a lot of money compared to the amount on which rural Canadians generally subsist. It does not often take much. Has any thought ever been given to this?
Ms. Edwards: I am not sure if all of you are familiar with Saskatchewan, but I live just north of Last Mountain Lake, one of the national bird preserves. Tourism in my hometown is very important.
Ducks Unlimited Canada has several nature walk trail brochures in various provinces, which highlight our projects as well as other projects. We do not have interpretive sites on all of our projects. We have thousands of projects across the country, many of which are on private land and would require the cooperation of landowners. Some of them do that; their land is included in nature trails et cetera. We work with partners such as Nature Saskatchewan and other organizations on those.
To increase ecotourism, there needs to be some way for a private landowner — such as a farmer, in particular — to capture some of that revenue. Some of them do it through their joint ownership of small businesses. For example, the local hotel in my hometown of Nokomis, Saskatchewan, on any Wednesday night in October is full of hunters and birdwatchers; we are a large migratory area. That is important not just for the rural landowners, but for the rural community itself.
There are a couple of options to increase ecotourism. Most of them include having those landowners able to capture that benefit, either through tax incentives to maintain natural areas or their involvement in their own ecotourism business in promoting that development in Saskatchewan. Many people have bed and breakfasts or vacation farms. Those are popping up and becoming more popular.
From our perspective, we feel that, in order to have that landscape effect, we need to bring more partners on board. Ducks Unlimited Canada and other organizations such as ours cannot do this alone, so we work with partners on some of it. It is certainly an area that needs to have more attention paid to it.
Mr. Turner: It was a pleasure to serve with you in the House of Commons, Senator St. Germain, and I admire you in the Senate.
This is a really important question. From a diversification of rural economy point of view, this has tremendous potential.
Let me be selfish for a minute on behalf of Ducks Unlimited. As Senator Fairbairn mentioned once to Dr. Brian Gray and me about four or five years ago in committee, when she was a young woman living in Lethbridge, there was wildlife and wetlands everywhere, along with hunters, many ducks, geese, deer and all the creatures we love to see. She commented that this is all gone now.
The pressure from agriculture on our landscapes has become intense. We must protect the wetlands, regardless of where they are — British Columbia, the Lower Fraser Valley, Amherst, Nova Scotia, Point Pelee in Ontario or anywhere on the Prairies — because these wetlands have tremendous ecological and economic potential for the country. They harbour songbirds, shorebirds, waterfowl and other mammals that come to the edge of the wetlands to drink.
We can show you aerial photographs of the wetlands on the Prairies in 1950 and the lack of wetlands in the year 2000. The disappearance is astounding.
These birds have the potential to generate economic rural activity through guiding services and school visits — our interpretive centre at Oak Hammock outside Winnipeg gets 250,000 student visitors per year. They come to see the birds and the wildlife. That is a huge opportunity.
One of our recommendations is the ability to enhance habitat for wildlife — not just waterfowl — from which rural residents could capitalize. We have 92 National Wildlife Areas across the country. They are administered by the Canadian Wildlife Service. For those 92 wildlife areas, they only have $2 million in their budget to manage them. That is impossible.
Eighty per cent of the people in this country now live in cities. Many of them have never been out to see nature, to see wild creatures, to see birds that have tremendous potential.
In 1996, the government did an economic survey called "The Importance of Nature to Canadians." It demonstrated the tremendous number of gross dollar expenditures on nature in Canada. Today, that amount is over $10 billion a year through hunting, fishing, birdwatching, backpacking, canoeing, national park visits, going to interpretive centres and taking kids to see their local environment. That generates hundreds of millions of dollars in tax revenue to the provinces and to the federal government.
As a country, we have to start to realize, as Ms. Edwards mentioned, the tremendous economic value of our natural capital, whether it is viewing, photographing or just listening to the birds. How happy do we feel in the spring when the birds come back? There is nothing better than to hear those robins and blue jays. It picks us all up when the snow goes and the birds come back. We have a new feeling about life. This country could capitalize on that.
The Europeans are capitalizing on it. It is a big business in Cuba. In Latin American countries, it is huge. Many of our birds spend their winter down there. Some migrate from Alaska to Peru; that is a long safari. They stop in the Fraser River delta to feed and get ready for the next leg of that journey. If we do not protect these areas, we will lose that. It is as simple as that.
Senator St. Germain: Does Ducks Unlimited have a program where you go out and spot various locations that you try to develop? The reason I am asking that is that I live in the Lower Fraser Valley. I do not know how many species of ducks there are at my place, yet there seems to be no development of any significance down in that area. The back end of my property and my neighbour's is all wetland. It is not a big area, but there is a tremendous amount of wetland.
How do you source these places to develop them? As Senator Fairbairn has said, I can remember Manitoba in the 1950s when I would go hunting with my father. The sky would actually darken with the flocks of ducks coming in by the Hutterite colonies along the Assiniboine River. Now there is nothing. I do not know where the ducks have gone. Is the population diminishing?
Mr. Turner: We have drained the wetlands. We have altered their habitat.
Senator St. Germain: I understand that; but is the population of the wildlife diminishing? Those are my two questions: How do you ferret out sites, and is there a diminishing process happening in the waterfowl population?
Ms. Edwards: With respect to the sites, our science arm at our head office, which is called the Institute for Wetland and Waterfowl Research, completes all of our waterfowl research. They look at breeding habitat and areas of importance for breeding, wintering and staging. The wintering and staging would probably be the sites to which you are referring.
We use the information gained through that research to help determine where we need to go in and conserve the best habitat possible through our intensive program. Those are the purchase and lease programs, which cost us the most money per acre spent.
On other areas, we have extension programs that help landowners better understand the role their land plays in the bird cycle and teach them how to conserve those areas on their own.
If those areas are already there and functioning in a natural state, as you mentioned for wildlife, we would not go in there and necessarily do anything in order to increase that. We might go in and conserve it if it is an area of high importance for waterfowl.
In the Prairies, for example, we have targeted areas where wetland pothole density is highest for breeding pairs. That is how we target. In Eastern Canada, we look also at wintering and staging sites in the areas that the birds use most. That is where we direct our highest cost programs because we cannot save it by ourselves as a company.
We use three types of programs: Direct intensive programs, which involve paying landowners to conserve a certain area; extension programs, which is adult education — growing winter wheat, for example, in the Prairies; and then our more extensive work through policy — trying to impact wetland policy, for example, at the provincial level to help maintain those. That could include incentives or mitigation for wetland loss if an industry or urban housing development comes in to the area. Mitigation for wetland loss is an important component to maintain the function that those wetlands have.
Mr. Turner: You asked about private landowners wanting to do something to protect waterfowl. We have agreements across the country with about 17,000 private landowners. We also work closely with municipalities, all ten provincial governments and the federal government to develop policies and practices to protect the landscapes on which birds and other creatures live.
To answer your second question about whether duck numbers are down; it is difficult to say. The markers we go by are the 1970 levels, which I believe are the highest in North American history for a variety of reasons.
In 1985, the North American Waterfowl Management Plan was developed between Canada, the United States and Mexico. Much of the funds we spend in Canada are generated in America. Waterfowl are migratory birds, and are a shared resource between the U.S., Canada and Mexico. Therefore, the U.S. government contributes money to Ducks Unlimited Incorporated in America, and monies come from there to Canada. One congressional dollar on the ground in Saskatchewan is about $4 here because we match that money.
The waterfowl numbers vary with rainfall, climate, habitat availability and predation. Currently in the Prairies, the climate change is severely impacting on parts of the land. There are no water areas left for waterfowl. They have been drained or have not been replenished naturally.
We work with private landowners. If you would like to initiate something with us, you can do so. We get many calls on a weekly basis from people across the country with concerns such as, "I have a hundred acres and beavers have backed up my back 40 acres. Can I do something about it with Ducks Unlimited Canada? Can I donate the land? Can I get an easement on it? Can I protect it?"
As Ms. Edwards has said, we target our limited resources based on science to specific areas that we know scientifically produce the greatest number of ducks per square mile. It is all a question of priority.
