In this bonus episode of the podcast, farmer, co-op expert and newly minted University of the Fraser Valley faculty member Chris Bodnar describes a BC Tree Fruits Cooperative that was beset with internal problems in the years leading up to BCTF's recent, sudden closure in late July.
Chris published a piece on Linkedin that delves deeper than we do. It's good. Read it here.
Hey everyone, this is Jordan Marr and this is a bonus episode of Farming in British Columbia. Listeners will have noticed that over the last month I've published one main episode and one bonus episode about the closure of BC Treefruits Cooperative and in my main episode I lamented that I felt I was missing at least one more perspective on everything. The proper episode that I devoted to this topic featured an interview with Jennifer Deol who had become a kind of unofficial spokesperson for the large portion of the membership that was really upset and shocked by what happened and I had her on to explain how it was going to affect all of those those apple growers and to speak her mind about how she thinks the cooperative failed her and and all of her fellow cooperative members. However, I was aware at the time that there are a number of different perspectives on why this has happened and I would have liked in that episode to share the perspective of someone who would want to make the argument that that this closure has kind of been a long time coming because of problems within the cooperative. After I released the episode I got an email from a colleague of all of ours Chris Bodner who's an organic farmer down in Abbotsford and a guy who knows a lot about farming cooperatives in general and quite a bit about BC Treefruits history. He told me in the email he sent me that he was frustrated about certain aspects of media coverage of this story. Chris feels strongly that there were a lot of internal challenges and problems at the cooperative that go a long way to explaining why we're at the point we're at with this closure. So Chris joined me on the phone a few nights later to give his perspective and I found the conversation really informative I think and hope that you will too. As a side note Chris just publicly announced that that he is going to be joining the faculty at the University of the Fraser Valley as a full-time assistant professor focused on the topic of agribusiness and I think he's he's really well suited for that role and I wish him all the best and congratulations. So that's it. Here is this bonus conversation with Chris Bodner. Chris Bodner thanks so much for joining me on Farming in British Columbia. Thank you Jordan. Chris you you I don't know if it was a text or an email but you got in touch with me after the episode that I released of the podcast featuring mainly featuring the voice of Jennifer Deol about the closure of BC Treefruits. That episode featured a long-form conversation with Jennifer. She was kind of representing the perspective of a BCTF member who was really upset about the closure of BC Treefruits Cooperative and making the case that these are assets that need to be protected and the government should be doing more to do so and you wrote me to say that you found aspects of that interview a little bit frustrating and I'm wondering if you could expand on that. Tell me a little bit about why why some of that felt frustrating to you? Yeah I think that it's not so much I've frustrated listening to some of the conversations around the demise of the BC Treefruits cooperative because there's a lot of emotion involved right now and rightly so like this is a catastrophic season and this is a horrible event to hit so many growers right now but I think that there's also aspects to the process of creditor protection in the courts that are important to understand in relation to whether it's a cooperative or any other business, how that works and what rights members have and what rights members don't have because that is unique in some regards with to a cooperative and so there are some I think important clarifications that need to be made around what happens when a co-op gets in trouble like this. Right and I think we'll touch on some of that today Chris you published an article on LinkedIn talking about this stuff I'm going to link to that in the show notes for this bonus episode of the podcast. Anyway in the article you described the situation at BC Treefruits as as dire for many years and that aspects of the management of the cooperative were sabotaged by parts of the membership. Could we talk about that? What do you mean by a dire situation for many years? Well so I think that in fact you covered some of this in the bonus episodes you did with voices of people from the sector a few years ago and you reviewed some of that as a bonus episode and giving some background as to what's going on with both the tree fruit sector but also specifically the co-op and so the first thing is that the co-op has been in a challenging situation for quite a number of years so it's not it's not a new problem it's perplexed people within the sector people within the government growers for quite some time and that has to do in part with like the the longer history some growers have seen the co-op as a buyer of last resort and so they've sent their best product to private packing houses and they've sent the product that no one else would buy to the co-op. What that did was undermine the co-op's position because basically when you're part of a marketing co-op generally your contract requires you to sell all of your product to the co-op and it also requires a quality of that product and so when you're sending your worst product the co-op has no way of of securing contracts with its buyers that when it can't assure the quality of the product or the volume of the product and essentially some growers undermined the