Unfamiliar Business Model at the Heart of Thriving Rural Economies

Park West Fibre Optic Co-op in Hamiota, MB

For rural communities across the prairies, fast internet is critical to keeping residents and businesses, attracting investment, and ensuring students get a good education. Not surprisingly, like most small towns across North America, Hamiota—a rural community in southern Manitoba—sees value in having fast internet.

Unlike many other smaller prairie communities, the town has managed to create a highspeed fibre optic network that puts most larger centres to shame.

How did they do it? A group of entrepreneurial community leaders from town took inspiration from a model that created Saskatchewan’s only oil refinery, supplied prairie settlers with vital goods in the early years, and introduced electric power to rural Albertans when no one else would. In short, they formed a co-operative.

Sign outside Hamiota, MB

The co-operative business model is a powerful economic development tool. While many rural economies still benefit from this time-tested model, many people don’t understand it.

In fact, a few years back, the University of Saskatchewan conducted a study designed to test whether the co-op business model was still beneficial and relevant in rural communities. The answer they found was a resounding “yes” —that is, if people know about and understand the model.

That many people do not know what a co-operative is on the prairies is surprising. Western Canadians hold 10 million plus co-op memberships and more than 1,500 co-ops from western Canada reported returns to the CRA in 2015.

These co-ops – credit unions included – employ 55,000 directly, create almost 170,000 western Canadian jobs indirectly and hold assets worth about $165 billion. Together, these largely retail, utility and ag co-ops contribute $14.2 billion to the Gross Domestic Product of western Canada. And, while that is only about 2.1 per cent of the overall GDP of western Canada, the impact in rural communities is significant.

“Zoom in on almost any small-town and you get a better picture of the role co-ops play in rural western Canada, says Audra Krueger, Executive Director of Co-operatives First. “Almost every town has a gas station, grocery store, or ag and hardware centre with the familiar red and white co-op ‘shield.’ These locally owned, independent retailers form the Co-operative Retailing System (CRS). Together, they create purchasing power and logistical efficiencies small market stores otherwise could not enjoy.”

Mayor of Hamiota, Larry Oakden speaking with Jack Thompson in Park West Fibre Optic Co-op.

The administrative arm of the CRS is Federated Co-operatives Limited (FCL). FCL operates an oil refinery that started as a co-op back in the 30s thanks to a handful of farmers with a dream. Today, the refinery contributes billions to western Canada’s economy and continues to fuel agriculture across the prairies.

“I’m from a small farming town in southern Saskatchewan,” says Krueger. “The only grocery store is a co-op and the co-op ag centre still provides local farmers with vital crop inputs—including fuel. Without a co-op few if any other businesses in the area supply these essentials. The market for the most part is simply too small.”

But without the essentials, people move away, businesses fail, and investment leaves along with them. So, co-ops often form a baseline for a rural community’s economy. By providing essential goods and building on local wealth, co-ops capitalize on regional resources so others can create businesses and support their families, helping the community thrive.

Take Hamiota, for example. To keep students around, community leaders recognized quality internet access was important. So, the school division approached surrounding municipalities, and together—as a co-op—they built a fibre optic network.

Providing lightning-fast broadband makes the town stand out in the region, increases investment readiness, and improves Hamiota’s chances of attracting young families and businesses—essential ingredients to thriving rural economies.

When developing their rural economic development strategy, the Government of Canada consulted rural residents across the country. Their report indicates high speed internet, affordable housing, energy diversification, and investment dollars for rural businesses are high priorities. Co-ops currently provide solutions to each of these challenges and examples are not hard to find.

In Mossbank, Sask., for example, Furrows and Faith seniors housing co-operative helps keep seniors near family in their home community. An energetic group from Dawson Creek, B.C. runs a utility co-op responsible for most of the major renewable energy projects in that remote northern region. And, in Alberta, an entrepreneurial group in Sangudo manages an ‘opportunity development co-op’ that allows people to invest their money in local businesses. Amazing rural success stories.

Co-ops have a long history of supporting rural economies in western Canada, and that is no less true today. In fact, if you pass through a thriving prairie town, a co-op is likely at the heart of it.