The boreal forest in the North is a part of this continent that has not received the kind of attention and protection it should. Ducks Unlimited Canada is very involved in the Canadian Boreal Initiative. We have identified five key priority areas in the Mackenzie Valley and one in the Yukon at the Old Crow Flats, which is on the northern tip of the territory. It is a wonderful habitat for waterfowl production.
As oil and gas, and forestry and mining industries develop, we are promoting very strongly in cooperation with the Nature Conservancy of Canada, World Wildlife Fund and Nature Canada. We have to protect these areas before we develop them. Let us get the rules right before we exploit the oil and gas potential of the Mackenzie Valley. Some of the areas we want to protect have clearly been documented in the eyes of the government and with Agriculture and Agri-Food Canada.
The Chairman: As an add-on to what you have been saying, this does affect other species as well. Certainly in our area, the burrowing owl is either on the list of extinction or just hanging by its little claws.
When you talk about young people understanding the history, very often you are getting that history out of centres, such as birds of prey, for example. That is the only place they are seeing these birds.
Mr. Turner: It is interesting you bring up the burrowing owl. Most people, who are environmentally aware, understand it is a very threatened creature.
If we can protect and enhance a sanctuary for the burrowing owl, imagine the potential for ecotourism or guiding services to take people, who have an interest in birdlife, to see these owls. People will drive or fly and spend money in a rural environment to go out and see these creatures. The potential is terrific.
The Chairman: Yes, it is terrific. Thank you.
Senator Mahovlich: I am interested in the common loon. I purchased a property up at Muskoka Lakes. The City of Toronto extends all the way up to Barrie with a population of about 5 million people — and I believe 4 million of them head North during the summer months.
I purchased my property out there in the 1970s. In the evenings, I would look out onto the lake and maybe see one or two lights. Today, I look out and it is like a city. All the property has been purchased.
My bay, Wiley Bay, was once owned by the President of the United States in 1917, Woodrow Wilson. He was a university student, and he owned all that property up there. There was a marshland deep in the bay, and I thought that that was where the loons would be safe. They mate for years. It has now been developed, and I am very concerned. Where do these loons go when everything is developed? The township is making all kinds of money on taxes. I do not feel Ducks Unlimited Canada can afford to purchase any property and pay taxes on it because the taxes are so high. The community just keeps building. Eventually, Muskoka Lakes will not have any loons. Is that where we are heading?
Mr. Turner: Unfortunately, I believe are you right. I am trying to say this politely because other people are listening, but we are raping our environment in many respects. It is all in the interest of bigger means better. Maybe bigger does not mean better. Maybe we have to slow down, as they are suggesting they do in Fort McMurray, because the expansion of that area is just out of control. We could look at other jurisdictions around the world.
I was a game warden in East Africa when I finished university, and I managed a very large game reserve on the border between Kenya and Tanzania. My base camp looked at Mount Kilimanjaro. It was a spectacular opportunity. That was 1969, 1970 and 1971. Back then, there were all kinds of wildlife. I went back 15 years later, and I was depressed. There was little or none left because it was full of cattle and goats.
In Canada, we are doing something similar. We are encroaching on the habitat of the loons that you love and other creatures that we all like to see. If we do not develop practical policies to protect these areas before they are developed, we will not have any left. The pressures are great for the people of Metropolitan Toronto to move North, to go to cottage country and get their piece of the lakeshore. Where does it end? What do you do with the greenbelt around Toronto, where the government made a decision to protect that? Developers were livid at that decision because, suddenly, their land values went down to very little. There is huge pressure on politicians to make the courageous decisions to protect those landscapes so that loons can live there.
The loon is a sensitive animal. They do not like people around them. Other animals can adapt more easily. We have deer in our cities and sparrows on our balconies; they can adapt. However, loons cannot and will not, so they will disappear. They are a quiet, secretive type of creature. They are not found in large flocks nor with large families.
What do you do? You are raising a good point. You have to get to the decision makers, who issued the permits to build these buildings, roads and highways, to take agricultural lands that harbour animals out of production. There is not a simple answer because economics sometimes trumps intelligent environmental decisions.
Senator Mahovlich: Does Ducks Unlimited Canada work with townships to preserve certain lakes?
Ms. Edwards: We do work with municipal governments, depending on which province you live in. In Ontario, we work closely with municipal governments because they have more responsibility for wetland policy and such. We do work with them, especially in this province, on issues such as wetland policy — how to lay out a development plan to conserve some of those natural areas while allowing economic growth as well. There is much pressure, not just from the natural land perspective but from the agricultural land perspective as well. Many of this country's people live on Class 1 agricultural land. That is a natural capital resource that we are losing also to urban expansion, development and roads to get the people from Toronto up to Muskoka and so on. It is a huge issue. Even in the Prairies, where the population is less dense, the Edmonton-Calgary corridor is certainly an issue where we are losing those natural areas. The very areas that drew people there in the first place are being destroyed by their presence.
Senator Eyton: I would like to know a more about Ducks Unlimited Canada. Our notes tell me that it was founded in 1938. I expect it was four or five duck hunters huddled in a shed somewhere close to a wetland.
I take it you are speaking with some authority about loons. Is Ducks Unlimited Canada kind of a misnomer? Have you thought about that?
Mr. Turner: It is funny how we evolved in 1938. There were some duck hunters in Manitoba who went out to hunt when there was a drought. One of them was a wealthy man from Philadelphia. He said to his buddies, "The ducks are gone this year. Where are they?" His friend replied, "Well, there is no water this year." They said, "Let us put our money together and reconstruct a wetland." They did that. It was called Big Grassy Marsh, and it still exists outside of Winnipeg. That was founded by hunters; you are quite right, sir. It has now expanded to be a large, successful conservation organization in both the U.S. and Canada.
We are more than ducks, as we say.
Senator Eyton: Is it part of your mandate? I would be curious about what your mission or mandate says about Ducks Unlimited Canada. What is your declared purpose?
Ms. Edwards: Although many of the areas we conserve are beneficial to other wildlife, people, water quality and so on, our mandate still circles around waterfowl. That is still our key priority. Our corporate goals are to restore waterfowl populations to the levels of the 1970s, which is the goal of the North American Waterfowl Management Plan. We were started, as Mr. Turner mentioned, by hunters interested in waterfowl. That remains our primary focus. Much of our research is on waterfowl.
As we have evolved and grown as a company, we have realized that not all people are interested in waterfowl, and we have branched off more into looking at the benefits that those areas provide for water quality, water quantity and flood retention. How do we get people, who are not interested in waterfowl, interested in wetlands and those other natural areas? That is why we work with partners such as Nature Conservancy of Canada, which has a broader mandate than us, and other researchers on how to get others interested in maintaining these areas if they do not have a specific interest in waterfowl. Our goal still focuses on waterfowl objectives, but they are all habitat based. The habitat is the key to the waterfowl.
Senator Eyton: It has been many years since Ducks Unlimited Canada was founded, and I am sure you have come a long way since that time. Can you give me some idea of the scope, length and breadth of Ducks Unlimited? How many employees do you have? How many locations or offices do you have? How much land do you administer?
Mr. Turner: We have about 400 employees in Canada. Our budget is about $80 million a year. In the United States, Ducks Unlimited Incorporated, based in Memphis, has about 600 employees, and their budget is about $120 million a year. Between the two organizations in North America, there are about 1,000 employees, with a budget of close to $200 million a year. We raise that money from scratch every year through fundraising events across the country. In Canada, we have about 700 events. Senator St. Germain has co-hosted two of them for us on Parliament Hill. We have 7,000 volunteers in all communities across Canada contributing toward raising the monies that we need to spend to enhance habitat for waterfowl. Of course, the benefits are for other creatures as well.
It has become probably the most successful conservation organization in the world. Mitchell Sharp said to me — a number of years ago when he was working with Mr. Chrétien — "I do not know how you guys have managed to become so successful when you were founded by hunters on the one hand, but, on the other hand, you appeal to all people who are interested in the world of wildlife and not just waterfowl. I said, "Well, sir, it is a magic formula. I cannot discuss it with you." However, he was right. We evolved from that hunting mindset, and we still support hunting and are still supported by hunters across Canada. It is very focused on waterfowl, as Ms. Edwards mentioned, but the benefits to other creatures are immeasurable.