co-op's position that way and that that drove other growers away and so growers who were very competent had high quality products they saw that increasingly they couldn't get the price they needed from the co-op because of the way other growers were using it and and some growers claim that that would their membership right and I know that at different points in time in the history of the co-op the management had trouble deciding or enforcing its rules and so you heard in like in some voices of people like talking about in previous generations like the co-op actually had people who went around and enforced contracts like they called them the apple police I believe but they actually had people on staff that went around and made sure that people were were following the contract that they had signed and I've seen this myself I've been in the interior and seeing growers packing their fruit in the field into bc tree fruits bins and loading it onto trucks that belong to other packing houses and so this is something that's been a long-standing issue the other part that that has been a problem um in more recently has to do with the growers using the the special general meetings that they're entitled to under their bylaws but essentially dragging management in when they don't like a decision that's being made and that's resulted in like five CEOs in an eight-year period like just turmoil at the executive level of the organization and at a certain point competent management are not going to stick around that that's not how other private sector entities are going to behave and it's impossible to enact strategy it's an it's impossible to have a relationship between the board and the CEO that's based upon trust that's based upon common vision and strategy and and so that that turmoil was really instigated by some of the membership and it ultimately undermined the co-opsibility of the function right so thank you for that summary i'm actually i want to go back a little further um to talk about even like some context even further back that played into everything you just described but first chris real quick um i i want to just establish why i'm talking to you um you're a veggie grower in the Fraser valley but it was really clear from your linkedin article and just from talking to you previously you know a lot about this stuff so why why is that how how have you developed this perspective on all of this well i guess through two ways so one is that i'm a limited licensed agrologist and i've worked with growers in the interior developing um farm business strategy and plans and financial analysis of their orchard production so i've worked directly with growers and understood what they're doing with and various attitudes towards the co-op within that on the other hand um i've studied cooperatives in agriculture for a number of years now i've studied agricultural cooperatives in other countries and i've studied british columbia's agricultural cooperative history and current state in quite um quite intensively over the last number of years i've worked on policy recommendations for the the sector with regard to cooperatives and i uh i operate like a my own farm business on a cooperatively owned piece of land so my head is sort of in it and i guess um when yeah i i've been a board member of the bc cooperative association so i sort of see a number of different perspectives within this and it's partly i'm passionate about it um as cooperatives because cooperatives play really important parts in agriculture around the world um not just in in parts of british columbia um and businesses in general can start and go out of business many times a day uh in in the general marketplace there aren't so many cooperatives and so when a cooperative goes out of business it's often pointed to as oh we'll see cooperatives don't work because people may only have one interaction with a cooperative over their lifetime like one particular cooperative and it may be a fairly close relationship that they have such as a lot of generations that have been involved with bc tree fruits and i think it's important to understand that the failure of a cooperative does not mean that cooperatives don't work and but we need to understand why an event like this happened and what were some of the best practices that maybe weren't followed by the organization both as an organization in general and with regard to elements of its membership all right so that's that's sort of where i'm coming at it from great thank you so now let's go back a little more because i think there's a little more context to fill in so you were describing an era further back when the co-op because the co-op's like you know what is it how many years old chris it was almost 90 years old thank you i knew it was near a hundred so um you you described times when the co-op exerted more control over these contracts that it has with these growers these contracts that jennifer in that main episode i produced explained i mean they they're supposed to operate on these contracts where except for like little tiny carve outs of being allowed to go sell at a farmer's market or out of their fruit stand members are supposed to sell to the cooperative and you you describe a time let's go back a few decades presumably when when the co-op exerted more control and made sure that was happening but what that that can also breed is within a co-op if there are certain members feeling they're not getting a good enough price in that context um people leave the co-op at different times and so it's been described to me that there have been these cycles over the decades where suddenly there'll be some new private packers pop up to try and compete with the cooperative and they pull some growers away um what it sounds like is we have been in like i don't know a one or two decades cycle of seeing a lot more