By Tara de Ryk
March 24, 2010

DAVIDSON-Along with some pork tenderloin, members of Davidson Co-op attending the association's AGM and supper last Tuesday had a bit of news to digest as well.

Members learned that their board of directors has approved a merger of the Davidson and Riverbend Co-ops.

Davidson Co-op's board of directors, at its meeting two weeks ago, had decided unanimously to support an amalgamation with the larger Co-op based in Outlook, John McJannet, president of Davidson Co-operative Association, said. Riverbend's board of directors has OK'd the merger as well.

Now it is up to the membership to ratify the deal.

For the amalgamation to go through, it requires a vote at a special meeting of the Davidson Co-op's membership. Two-thirds of the votes cast at the special meeting must approve the merger. The same process will take place for Riverbend Co-op's membership.

If two-thirds of the members at these two special meetings approve it, the amalgamation will proceed.

Besides Outlook, Riverbend Co-op operates retails in Kenaston and Beechy.

McJannet told members at the AGM that the board sees the merger as a good opportunity for Davidson Co-op and its members.

He said Riverbend is in a strong financial position.

"It gives us access to a whole lot of working capital."

The downside of the merger, in some members' eyes, could be the loss of the local board.

McJannet said Davidson will have representation on the Riverbend Co-operative Association, but it won't be by nine members from the local community.

The name Davidson Co-op will remain, but it will operate under the Riverbend Co-operative Association.

"We can't see too many things wrong with this," McJannet said. "What we want to do is get you more money back."

With the merger, Davidson members will benefit from Riverbend's better balance sheet by receiving higher dividends and patronage payments.

Currently Riverbend pays a 7 per cent dividend on fuel as compared to Davidson's 4 per cent.

Davidson Co-op general manager Geoff Anderson points out that Davidson and Riverbend have a petroleum agreement. They use the same truck and driver delivering the same fuel, but a Riverbend member receives higher dividends than Davidson members.

This year is Davidson's second in 30 years where members will get an equity cheque, he said.

"Davidson hadn't had a general cash repayment in over 40 years. For years we struggled," Anderson said, adding that during the years of 2003 and 2004

Davidson recorded a loss after patronage and there was a question of whether Davidson would have to shutdown some of its services.

Anderson said the board and the staff made "some good decisions" and turned it around.

"But we aren't able to fund other activities."

Anderson said from a membership perspective, if the merger were approved, members would notice larger allocations and larger general cash repayments.

"Davidson Co-op pays out its members at 75 years of age. Outlook pays at 67 years and it has an equity cap at $8,000. Once they hit the $8,000 cap, each year after that they get 100 per cent of the allocation back," Anderson explains.

He said people should notice little change.

"The same faces they know and trust. The same faces will be here every day."

Anderson said no staff jobs will be lost because of the merger and no one will be forced to relocate.

"The only changes for staff is they can expect to have better wages and benefits by being part of a larger and more profitable organization," Anderson said.

Riverbend's general manager will oversee the Davidson Co-op with Larry Dueck managing the Food Store and Nikki Rohs managing the Home Centre, Anderson said.

As for him, "I'm going to be continuing to move on in the system," Anderson said.

He said members' numbers should remain the same, however, they may have to add a prefix before the number.

McJannet said a union with Riverbend would give Davidson Co-op access to cash so it can take on new projects.

"We're making money, but not the kind where we can say yes to a new opportunity. They (Riverbend) have the cash to do it now. We would have to save for five to 10 years," McJannet said.

One opportunity Davidson Co-op wants to further explore is a cardlock on Highway 11, but can't afford to do it right now if feasibility studies come back positive.

McJannet said there are other opportunities for Davidson Co-op to increase profits.

"We know we could make money selling grain bins, but we would have to have them in stock and we don't have $100,000 to buy them. We can't do it on spec.,"McJannet said.

McJannet said Davidson Co-op has made a profit the last two years. It now owns all its assets including the Food Store, which it bought from FCL last year.

Given its relative stability and profitability, the board decided now was the time to look at merging with Riverbend while its position was strong.

"Davidson Co-op has been fairly stable the last couple years. We know it's a strong player with market potential there for the total association," Dale Firby, Riverbend's general manager, said.

He said Davidson Co-op would benefit from management stability. It will also gain he ability to market a larger range of products.

He expects to see more mergers in the future.

Firby said there are about 260 individual retails in the Co-op system.

"At one time there were over 400. It's definitely a change in Saskatchewan that has been gradually taking place," Firby said.

The leaderonline is a division of The Davidson Leader, Davidson, Saskatchewan, Canada.