We have worked hard, have a great staff and have well-educated, dedicated senior scientists, whether they are water experts, agrologists, foresters or biologists, who work with our Institute of Wetlands and Waterfowl Research to do the best we can to influence policies and practices to protect the landscapes.
We are good, sir. I do not mind saying that, but we got there through hard work.
Senator Eyton: I am always interested in trend lines. What are the trend lines? Is your revenue increasing year by year? Is the number of employees and people involved in your activities increasing?
Mr. Turner: It has been flat for the last couple of years. The U.S. took a bit of a downturn two or three years ago. Because we are dependent on matched revenues from America, if they go down, then we lose some revenue, so we have to adjust accordingly. We do have a fairly significant reserve fund that we draw on from time to time, but the event system raises much money in North America for Ducks Unlimited Canada. Sometimes we are on a roll, our events are exciting and there is an issue that draws a lot of attention. This year, we have Senator Mahovlich in our event system. We are auctioning off a very flamboyant jacket worn by Don Cherry, and these are selling for $1,500 to $2,000 at our fund raisers, so maybe this year the revenue will increase. However, it has been pretty steady for the last three or four years, and if you would like to suggest some ways we can increase it, we would like to talk to you about that.
Senator Eyton: Is Ducks Unlimited Canada an independent organization?
Mr. Turner: Totally; it is a not-for-profit independent organization.
Senator Eyton: Are its activities confined to Canada?
Mr. Turner: We have a board of directors, 75 men and women from across the country, who set the direction for the company.
Ms. Edwards: We do have individuals from the U.S. on the Canadian board, just as there are Canadians on the U.S. Ducks Unlimited board. Ducks Unlimited Canada is a Canadian company.
Senator Eyton: Do I understand correctly that you are privately funded?
Mr. Turner: No, we get a certain amount of revenue from government sources for specific projects. For the last three years, for example, we have been doing an intensive project on climate carbon sequestration mitigation. We have funding from Environment Canada, Agriculture and Agri-Food Canada and Natural Resources Canada to help us determine the sequestration potential of existing wetlands, restored wetlands and their surrounding habitat. Some of our research is proving to be extremely remarkable. For example, a restored wetland on a farm in Saskatchewan can sequester carbon at a rate four or five times faster than the surrounding habitat or forest. There is an incentive there, perhaps, for landowners to restore a wetland if they will get so much per tonne of carbon that is sequestered on that restored wetland. The money to help us do that came from the federal government.
Ms. Edwards is very involved in projects we get from Agriculture and Agri-Food Canada to help us with various initiatives nationally. We get some provincial funding as well, but most of our money comes from businesses, individuals, transfers from the U.S. to Canada and through our fundraising events.
Senator Eyton: You gave me your total revenue before, but I have forgotten it. How much was your total revenue last year?
Mr. Turner: It was about $80 million.
Senator Eyton: How much of that came directly from the private sector?
Mr. Turner: That is a good question.
Ms. Edwards: About two thirds of it comes through the U.S., most of which is raised at Ducks Unlimited Incorporated fundraising dinners and through private donations. It is matched by the federal government in the U.S. and comes to Canada. The remaining one third is primarily driven by revenue generation in Canada. That would include some of the project-based funding that Mr. Turner mentioned, which we get from the federal government, but the majority of it is private individuals or organizations.
Senator Eyton: I am trying to understand how the processes work. I live in the country, and there is property broadly identified as Ducks Unlimited Canada property. I take it, from your earlier remarks, that there are three categories of involvement by Ducks Unlimited Canada. One is to own property, but I expect that is fairly rare. To own it, you could have someone simply transfer it to you for a dollar, for example — you would still be the owner and be responsible for it. The second category of involvement would be a lease that would run for some period of years, I assume, and the third would be an easement arrangement, again, that runs for a period of years.
With respect to the ownership, you acquired ownership and have responsibility for it, but I expect it is a small part of your activity.
Ms. Edwards: Yes, it is.
Senator Eyton: Can you tell me about the most common lease arrangements? Where you are a lessee of land, I would like to know more about the terms of that lease, in particular, the length of years that it would be.
Ms. Edwards: Many of the projects where you see our signage are long-term management agreements, where we went in and helped restore some property with a landowner. Most of those are for about 30 years, where the landowner agreed up front to restore the property, and we manage it for the landowner. Many of our leases were done in the Prairies in the late 1980s and early 1990s under the Prairie CARE Program, which was taking cropland that was marginally productive for crops and putting it into forage species that we could hay or graze. We manage those properties once every five years or so through the use of haying or grazing. Most of those leases were ten-year leases, where the landowner would get a payment every year — just as any lease — and we manage the property for them.
We have moved away from that a little and more into extension, looking at winter wheat, rangeland management, arrangements that help both the producer and waterfowl. It is making those working lands more productive for waterfowl, yet still having agricultural use on them, so revenue is still being generated for the producer.
Senator Eyton: If you take on some responsibility for a piece of land, you have to have a minimum number of years.
Ms. Edwards: The leases are a minimum of ten years. Many of them were 15 years, and our management agreements are typically 25- to 30-year management agreements. All of our conservation easements are perpetual conservation easements.
Senator Eyton: There is urban development. Arable land is escalating in value, it seems to me, so there are trends against you. On the other hand, there was an announcement this year about half a million acres that is to be dedicated. How are you doing overall? Are you winning the battle?
Ms. Edwards: Overall, we are making strides toward winning the battle. Our conservation easement program has come on board, especially in the Prairies. We have about 70,000 acres under conservation easement in the three Prairie provinces, but we still continue to lose wetlands every year. Manitoba, I believe, still has the highest wetland-loss rate, which is a big issue and which is why we have switched some of our focus from those parcel-by-parcel programs, lease and conservation easements et cetera, into working with provincial governments and municipalities on conserving wetlands through policy. That is why we are so involved in the development of agricultural policy because we feel programs such as the National Farm Stewardship Program can be used to provide incentives to maintain those natural areas as well as to restore them.
Right now we provide an incentive to restore what should never have been broken in the first place, and by "we," I mean programs in general and federal-provincial governments. We would like to be able to use those programs to maintain what little natural area we have left.
Mr. Turner: The trend is against us. It has been against us for decades. We are confident with the next generation of the Agricultural Policy Framework; the current one will expire in March of 2008. We met yesterday with the deputy minister of Agriculture and Agri-Food Canada to impress upon her and her colleagues the need to strengthen the environmental pillar of the next agriculture policy program. We are confident this environmental shift that everyone is so conscious of today is beginning to turn around in our favour, and not just for geese, ducks and waterfowl, but for all species in this country.
We keep plugging away. We ask for your support as well to influence your colleagues to ensure that the next Agricultural Policy Framework strengthens the environmental pillar to protect the areas that we want to see in perpetuity.
The Chairman: Colleagues, we are being chased by the clock now. I might suggest to Mr. Turner in his fundraising, maybe you should get a jersey from Senator Mahovlich and auction that off.
Mr. Turner: We did have a Leaf's jersey, and it was Darrell Sitler's.
Senator Biron: In Lac Saint-Pierre, specifically in Baie-du-Febvre, there is a sanctuary of birds. About 20 years ago, we had many more ducks. Presently, it has more snow geese at the beginning of their migration followed by bustard.
Over 50 years ago, Minister Élie, during the Duplessis government, found there were too many birds eating what was left in the spring. Today, this place is a sanctuary that brings thousands of tourists, who come to observe the birds.
Have you, in any way, worked with the municipalities to organize that sanctuary? I know that on Saturday there was a fundraising event in Sorel, Quebec for your organization.