of these private packers pop up and and luring away if not members entirely enticing them to to sell some of their best apples to those private packers which as you explained undermined like the strength of the cooperative itself so i've i've tried to add a little context there is that is that i mean we're gonna we're just trying to stay in broad strokes have i got that mostly right yeah yeah and i think the i think the important thing to understand here is that like the cooperative in that instance it it originated at a time when a lot of cooperatives in british columbia also came about and predominantly if you think of credit unions a lot of credit unions uh came about in that uh sort of world war two era and a lot of credit unions for example were started by communities like in agricultural communities where there were no banks and so it was a way for a community to basically do self-help like figure out how to provide themselves with financial services and so likewise uh a co-op like busy tree fruits originated at the same time when farmers realized that they were just fighting with each like competing against each other fighting for the lowest price um and unless they had some sort of economy of scale and ability to work together um they weren't going to survive and and we have like most agricultural cooperatives across uh Canada started that way like in the prairies farmers realizing they're not going to survive growing like a quarter section of land on their own they need some sort of ability to get their get their grains to market um the same thing with dairy producers like they no one have the ability um to get their to get their milk to a processing plant on their own so these are there's a history of cooperative starting in in these times of a common need and at the same time they don't work very well when they become a monopoly um if they have if there's not a challenge uh to force them to innovate to become better and so in some regards you can say like there it should have been something that helps them to be help them to become better to have competition from whether it could have been other private uh private packing houses it could have been other co-ops that that originated like there there could have been many scenarios that provide that and you're likely to have that in at a time as like as wealth develops in a community people see other opportunities to develop product or to explore markets um i think that what happened though is that like over time the co-op enjoyed a monopoly position um and that it in the larger sense it didn't innovate to what was going on on a like on a global scale and so we now have like overproduction of apples from many jurisdictions and so the the larger question is like can British Columbia produce apples competitively um when you have other jurisdictions like Washington beneath us uh to the south that like land values are a fraction of what they are in British Columbia and production is is like tenfold higher i think i at least tenfold higher of apples yeah exactly and so so like there are larger issues facing the sector i don't i don't think the co-op is to blame or to like you can't really say that this is this is the co-ops fault or any any one individual but there is a larger question as to like did British Columbia sort of sit on its laurels for too long uh and not adjust to the reality of a global marketplace but in one sense like you do have you do have the co-op that tried to develop markets for cherries um and to develop that with with other growers but i mean there are a lot of what ifs or or so ons within this um but it's it's sort of a sensitive time where everyone including myself is sort of trying to come up with scenarios of like what could have been done differently or how how could this have been avoided and i i think that i think in a lot of ways it's a trajectory that that afflicts the apple sector and tree fruit more generally but also agriculture in British Columbia like we're we're small compared to i was gonna say i was gonna say like as you were just saying that oh man just like a few different directions i want to go here Chris like as you were just saying i was gonna say like um okay so maybe we rested on our laurels or maybe we didn't adapt or whatever but at what cost would we have adapted in the sense that the okanagan and samilkameen and and the valleys and the cootenies that produce apples they're filled with five and ten acre orchards this real like patchwork of small scale farms um that a lot of us celebrate like those that that you know that that increased competition we saw see from places like washington i mean the orchards down there are not in the five and ten acre sizes they're in the hundreds or in some cases yeah thousand acre sizes the ontario pension fund owns thousands of apple acres in washington alone um yeah so but but it's funny too because as you were just as we went a little further back briefly in time and then you and you bring in this this um i i before you started talking about just the the industry in general worldwide and and how we haven't managed to keep up with with the market forces before you said that it had me thinking i wanted to ask you like well was it the chicken or the egg you know was it was it was it all the problems within um was it all pro was it problems caused by members doing some of the things that you mentioned or or was it a failure of the co-op to um to keep everybody happy in the first place but but it but it in light of what you more recently said just about market forces and worldwide production it there it almost sounds like there's a narrative like at least something to consider if not making a definitive conclusion that like really does this closure simply reflect that the the British columbia apple sector was actually the writing was on the wall