Co-operative System stronger than ever. (Business Profile).

The co-operative retail sector in Western Canada is thriving. As Federated Co-operatives Limited (FCL) celebrates its 75th anniversary year, dividends to members are at an all-time high, new or upgraded facilities are springing up in communities across the Prairies, and sales are soaring.

The key to this success is largely due to an innovative and highly efficient Co-operative Retailing System (CRS). FCL and its member retail co-operatives together form the CRS. These retails own FCL, which provides central wholesaling, manufacturing and administrative services to approximately 300 locally-owned retail co-ops across Western Canada with an estimated one million members. In Saskatchewan there are 165 retail co-ops, with more than 305,000 members.

The Grocery People Ltd., FCL's wholly-owned subsidiary, supplies a full range of food products and related items to independent retail outlets and supplies fresh produce to the retail co-ops. FCL also owns and operates a sawmill and plywood production facility in British Columbia that provides products to its retails and to customers in North America and abroad.

Consumers' Co-operative Refineries Limited (CCRL) is another wholly-owned subsidiary of FCL. CCRL is the only operating refinery in Saskatchewan and is integrated with a heavy oil upgrader, NewGrade Energy Inc. CCRL is in the final stages of a $400 million expansion that will provide an estimated $120 million per year economic benefit to Regina. Once the expansion is completed, the facility will be able to process more than 85,000 barrels of crude oil daily, an additional 30,000 barrels per day over its existing capacity.

Retail co-ops employ approximately 15,000 employees in 500 communities. Over 5,700 of these employees are located in Saskatchewan. FCL itself employs more than 800 employees and CCRL will employ about 550 staff once the expansion is complete this summer.

Since 1985, FCL has returned more than $1.6 billion to its member retail co-operatives, while cash equity repayments by co-operatives to their individual members have totalled more than $924 million. FCL's sales topped $3.23 billion in 2002 and a new high was established for profits with net savings topping $246 million.

"We've become leaders in merchandising and display. We're very proud of our facilities across the West, which includes our new gas bar/convenience store/car wash complexes, food stores, agro centres and home centres," says FCL President Dennis Banda. Retail co-ops have invested hundreds of millions of dollars in their facilities over the last few years.

Banda added that the CRS is highly computerized and efficient and that it has enabled FCL to obtain a substantial share of sales of new products by getting the products to market quickly.

FCL's new warehouse management system is cutting-edge technology that Banda says enables FCL to reduce costs without sacrificing efficiency or service. "We've just finished implementing the new system at our Saskatoon warehouse and we'll soon be on-line with our Winnipeg, Edmonton and Calgary warehouses."

FCL has also improved sales of crop supplies and feed. FCL's feed mills sold a record $93 million worth of product in 2002. Banda attributes some of this success to the fact that farmers like dealing with their local co-ops because they know they are financially stable, It also helps, he says, that 80 percent of the retail co-ops paid cash dividends to their members last year.

Banda says the ability to pay cash dividends at the end of a year is a message that works very well when marketing the co-op system to young people. "Last year the Saskatoon Co-op was able to pay 4.85 cents per litre on gas as a dividend to members," he says.

One interesting project that Banda is particularly proud of is that Prairie historian Brett Fairbairn has been commissioned to write a history of the cooperative retailing system. The new book will carry on from where Fairbairn left off with his previous book, Building a Dream: The Co-operative Retailing System in Western Canada, 1928-1988. The book will be completed in time for FCL's 75th annual general meeting in March 2004.