Mr. Turner: You mentioned Lac Saint-Pierre. We have been working in Quebec for only the last 25 years, but we have a number of projects in Quebec. I do not know about Lac Saint-Pierre, but you are speaking of the snow geese. They have become a huge attraction when they migrate north and south. The Canadian Wildlife Service protected a certain habitat around Quebec City called Cap Tourmente. This is an area where tens of thousands of snow geese migrate every fall. It is a huge attraction and generates much interest. Many people go to see and photograph these birds. We can only say, let us keep doing that. Our program in Quebec is expanding and getting stronger and stronger.
We have a huge project in the Outaouais here; about 6,000 acres of land between Gatineau and Montebello is protected in cooperation with the Quebec government and Ducks Unlimited Canada. That is becoming an area of protection for the snow geese. Many people are now beginning to look at them, hear them and marvel at nature.
Senator St. Germain: We are studying rural poverty and trying to improve the plight of rural Canadians; that is why we invited you here. Ducks Unlimited Canada does provide work; there is no question. Maybe you have answered this, but is there anything in your program that you anticipate developing that would promote and help rural Canadians develop an economy tied into what you do?
My family comes from around St. Ambrose, Manitoba and many of my ancestors do guiding. Is there anything that you are doing, such as birdwatching, that would give us some assistance in our study that our capable chairman and vice-chairman have instigated?
Ms. Edwards: We have worked closely with individuals in the beef industry to expand the opportunities in that industry, which is good for waterfowl and rural economies. We have been particularly successful in some areas of East Central Saskatchewan. We have seen landowners come from Alberta, where it is very expensive to expand an operation — even impossible in some areas — to Saskatchewan and worked with them to convert lands to forage conversion.
We have worked closely with the rural economic development associations, which has been a good boost to some of those areas, and are working on more of those agriculture extension programs, as well as nature trails and the interpretive centres that Mr. Turner mentioned earlier. We are working with provincial tourism associations, but not too much beyond interpretive centres such as Oak Hammock Marsh, our national headquarters, or Chaplin Marsh in Saskatchewan.
The real rural boost that we have seen over the last few years is the expansion into the beef industry and bringing people back to those areas to live and work.
Mr. Turner: We are not in the tourism business; we are in the habitat protection and wetland restoration business. Without habitat, there is no tourism. We are essentially ahead of the tourism potential by working to develop the policies and practices to protect the habitat so there can be some tourism activity.
Senator Peterson: You mentioned that since 1950 there has been a decrease in wetlands. Understandably, farmers were trying to increase their production. Now would probably be a good time to start reclaiming that. However, do you see the emerging ethanol and biodiesel industry in Western Canada as a threat? Not only will you not be able to reclaim the land, but, with incentives, there could be even more marginal land turned into production. How would you deal with that?
Ms. Edwards: The ethanol and biofuels industry is a big question mark for us right now. It could be either a risk, if there is more marginally productive land put into spring crops to feed the ethanol industry or biodiesel industry, for example, or it could be a potential benefit if the feedstocks that are used in those grain-based ethanol production plants are winter wheat. That would provide habitat for nesting waterfowl.
The other opportunity we are looking at closely is the use of switchgrass or perennial crops as a feedstock for ethanol production, which could also be a benefit to waterfowl and other wildlife. The ethanol industry is still a question. It could be either good for conservation and organizations such as ours or it could be a risk.
Mr. Turner: It probably boils down to the type of feedstock that is being supplied to the plant. Ms. Edwards mentioned that we are high on winter wheat and switchgrass. That would be excellent for conservation and waterfowl.
Senator Mahovlich: With the diminishing wetlands, has the count of Canadian geese gone down, or do we have the same amount that we had 40 years ago?
Mr. Turner: I am not one of the scientists who can give you a detailed answer, but my personal observations in Eastern Canada, at least, is that the Canada goose population is higher now than it has ever been. I am sure you play golf and have seen them on the fairways.
Senator Mahovlich: Golf courses seem to attract them.
Mr. Turner: That is because they like the short green grass; they like the feed source that is there. They are all over. To me, the goose numbers in Eastern Ontario are higher than ever.
Senator Mahovlich: In Palm Springs, they are popular there at the golf courses also. They are on the increase.
Mr. Turner: I would say they are on the increase.
The Chairman: Thank you very much to our witnesses and to the colleagues. Do keep us in touch with how you are progressing. I am sure we will meet again.
Our next witnesses are Carol Hunter, Executive Director of the Canadian Co-operative Association; and Pam Skotnitsky, Associate Vice-President, Government Affairs for the Credit Union Central of Saskatchewan.
Welcome to both of you.
Carol Hunter, Executive Director, Canadian Co-operative Association: I am very pleased to be here to speak about an issue very close to my heart. When I was listening to the other witnesses from Ducks Unlimited Canada, I was trying to figure out what the relationship would be between them and cooperatives. It occurred to me that instead of ducks flying in formation, we are here to talk to you about people working in formation. There is some similarity there.
I welcome this opportunity to be joined with my colleague, Pam Skotnitsky. We are here today to talk about the role of cooperatives, both financial cooperatives, which we refer to as credit unions, and non-financial cooperatives and their role in building rural infrastructures and addressing rural poverty.
The Canadian Co-operative Association, CCA, has been around under different names for about 100 years now. We are made up of 33 cooperatives and cooperative federations, which include the credit unions; the Co-operators Insurance; retail cooperatives such as Federated Co-operatives Limited, Mountain Equipment Co-op and United Farmers of Alberta. We also have agricultural cooperatives as our members, such as Gay Lea Foods Co-op Limited, Scotsburn Co-op Services Limited and Northumberland Co-operative Dairy Limited.
In partnership with our francophone sister organization, the Conseil Canadien de la Coopération, we form a network of over 9,000 cooperatives in Canada who, in turn, represent about 11 million members in Canada. Our co-op sector employs collectively close to 160,000 people.
Four out of every 10 adult Canadians are members of at least one co-op. In Quebec alone, approximately 70 per cent of the population are co-op members and in Saskatchewan, some 56 per cent are members of cooperatives.
Today, there are about 2,800 rural cooperatives in Canada, which reflect about 31 per cent of the total number of cooperatives. These are found in a wide variety of sectors, which we call from the cradle to the grave — from child care co-ops through to funeral co-ops; and there are over 1,200 agricultural co-ops with a membership of 476,000 people among agricultural co-ops alone.
Worldwide co-ops have close to one billion members. Collectively, cooperatives worldwide create 20 per cent more jobs than all the multinational corporations put together.
The movement grew out of rural areas in Canada. From the growth of consumer co-ops in Western Canada in the first decades of the century to the work of Moses Coady and the Antigonish movement in the Maritimes, co-ops have always been connected to rural development in Canada. They grew out of the striving of farmers, fisher folk and rural residents to use their collective strength — again, this is the working in formation — to achieve a better economic situation by building democratic economic instruments, with one member, one vote, where co-ops are owned locally and profits are shared and kept in the community. Moses Coady, who was a priest in the Antigonish movement, often said, "You are poor enough to want it and smart enough to do it."
In two provinces, Ontario and Alberta, the mainly rural co-ops also led to the creation of two cooperative political parties — although we want to emphasize that cooperatives are staunchly non-partisan organizations and very neutral today. The United Farmers of Ontario was the government from 1919-23, as well the United Farmers of Alberta formed the Alberta government from 1921-35. The successor co-op organizations in these provinces — no longer engaged in politics — are today both members of CCA.
In our joint presentations today, we will try to show you how both the existing co-ops as well as the emerging co-ops contribute to the strength of our rural communities.
Before we move on to talk about how co-ops can work to fight poverty here in Canada, we wanted to mention the work we do internationally as we both have a domestic and an international focus. Internationally, we work in Africa, Asia, the Americas and Eastern Europe. We work primarily though our partner organizations in developing countries to improve the socio-economic status of individuals, households and communities by reducing poverty, distributing income and increasing the democratic participation in civil society. Through the cooperative approach, the CCA works to enhance the capacity of strategically selected community-based organizations, such as credit unions and agricultural co-ops, to effectively manage their own development, provide valued services to members and improve the environment within which they operate.