of like doom to doom to failure like a long time ago i mean that it's it's sad to think that that would be the case um but it certainly has an uphill battle um that i think that i think the key thing like when you think of what what could a co-op do in this place uh like in this space in the market um in British Columbia the co-op could have been more proactive in working like on its members behalf to do replants of new varieties so where you have like the sort of the intellectual property of named varieties um where they could go to a breeder and say hey we could grow out that apple on 300 farms in BC and get to scale for production in a very short timeline because we have a coordinating power or we could do processing and so where we look at an example like in northern Italy where grower co-ops really don't focus on the primary production i mean they support their growers they provide agrology services to their growers but really what they're doing is looking at what is the value added they can do and so you have co-ops there that are doing um like brand label products for coca-cola like fruit juices and so on that are being sold uh throughout like uh Europe and eastern block countries and so on like uh so you have you have a different way of looking at the opportunity within like a more international marketplace and the role the co-op has to advocate on it behalf of their members and that we've never really gone to that point but I don't again I don't know that it's really the fault of the co-op in this instance is when you look at British Columbia like we have we don't have policy that's encouraged processing here so it's not it's not just it's not just like I mean the co-op tried to develop a right when it did a hard cider product using apples but we don't like we we don't have processing here in in British Columbia and in Canada in general I mean we export raw product and we don't we don't have any value added and more to the point like farmers don't have any stake in in any of that where there is processing so like dairy co-ops used to exist in the 1980s most of them were liquidated and sold off to what Snell Siputo so like dairy farmers here they again they sell a raw product they don't have any stake in the value added processing of those of those items and so it's a larger issue of what our agricultural sector looks like and that we really don't we really don't get the full value for the product that is produced here Chris I think what I've heard kind of quite a bit in my informal conversations with people what you touched on in your article was that the situation the recent one of the BCTF being forced to close um was not helped by tensions among the membership discord among the membership over the last um you know I'm gonna say 10 years I think it's more than that but can you can you talk about those tensions and what what that what that looked like and what that resulted in in terms of disrupting the the um efficient management of the cooperative yeah I think that I I mean I we can put it most simply in saying there's often a misunderstanding of what it means to be a democratic organization and have members of the involvement in a cooperative and so at a at a basic level like I'll use an example that a lot of people would be familiar with with as a would be the like a credit union so you're a member of a credit union and what it's a democratic organization what that means is as a member you can attend the AGM you have a vote at the AGM on special resolutions and electing a board but once you elect a board that board has a fiduciary duty to the organization so that means that that means that once you're a board member you cannot make decisions based on how it affects you personally you have to make decisions that are in the best interest of the organization as a whole and sometimes that means making a decision as a board member that's not in your best interest but understanding what the larger picture is that the organization needs to be able to survive or to thrive and develop a new strategy and so this idea that members can constantly call special general meetings and drag the executive and the board in and overturn their decisions is it it I mean it's a recipe for disaster and you're implying that this was happening well I mean we see that it's happening it happened even this this winter when members called a special general meeting to overturn the sale of assets that were being proposed or being undertaken by the co-op in order to consolidate their operations and provide liquidity to their capital to be able to to pay debts and service loans so you can't like you can't have a strategy and this is like this is important underlying that the province like the the Ministry of Agriculture funded a strategic review for the co-op starting in 2020 and with with a new CEO at that point it brought in outside expertise and they were they were enacting this plan and no doubt the plan did not make everyone happy it meant some growers were going to have to travel further to deliver their product to the co-op but the reality at the end of the day is that the co-op needed to do something it like status quo wasn't an option as you and I'll just interject and say status quo is not an option you just a few minutes go to scribe all the conditions taking place around the BC apple sector from outside forces yeah and so they have to adapt and part of that meant like selling off receiving stations they needed to consolidate like if they needed the technology to be able to grade to be able to sort to be able to store to be able to pack that needed to be in one place you can't have that located all over the place you can't have receiving stations that are not profitable to the organization and so those are their decisions that had to be made by the board or so like made by executive and