Our international work is funded mostly through the Canadian International Development Agency, CIDA, as well as a through a charity organization of our own, the Co-operative Development Foundation. We provide both financial and technical assistance to our partners overseas. We engage many people from the co-op movement here in Canada in terms of providing their expertise to our projects overseas.
Our international experience confirms that cooperatives are indeed effective transformative structures that help people and communities in the developing world build livelihoods as well as assets, whether they are human assets, financial, natural, physical or social.
We also believe there are many lessons for anti-poverty work here in Canada. Too often we have found that, in Canada and with government, we build a wall between the work that we support overseas and the strategies we could also be using here in Canada.
I will talk about the work that we do with cooperatives here in Canada. The co-op model is a promising approach to help meet needs not fulfilled by the traditional form of enterprises, whether private, public or voluntary enterprises. The co-op model has often proven to be a solution for dealing with youth out-migration, difficulties with the aging population, lack of job opportunities, lack of access to health care in rural communities and even the integration of new Canadians into our society.
As both economic and social actors, cooperatives foster community accountability and empowerment. The cooperative form of enterprise ensures any group of individuals an effective means to combine their resources, however small, and allow them to meet their common economic and social needs.
I would like to highlight some of the examples of the established cooperative sector here in Canada in terms of what they are doing to help develop rural Canada. Federated Co-operatives Limited, FCL, one of our member organizations, by assets, is the largest non-financial cooperative in Canada. It is owned by 281 retail co-ops located throughout Western Canada in more than 500 communities and claims 1.2 million members.
The Co-operative Retailing System started in rural Western Canada and it has since expanded into some of the major urban areas of those regions. The co-op system has, however, remained very involved and supportive of rural communities, especially in Saskatchewan. In Federated Co-operatives Limited's District 8 region, for example, which includes the cities of Regina and Yorkton, there are cooperatives in 40 rural communities. In 18 of these communities, the co-op is the only food store. In most cases, these co-ops are too small to be particularly viable, but, because they are part of the larger retail system, they are able to continue operating. The system not only acts as their supplier but also provides management and operational assistance at no charge. As members of Federated Co-operatives Limited, they are able to share in the profits of the wholesale and the manufacturing arm of FCL. In a similar number of communities, the retail co-ops are the only lumber, agro or farm supply business providing local services to their customers as well as providing support to the community. It is this cooperative system that can help prevent the cycle of decline and, finally, the extinction of our rural communities.
Another example, moving to the North, is with our other member, Arctic Co-operatives Limited, which has 36 cooperatives in Nunavut and the Northwest Territories. It is owned by 18,000 members from the Inuit and First Nations communities. In 2005, some $2.6 million in patronage dividends were returned to members. In contrast to the operations of private, big city-based ownership of retail stores, they are still very much owned by the Aboriginal communities in the North and keep the surpluses and the control in the community.
Cooperatives in the North are also a training ground for democracy and community involvement, and many of the leaders in the Nunavut government got their first experience in group decision making and governance in their own local co-op store.
Co-op Atlantic has developed a whole series of initiatives to help Atlantic farmers hard pressed to compete with out-of-region and out-of-country products. For example, Co-op Atlantic has promoted an Atlantic Tender Classic Beef brand, which is a joint effort with the Atlantic Beef Producers Co-operative Limited, a cooperative slaughterhouse. The encouragement of fresh, local produce has been extremely popular with cooperative members.
Cooperatives are also important models of rural health care, particularly in Quebec, where health care cooperative clinics have been set up often in rural areas to ensure the provision of medical services when doctors have departed. There are also some 44 home care cooperatives in Quebec with 35,000 members, where users and employees have joined together to provide quality services controlled by those who need them and those who provide them.
Ms. Skotnitsky will talk about the similar role that credit unions play in communities as the only financial institution and how important that is to rural survival and development.
I would like to now speak about new and emerging cooperatives. They illustrate how cooperatives, because they teach people how to fish rather than simply giving people fish to eat, are one of the best ways of dealing with the preservation of rural Canada and the menace of rural poverty. The Co-operative Development Initiative, CDI, is a five-year program that ends in March of 2008. We hope it will be renewed and strengthened and, after you hear some of what has been done on a shoestring budget, you will agree with us. It is funded through Agriculture and Agri-Food Canada and the Co-operatives Secretariat. The program's advisory services component is jointly managed by CCA and our francophone organization, and its services are provided throughout the country through a solid network of 17 partners. The $1 million a year cost of the program is split 17 ways. That demonstrates how modest this program is.
After four years, the CDI partners have achieved impressive results. Since the beginning of the program, over 800 cooperatives have received assistance and some 125 co-ops have started after receiving support from one of the CDI partners.
The co-op model is an effective way for people to create their own job opportunities, gain access to services at a reasonable price, generate extra income and enable people to participate actively in the development process of their communities. Here are a few of the many projects that are supported in rural areas.
The Quality Agricultural Producer Co-operative is a new co-op that received assistance from CDI. It is helping farmers of the Bay St. George region in Newfoundland and Labrador to share new harvesting and processing equipment in order to increase production capacity.
In the small community of Mossley, Ontario, there is an agricultural cooperative that provides the means for local growers to market and distribute their products, as well as access a wider audience for their goods.
Small businesses located through the Baccalieu Trail, a rural area located in Newfoundland and Labrador share a common interest in expanding their market potential by offering goods or services via the Internet. They have formed the Baccalieu E-Business Co-operative, which provides knowledge and technical expertise to small businesses that would not be able to afford these services otherwise.
Another interesting project that is currently being supported in Northern B.C. is the Community Woodworking Co-operative. The Aboriginal community of Burns Lake is facing several challenges. The unemployment rate is very high — around 80 per cent — a situation that fosters other social problems in the community.
The co-op will be an opportunity for the woodworking artisans of Burns Lake and several neighbouring communities to put their talents to work while earning some extra income. By joining the co-op, unemployed woodworkers have access to adequate equipment and training opportunities that enable them to show leadership and develop managerial skills, while becoming less dependent on government transfers.
In the Acadian region of Evangeline in Prince Edward Island, the lack of adequate and affordable housing for elders forced several older people to leave the community to settle in a smaller residence located in the neighbouring urban area, Summerside. The community decided to address this problem of lack of housing and collectively through the cooperation of the Cooperative Le Bel Age. They have created a 14-unit facility to house a number of elders, and there is also one being created in Hanmer, Ontario. The Hanmer Regional Development Cooperative will build a 20 unit housing project for independent retirees.
I would like to highlight some agricultural sector activities through the support of a new program that was launched last summer, the Agricultural Co-operative Development Initiative, Ag-CDI, worth $1 million. Through this initiative, launched in September 2006, a number of new agricultural cooperatives in the biofuel and value-added sector have been created. Twenty-seven co-ops have received assistance through this program.
The Southern Manitoba Biofuels Co-operative Limited began as a way to help address the loss of community tax revenue and infrastructure. The plan is to develop a community-owned 9 million litre-per-year biodiesel plant using canola as feedstock. The aim is to create a secure supply of biofuel for local farmers and truckers, while producing a range of valuable by-products, such as canola protein meal, glycerol and fertilizer.
Many cattle producers across the Prairies have struggled to survive in recent years, challenged by the BSE crisis — mad cow disease — and the dominance of their industry by several large packing facilities. Three groups, representing over 1,000 independent producers, are forming a cooperative to conduct their own processing and marketing of mature cattle, over 30 months of age, with the aim of increasing returns to their producers.
In Saskatchewan, the Craik Small-Scale Bioproducts Co-operative is the community's attempt to revitalize and reverse the trend of out-migration. The co-op plans to create a small-scale biodiesel plant as a way to reduce fuel costs for local farmers and to help sustain the planet. This community believes strongly that the co-op model is an ideal one for community renewal and ownership of the future.
I would like to speak now about the issue of business succession and the fact that many retiring business owners, when they retire their business, often close down in rural communities.
According to an article printed in the August 11, 2001 Financial Post, written by Rod Reynolds, President and CEO of RoyNat Capital Incorporated, a family business is at serious risk when a son or daughter takes over the business. To quote directly:
. . . Our experience as a merchant bank, which is supported by U.S. studies, is that only 30 per cent of family businesses survive to the next generation. The odds are a little better — just 50/50 — when a business is sold to an outside buyer. In contrast, successions involving leveraged employee buyouts, supported by key managers, succeed in about 80 per cent of cases. . . .
The study also showed that 27 per cent of owners of family businesses with sales of at least $1-million will retire in the next five years; 56 per cent within 10 years and 78 per cent within 15 years. . . .
. . .The study reports there are currently 124,000 family-owned businesses with sales of $1-million or more in Canada. These companies employ about 6 million Canadians and generate as much as $1.3-trillion in gross annual sales.
The Canadian Federation of Independent Business, CFIB, recently cited a risk of 2 million lost jobs in Canada due to an absence of family members prepared to take over the family business. These business owners are unprepared for their imminent retirement. Apparently, the resulting trend is to sell these businesses to competitors — and U.S. competitors in particular. This trend is expected to see numerous businesses close their doors, since purchasers are mainly interested in buying goodwill rather than production capacity.
In addition, statistical data analyzed by the Fonds de solidarité FTQ in 2005, show that 70 per cent of small- and medium-sized enterprises, SMEs, do not outlast the first generation and 90 per cent do not outlast the second generation; 56 per cent of SME founders will be retiring by 2010 and 73 per cent by 2015; 70 per cent of business owners thinking about retirement have yet to choose their successor.
The issue of business-ownership transfer is not confined to North America. The Enterprise Directorate General of the European Commission estimates that approximately one third of European businesses will transfer ownership in the coming decade.
The impact that this growing trend will have on rural areas and remote regions across Canada is quite profound. CCA, in partnership with a number of other cooperatives across the country, is working to develop cooperative solutions to the impending business succession crisis in rural areas with the support of funding from the Co-operative Development Initiative. Building upon research undertaken by the Canadian Worker Co-op Federation and resources developed by the Fédération des coopératives de développement régional du Québec as well as work undertaken in the United Kingdom by the Plunkett Foundation, the partners will develop approaches and tools to advise small, rural business owners considering retirement as well as community or employee groups who are interested in taking on the businesses. The project will prepare case examples of successful business transfers to the cooperative model. In addition, the partners will put in place a "watch system" with other stakeholders, such as chambers of commerce, municipal or regional economic development officers, accounting and legal firms, to identify businesses considering the transferring of ownership to alert them to the cooperative or community-owned model.
This project has huge potential to provide lasting benefits to rural communities across Canada. Alongside the development and promotion of tools, resources and advisory services, as a response to the growing concerns over the traditional business ownership models in rural communities, this project also has the scope to develop new models of cooperative working.
This type of response of economic self-help solutions to problems in rural and urban areas is not unusual in the co-op sector. The opportunity to develop new models can be evidenced by the growth in rural parts of the United Kingdom where community-owned stores are being bought out by the community. Despite the increasing decline of retail services in rural areas and in the U.K. — over 70 per cent of rural communities do not have a general store — more than 200 community-owned cooperative general stores, pubs, petrol stations and manufacturing businesses have been established as a response to the number of traditional store owners and small business owners seeking to close their businesses.
This phenomenon of community ownership has only taken place in the past 15 years. Research conducted in the U.K. found that the average community-owned store in England has over 110 members, a turnover of over $160,000 and is profitable. These stores engage 25 volunteers on average, strengthening the community and social bonds within the rural communities and employ 1.5 full-time equivalent staff.
The potential to develop new models of cooperative and community ownership in Canada, as a response to the growing challenge of many businesses transferring ownership in the next five years, is a very profound and exciting opportunity.
I hope that this presentation has given you some ideas of the past, present and future role of cooperatives as tools of rural sustainability and bulwarks against decline and poverty. CCA would be the first to tell you, that while co-ops are a crucial factor in the process of stopping rural decline and moving toward a value-added rural future, they are only part of the answer. In this presentation, we have concentrated on the role of cooperatives, but CCA has also recently endorsed the need for a national anti-poverty strategy with targets and timetables that would combine the efforts of all levels of government, including Aboriginal governments, in working to lower Canada's still very high poverty rates compared to many similar European countries.
We are also a founding member of the Make Poverty History campaign, which is committed to ending poverty both domestically and internationally, and which now claims some 230,000 Canadians as members.
The Chairman: Ms. Hunter, could I just cut in for a minute? Did I understand that Ms. Skotnitsky will give a presentation as well?
Ms. Hunter: I believe her presentation is 10 minutes.
The Chairman: We will have very few minutes left for our questions. I was wondering if, with the conclusion here, we could read that ourselves and let Ms. Skotnitsky do her piece so we would have of time to ask questions. Would that be alright with you?
Ms. Hunter: With your permission, I would just read the headlines of the co-op advantage.
We believe cooperatives are an advantage for rural economic development because cooperatives build community assets; stay in business longer — we have data that demonstrates that co-ops stay in business longer than other small businesses; are schools of business and community participation; and are locally owned and controlled. There are more details that flesh out the cooperative model at the end of my written presentation.
Pam Skotnitsky, Associate Vice-President, Government Affairs, Credit Union Central of Saskatchewan: Although I participate on the national legislative affairs committee of the Credit Union Central of Canada and also chair an agricultural subcommittee of that committee, for the purposes of today, I will be speaking more specifically about Saskatchewan.
I certainly understand the mandate of the committee and appreciate the work that you have done. Credit Union Central of Saskatchewan is a democratic financial institution with 75 member credit unions in Saskatchewan. They then elect a district representative, so each credit union has a representative that is a delegate. From that delegate body, they elect a Credit Union Central board. We have a 12-member board that directs our actions and provides us with strategic direction.
Across the province, we have 527,000 credit union members. In a province with a population of 1 million people, that is quite remarkable. Over 50 per cent of the population is a member within the credit union. We deliver services through 316 locations in the province. Those locations are within 274 communities, so we serve 274 communities across Saskatchewan.
In taking a look at the definition of "urban" in the committee's preliminary report, about eight to 10 of those communities would be considered urban; 264 of the locations that credit unions serve in Saskatchewan are rural in nature. It is significant that in 160 communities, the credit union is the only financial institution within the community.
When we look at our strategic direction in our vision, our vision is to grow communities through innovation, social responsibility and financial strength. We see a commitment to the province of Saskatchewan, and definitely to the communities within the province.
In keeping with that vision, Credit Union Central of Saskatchewan developed an economic development strategy in 2004. The objective of the strategy was to engage public, business and non-governmental partners to collectively create better conditions for economic growth and employment generation.
At a high level, the strategy has three pillars: We want to cooperate and collaborate with key provincial stakeholders; we want to articulate the views and positions on public policy; and we wanted to introduce a program that would focus capital on economic development.
When we look at the latter objective of focusing capital on economic growth, I want to touch on two initiatives around that because that was a key gap in the economic development engine in the province.
We did research into the key players in the venture capital market in Saskatchewan, and we quickly identified a gap in the small capital category. That gap was significant because small capital investments are those where the employer has fewer than 50 employees and less than $5 million in annual sales. They are small players in the marketplace on a global basis; but the segment is extremely important in that it created the vast majority of new jobs within our province in the last 10 years.
I have seen numbers that suggest from 75 per cent up to 95 per cent of the new jobs are coming from this sector. As well, they are an economic engine in rural areas. About 42 per cent of the activity in rural areas is of this scale.
The main reason for the gap was that the costs of engaging in a small deal, in terms of the due diligence and legal costs, did not net a significant gain to compensate for the cost of the effort. As well, there were significant mentoring and experience gaps that needed to be filled if these ventures were to be successful.
We took on this issue and developed an entrepreneurial foundation and an entrepreneurial fund. Very briefly, the entrepreneurial foundation assists entrepreneurs with advisory services and mentorship. By addressing gaps in knowledge, expertise and experience, we can enhance the success of these ventures.