supported by the board and part of an overall strategy and yeah some members didn't like it but if you're going to like every time there's a decision that people have questions about or don't like they're going to call a special general meeting it paralyzes the organization competent leaders are not going to stick around for that so there's a lot of finger pointing like some members pointing towards management and no doubt there were there were probably times when there were staff that were better than others but also there's a huge amount of responsibility that ultimately lies with the membership like the members are the ones who elect the board the board needs to hire a CEO their board needs to set a strategy and then they need to hold the management accountable to that strategy but you can't do that if everyone like in a 300 member organization has a different opinion and tries to be financially dragging people through that like and making them like justify every decision to every person in the organization it's not going to function so yeah i think that that's i think that's ultimately like where we get to the root of the problem and that and that members do hold a lot of responsibility for what happened so there was this uh we're almost done chris but there was this formal process in 2020 like with a lot of help from the vc ministry of agriculture to figure out a strategy to to update the cooperative or modernize a cooperative um to make it stronger that didn't lead to the changes uh i gather that that we're being recommended does this partially explain our current governments or our current ministry of agriculture's seeming reluctance to do very much to intervene in what just happened with this closure do you think for them aside you have argued in your in your article and elsewhere that they shouldn't a government shouldn't be intervening in like a bankruptcy process to begin with we wouldn't expect them to do it with a private business we shouldn't do it they shouldn't be doing it for a cooperative that that operates like a business but do you think do you think we might have seen more had the had they not already gone through this massive effort that was presumably very expensive to um to try and write the ship try and help them write the ship i should say so the the previous minister of agriculture made it clear at the time that the funding was provided to the co-op that it was being done based upon having a larger strategy for the sector for it to develop the fruit tree sector and also that there were conditions the co-op had to meet and so they can put some money towards figuring out is this like what what what can be done to write the ship like and and it's recognized that the co-op had important infrastructure played an important role but it wasn't the only it wasn't the only player in in the interior for like obviously we have many packing houses and so on that operate independently so it's problematic now when when members are saying well the government didn't do enough or the government should have done this but it's a it's members assets it belongs to the members and so i think that that's the important part so a co-op is a private organization so like when we talk about private and public public organization like it if it's publicly traded that means it's traded on the stock market if it's a crown corporation it means that it's owned by the government a cooperative is owned by its members so the government doesn't intervene to run a private organization like the members are responsible for overseeing that operation by electing a competent board and so this idea that the government bears responsibility within this i think where the government bears responsibility is perhaps with a larger um support for the sector and understanding what like what are the priorities within bc and so we look at this like prior to 2017 we went what like 15 years without having a minister of agriculture who had any idea of what was going on in agriculture and so we had lana popham up in from 2017 till 2022 who knew the sector quite intimately and had a very strong vision for what she thought um could happen and now we're back to a period like where the sectors in crisis we have a minister who has really no new ideas to bring to the table and and this is where we're at but ultimately at the end of the day when an organization files for creditor protection that's a legal process we don't like i can't imagine a scenario where people would want government to start to intervene in legal processes like we have that's why we have an independent legal system a judiciary that is not part of government like we don't want government intervening in that on the other hand like where we have people saying well the government should buy these assets if they were to do so like in what form like are we asking the government to nationalize an agricultural entity like what for who like do we put 50 million dollars of public money into buying back the assets for the members of the co-op like that doesn't so like why would they do that compared to all the other private packing houses and not to mention the fact like there's no there's no line item in the ministry of agriculture's budget to do that so it's not really realistic thinking to think that the government is just going to somehow step in and do this and so i think yeah the government's going to be very reticent to take any action but also it's not going to take action that's going to benefit a handful of growers who are viewed like within the sector to have mismanaged their affairs so i think that that's where like at the end of the day there's going to be a lot more caution in watching this and probably support to try to stabilize the sector without having to take it on like themselves as like you're not going to get government coming in and nationalizing the bc tree food co-op for example and what about maybe we'll try and end here chris but what about a scenario where we let the market become more efficient and what if that results in you know a bunch of land consolidation and the outcome looks like you know 50% or more less individual farmers and farms you know so much you know larger fewer farms run by more agribusiness oriented managers and owners is that i don't know what do you what i'm asking you partly because i know you're a small-scale mixed farmer clearly you're not you've made a good case for why we can't just we you don't think we can just make an outcry for please bail the cooperative out government but what do we what do you make of that outcome maybe maybe you don't think it's very likely but i'm curious what you have to say about it it's challenging because we have like an agricultural sector in british columbia that operates on a net loss of about a quarter billion dollars every year like the sector as a total loses more money than it makes and that's like that's public data that's published by the ministry of agriculture each year so on the one hand yeah we can't say that there's like the market is going to work in this to make agriculture more efficient because that's the model we have right now and it's not and so we we can't produce food in british columbia in general more cheaply or more efficiently than in other jurisdictions that have economies of scale and much cheaper labor and lower land prices etc i guess uh i guess what i would look at is do we have from a public perspective an understanding of what is the purpose of agriculture in our economy and i don't think we have a clear sense like if we if we had provincial governments for example that cared enough about the sector to put in place a competent minister who understood the sector is able to sit at the table and talk to members of the sector using their own like terminology and so on that would be a really good starting point but like as i as i just mentioned apart from a short period from 2017 to 2022 we haven't had that like in decades and so agriculture is not really a priority of most governments so i think that i think that more in general like looking at what what are elements that would make the sector viable and i don't think that that means i don't think that means like bigger corporate etc because that at the end of the day that's that works in a couple of places but the reality of many parts of the world in fact most of the world is that you have cooperatives coordinating market access for growers of a variety of sizes and you can look at areas like in Japan in uh northern Italy in Spain in France where cooperatives support a diversity of sizes of growers but their real focus is on how can they get the best price for their growers and access to the broadest uh most diversified marketplace and ultimately that involves processing it involves value added products and when it's when that when that processing is done by cooperatives that are owned by farmers there's no incentive to offshore production the value that's created by those enterprises comes back to the growers in the communities where they're producing and so i think what we have in general is a lack of creative thinking in understanding how are we going to get out of this and what do we support and until we have from a public perspective but also from a private marketplace perspective and understanding of cooperatives and how they can be of devi advantage to agriculture in our province i think we're really going to be spinning our tires one more question if you don't mind sure how do you how do you i guess i'll use the word personally i don't know if it's quite appropriate but how do you personally feel about the when you think about those assets that'll be that'll leave presumably leave the hands of this this cooperative of growers and go into whatever private interests presumably purchase it i guess i i think about it in the same context that i think about agriculture in general that i've been long and advocate for helping support new entrants into the sector but i also think it's really important that incumbents within the sector are supported to have succession whether that's within a family or succession to others outside the family but really scenarios that don't require the next generation to buy out the previous generation if every time a new generation has to pay the full cost of the farm agriculture will not be viable and that's what we're seeing like where land prices where i live are what like a hundred and fifty thousand dollars an acre you're never going to pay for that by farming so it makes it unrealistic and so likewise when i see the assets of the co-op going up on the auction block in bankruptcy proceedings i know that like whoever has the deepest pockets is going to buy it out and they're probably going to get a bargain like they're not buying all the individual parts they're buying a full functioning like processing facility and i don't think that the result at the end of the day is going to be in the growers interest so it makes me sad but i also i think that like from a public perspective like with policy there's government is going to say well what is the responsible choice like we can't throw money around um but how do we recover from this and i think that that's really where um like we have a lot of really talented people in the private sector we have a lot of talented people within the public sector and in like as bureaucrats and policy um analysts and i really hope that there's an opportunity for better dialogue as to how we move this forward chris i i always learn something when i talk to you whether i'm on or off the mic and i uh i did uh did so today thanks so much for for making time on the phone well thank you for the invitation to