To supplement that, we have the entrepreneurial fund, which is separate and aside from the foundation. It was established to make investments between $100,000 and $1 million in selected businesses that emerge from the foundation.
The success of the venture will be measured in terms of return on investment, as well as the number of jobs created. Each investment is measured on a triple bottom line basis; we look at the social impact, as well as the economic impact and the impact on the environment.
Both of these initiatives are developed and designed contemplating participation from a wide array of partners. Right now, we have partnered with our provincial government on this initiative, and it is open for additional partners to come in. It is a very open type of venture so that we can leverage as many partners as we can.
This strategy also incorporates a previous fund developed by credit unions called the Apex Venture Capital Fund, which funds ventures in the range of $1 million to $4 million. These two initiatives, partnered together, would provide capital to businesses anywhere from $100,000 in size up to $4 million. Credit unions locally play an important role in linking up business ideas to the foundation and to the fund.
The second area I want to touch on is the importance of leadership within the communities we serve. Our economic development strategy is inclusive of cooperative organizations, which are eligible to participate in the entrepreneurial foundation as well as in the fund.
Within the communities we serve, many different initiatives are focusing on economic development in communities. Because we have employees as well as board members and leaders in all of those communities, we participate in many initiatives that are under way. I will give you a few examples.
We have Tisdale Credit Union in the community of Tisdale working with the Tisdale Home Support Co-operative Limited. The Tisdale Home Support Co-operative Limited is providing affordable housing to seniors and non-medical home services to enable the residents to stay as independent as possible without being forced to move into personal care homes. In this instance, the Tisdale Credit Union is providing strategic planning and office space in the credit union, as well as mentorship, training and financial support.
The second example that I will provide is Diamond North Credit Union. They have been active in the Nipawin Biomass Ethanol New Generation Co-operative Limited. They were involved with the planning committee when the project was initiated, and they sit on the board of that new co-operative today. In this instance, this credit union also offered prime rate loans for the community to purchase shares. If people wanted to get involved in that venture, the credit union provided that opportunity for people to purchase shares.
We are a major employer in the province; 3,000 people are employed by credit unions directly. As well, we have another 1,300 people who are employed by our partner organizations. In addition, we have approximately 700 board members who are locally elected by the boards of their credit unions. They provide strategic leadership, and these people are truly leaders who are engaged within their community.
In addition to economic development, each year Saskatchewan credit unions contribute $5 million to their communities and to province-wide initiatives through sponsorships and donations, activity in the community and volunteer time. In addition to this, in 2006, $22 million was provided back to communities through patronage returns.
Our market share is impressive; the statistics are noted. According to Statistics Canada, credit unions finance 27.5 per cent of outstanding farm debt within the province. As well, we have $1.7 billion in authorized credit to businesses, most of which are small- and medium-sized enterprises. In a survey of small business conducted by the Canadian Federation of Independent Business, credit unions ranked number one based on levels of satisfaction of service, loan availability and fees. Further, credit unions are favoured banking partners for small Saskatchewan businesses.
The commitment we have to our communities makes us very sensitive to the issues in rural communities. Farm members played a significant role in the development of co-ops and credit unions. This solid relationship exists today and will exist into the future. As a result of this relationship, we are active in rural and agricultural-related initiatives and definitely look forward to governments ensuring that we maintain a secure food supply. We want to see this as a key policy priority, and, as well, would like to see public education on this necessity.
When we look at programs that are being introduced, we want to ensure the programs for agricultural producers and rural communities meet the needs of those that they are trying to serve. We look for long-term commitments that are reliable and programs that are predictable and easy to administer.
Saskatchewan was very supportive of the Farm Improvement and Marketing Cooperatives Loans Act program, where 70 per cent of the loans under this federal program originated from Saskatchewan. Saskatchewan credit unions directly promoted the program to the farmers that needed it, and it is successful within our province.
We are encouraged by government's indication that this program may be expanded to consider the issues we have with intergenerational transfers within the province and with accommodating new farmers.
We are definitely interested in seeing the development of a vibrant, value-added agricultural sector, and we are supportive of the role that farmers directly may play within these value-added ventures.
We are also interested in the biofuels industry; that is of interest to Saskatchewan. We recognize that it requires broad and consistent policy framework, so we look to government to ensure that all factors are considered — environmental, tax, trade, government research and development — to support these programs.
The Chairman: This is a very important part of what we are looking into across this country. I do not feel people hear enough, in certain parts of Canada, about the cooperatives and the job that they do. I thank you for that.
Senator St. Germain: My question relates to the environment and the hysteria — to a degree — that is going across the country should we go into a biodiesel and ethanol mode. We are dealing with rural poverty, and this will drive the price of commodities through the ceiling.
I heard some expert say that it would contribute a small percentage to the replacement of fossil fuels.
There is a possibility that this could exacerbate the situation of poverty in rural Canada. Many people live there because of the low cost of housing. They shop in your facilities because they can get a rebate every year on their purchases. How do you see this? Both of you mentioned something about biodiesel in your presentation. Is this not a concern of yours? Historically, you have served that component of rural Canada that has not lived in the riches in which our urban cousins have lived. Is there any thought given to this?
Ms. Hunter: We argue that in terms of a cooperatively producer-owned biodiesel plant, that is good for farmers. When commodities are low, they can participate in the profits of the processing part of the plant and when the commodity prices are higher, then, in turn, the input prices are lower for the processing part of it. In terms of value-added and integrated process of being not just a supplier but also an owner of the processing piece, farmers can enjoy more of an economic return in that particular business model. That is with respect to the first part of your question on the commodity prices.
The second piece concerns the environment. The biofuel industry is an evolving industry in terms of the technologies. There are many different inputs, from ethanol to corn to cellulose, which are, by some, considered more environmentally friendly than wood products and straw. I feel it is important to be looking at those evolving technologies and that analysis around the environmental impact — depending on what the inputs are — so we are following that.
In terms of the presence in rural communities, we would suggest that ethanol fuel is still a much cleaner kind of fuel than the big tar sands oil extraction industries. By comparison, we feel ethanol is certainly still cleaner than the fossil fuel types of oils. However, we acknowledge it is an evolving technology, and we are aware of the environmental impacts. It is a big industry with many different types of inputs.
Ms. Skotnitsky: That is a very interesting observation that you make. From the farm members to whom I have had the luxury of speaking and the credit union leaders we have, it is very apparent that farmers want their income to come from farming and not from programs. When it comes to new initiatives, such as biodiesel and the possibility of enhanced price for their commodities, that would be supported because then they will be getting their income from farming.
We are also interested in ensuring the structures that are established for biodiesel plants include some ability for farmers to participate in those initiatives. We see it as having that benefit as well.
When we look at the potential impact on rural Saskatchewan, I believe the farmers there are active and participate in their communities. They buy locally and certainly support their local communities; I see many benefits.
As far as our submission has indicated, we would like a complete and comprehensive look at the biodiesels and biofuels, not only the research side but the entire package. Are there advantages and disadvantages? I imagine that there are. Have we, as a credit union system, fully researched these? The answer is, no, to that. We have a few perspectives, but not a holistic answer.
[Translation]
Senator Biron: Concerning biodiversity and carbon credits, I have to say that, in Saskatchewan, estimation showed that farmers could get one million carbon credits, ethanol production not included. On the free market in the U.S., in Chicago, these credits could be worth $40 million. On the regulated market in Canada, after Kyoto, they could be worth up to $300 million for Saskatchewan farmers, credits for the ethanol market not included.
I understand this can be construed as a socialist conspiracy of rural Saskatchewan against other parties, but I just wanted to mention these opportunities for Saskatchewan farmers to get millions of dollars through carbon credits.
My other question deals with something else. First, I would like to congratulate you on the efforts by co-operatives. My congratulations also to the Credit Union Central of Saskatchewan for this economic development that will certainly help the underprivileged. Your sense of social responsibility is also worthy of praise.
About the rich, I would like to tell you that in 2004, about 1,200 payday lending operations opened, and this trend is increasing. Legislation will soon be passed to regulate the amount lenders can generate from these loans. A $50 payday loan can generate interest costs of 435 per cent, when advances on a credit card carry an interest rate of 36 per cent, overdraft protection in a bank or credit union costs 21 per cent, and a credit line 10 per cent.
Is the creation of all these payday lending operations a sign that, in some way, banks and credits unions have not played their role to help those who experience temporary problems? Do the co-ops intend to let these poor people at these lenders' mercy? Do they have a plan to counter these loans at rates that can be considered usurious, and will not be considered as such after the legislation is passed?
One of the reasons why people have money problems is that they do not have an account in a bank or credit union. When they want to cash a cheque from the federal or provincial governments, they have to resort to these lenders. Would it not be less expensive for governments to make it mandatory for banks and credit unions to open an account for people who come in with a government cheque? If they all had an account, electronic transfers would be possible, and governments would save.
And when they have an account, people on welfare or on old age security could borrow by over-drafting their account, or they could even have a credit line.
Would that be a way to deal with the abuse by payday lenders? I would like you to comment.
[English]
Ms. Skotnitsky: First, on your comment on the carbon credits and the opportunity there, I had mentioned the communities that we serve. We have lending expertise out there, and most of them have relationships with a large number of agricultural producers.
That is an emerging area; we get many questions on the opportunities around carbon credits. There is much interest in that opportunity.
On the payday lenders, you certainly touch a cord with us, because we do not know why the growth of payday lenders is there. I have talked about our expansive network. When we look at our credit union statistics, we serve a population that is older as well as lower in income than the demographics of the province.
We see the growth of payday lenders as a concern for credit unions, as to why the payday lenders are there and who they are serving. We see a knowledge gap for consumers. Are they making informed decisions? We want to ensure they do, so we are enhancing the education around the type of interest and fees they are being charged by payday lenders.
We are also working with the five credit unions in our province, where there is a payday lender within their community, to determine what gaps there might be that we need to consider filling. We see this as an issue, and we are taking steps to identify the knowledge gap, as well as other aspects that are not being served that need to be served.
We offer a basic banking account to ensure there is access to credit union services. There are no barriers to entry in dealing with a credit union. We will do some additional work with this market to see where we are falling short and determine how to address those gaps.
[Translation]
Senator Biron: We would certainly like to know the results of your studies, and we would also like to know why these people turn to these institutions. Our committee might be interested.
[English]
Ms. Skotnitsky: We recognize that there may be some gaps that we can fill; and there may be some societal issues that need to be addressed as well.
Senator Peterson: When the big banks vacated rural Saskatchewan, the credit unions moved in quickly to fill the gap, and I commend you for that. However, there are a couple of trends now that are of concern.
One is amalgamation. The smaller credit unions are being bought out by credit unions in the city. Another is the days of service; they started off with five days a week and now it is down to two days a week.
Is this a trend? Could this change the dynamic in which all the good work we are doing will be lost?
Ms. Skotnitsky: The trend in Saskatchewan is a national trend — the mergers and amalgamations to which you are referring. It is an attempt to continue to offer the services throughout our extensive network. We hit our peak in branch locations in 1965, and we have been merging and amalgamating since then. It is a higher profile now than back then, but that is when our numbers of credit unions peaked.
Having said that, the reason for mergers and amalgamations is purely to try to realize economies of scale. Consumers, regardless of where they live, demand the same conveniences; and they need access to financial services wherever they go. That leads to real issues that we have with automation. Automation is expensive. Credit unions are joining together so they can access different networks and provide services to the consumers to meet their needs. That is what is driving the restructuring.
Will that impact delivery through rural locations? We continue to try to be in the rural locations as much as we can. However, slowly we are seeing some of those communities no longer able to sustain their branch locations, and that is impacting delivery. The first approach is to consider how we might deliver the service differently. In some rural locations, we have reduced the number of hours available to the consumer, but we continue to deliver services as much as we can.
We also consider whether we can expand the number of services provided through each of the community locations. We have been working with our provincial government to see the reduction of the barriers on insurance delivery, because that would enable us to combine banking and insurance services. In some of those rural locations, if we can deliver more services, the economics might be there to maintain those services — not indefinitely but for a longer period of time. As communities are reducing in size, there will be instances where the credit union is no longer viable if there is not enough business. It is a reality, unfortunately.
Ms. Hunter: Although the number of credit unions is diminishing, the number of service points in the communities is not diminishing. The retail outlets are staying open. It is just the number of credit unions that are diminishing as they merge.
Ms. Skotnitsky: That is right. We actually have more service locations than we did in 1965 as we have been merging and amalgamating. Your point, that some hours or days have been trimmed back in some areas, is correct. It is not the majority by any stretch, but there are a few locations that needed to trim back their hours and days of service.
Senator Mahovlich: You mentioned that Burns Lake has an 80 per cent unemployment rate. I was through Burns Lake maybe 10 or 15 years ago, and there was a bank there. Are you saying that the bank has moved out and the credit unions have moved in?
Ms. Hunter: I have to confess, I do not have the answer to the credit union itself in that community, but I would be pleased to find out if there is one.
Senator Mahovlich: Do you know the reason why there is an 80 per cent unemployment rate?
Ms. Hunter: In Burns Lake?
Senator Mahovlich: Yes. Is it because of the beetle?
Ms. Hunter: I do not know much more about that community. I will have to provide that to you later.
Senator Eyton: I was astonished at the numbers you gave us for succession of family businesses. I had not really thought about it in real terms. I suppose it means that those businesses close. Clearly, there is an alternative source of either services or goods, so it means people may then drive 25 miles to a larger store. Still, the idea of assisting in successful succession seems to me a dynamite idea. I am not sure that I have any query. I thank you for tabling that, and I would be interested in getting more information about it. I have never really thought about it before, in terms of our economy and particularly rural poverty.
I have a couple of questions. I see before me the cooperatives and the credit unions. What is the relationship between the two? Is there a necessary relationship? I have always thought of them as quite independent in what they did and yet you are here today talking almost as if you are partners in whatever it is you do. What is the ongoing relationship?
Ms. Hunter: The Canadian Co-operative Association is multi-sectoral, representing co-ops in both the financial and non-financial service sector. Historically, I would suggest that credit unions have said that they are part of the movement and are cooperative. They are still indeed cooperatives, but, in their attempt to rehabilitate and modernize their image, they have focussed more on the fact that they are the credit union sector and have not used the word "cooperative" as much. It has been a branding or marketing issue, but credit unions are very much a part of the cooperative movement. They operate according to the seven principles that all cooperatives around the world follow. We hear the expression, "the cooperative and credit union sector" as if to suggest they are two separate sectors, but it is really just to highlight that sector because they are a large part of the cooperative economy.
Senator Eyton: They would also have their own specific governance and regular risk assessments. It would be different than co-ops.
Ms. Hunter: Yes, that is correct.
Senator Eyton: Cutting to the chase, what are three recommendations you can suggest for the federal government, working with the cooperative movement and embracing credit unions, to reduce rural poverty?
Ms. Hunter: The Cooperative Development Initiative that I mentioned before, which ends in 2008, has been a very important program to nourish the development of new cooperatives in Canada. A recommendation for a renewed CDI is something of which we are very much in favour. In addition, the Social Economy Initiative was not rolled out under the Conservative government. The only monies rolled out were to Quebec, and there is a large patient capital fund now operating in Quebec with monies under the Social Economy Initiative. We would urge a reconsideration that the Social Economy Initiative is something that is available for all Canadians across the country, not just in Quebec.
The other recommendation is a cooperative investment plan for agricultural producers so that producers can invest in their agricultural co-op and receive a tax credit through a co-op investment plan.
Senator Eyton: That is certainly clear. Thank you.
The Chairman: I would like to thank you for coming. I come from a rural area in South Western Alberta. Often, as you move across the country, there is a great misunderstanding about what it is that you both do. At a time when our rural community needs every bit of help and support it can get, it is very good of you to be here today and important that we have this meeting. As you know, you will get the full text of it. We will be able to include this in our report.
Good luck, and thank you.
The committee adjourned.