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NZ Cooperatives Ready To Boost Economy In Alert Level 3

New Zealand’s retail cooperatives around the country are relieved they can resume operations under Alert Level 3, said Roz Henry, chief executive of Cooperative Business New Zealand.

The retailers still can’t open their doors for normal public face-to-face purchasing, but they can receive internet and phone orders, and provide click and collect and direct delivery services, with the appropriate health and safety measures.

“It is a step towards ensuring these hard-working Kiwi-owned businesses continue into the future,” said Ms Henry. “Cooperatives are made up of a number of individual entities ranging from small and medium-sized enterprises to major companies that collaborate for the greater good in terms of purchasing power and quality services.

“Aside from the well known agricultural cooperatives in New Zealand, there are many in the trades, retail and services sectors that were unable to conduct worthwhile business during the Alert 4 lockdown and are facing significant financial hardship,” she said.

Some may not have survived if the lockdown continued as they need to operate at 70 per cent capacity over the coming weeks to cover staff salaries and basic costs, including rates, rent and utilities. “Even in Alert Level 3, there are unknowns about the amount of throughput that will eventuate to cover these costs.”

Ms Henry said there has been misunderstanding that with many cooperatives classified as essential services, they would be immune to the economic impacts of COVID-19. “That’s not the case. Our retail and services cooperatives are working hard to stay afloat.”

One association member, ProCare represents doctors and nurses and 170 general practices with 800,000 patients. As already reported in the media, these frontline businesses’ revenue has fallen away significantly to the point where they may have to lay off staff.

In the retail sector, Mitre 10 was only able to offer very limited goods for essential trade supplies during the Level 4 lockdown and was recording a small fraction of its pre-lockdown revenue.

Aside from the low level of throughput, these organisations’ supply chain costs have gone up exponentially. Although it was uneconomic to provide essential services, these cooperatives continued to support their communities.

Retail cooperatives such as Mitre 10, ITM, Build Link, Capricorn (mechanics), Independent Optometry (Visique), New Zealand Plumbers’ Merchants (Plumbing World and Metrix), Interflora, Composite Retail and Flooring Xtra weren’t able to open to the public during the lockdown.

“These types of cooperatives are trying to act as exemplars by keeping their staff employed,” said Ms Henry. “There are more than 10,000 small and medium enterprise members in these co-ops that will struggle to remain viable. They are in a precarious state but remain prepared to assist the economy.”

She said the loan access scheme proferred by the government is tenuous. “The feedback I’ve received is the banks struggle to support the co-op customers because of their business model. Given the need to follow responsible lending rules, it makes bank lending to these individual business owners sitting with the cooperative model more prohibitive.”

Cooperatives have been around New Zealand for 100 years and in particular have formed the backbone of rural business.

“No matter their size and scale, these are all individual business owners, not massive corporates, who have come together to create greater supplier/purchasing power and keep costs and prices down. In doing this, they are able to be innovative and make use of technology to enable them to be competitive,” Ms Henry said.

Cooperatives meet their members’ needs by buying goods at the best price and providing affordable and high quality services rather than maximising the co-op’s profit. They return surplus revenues to their members in proportion to their use of the co-op, not in proportion to their investment or share ownership.

Ms Henry said more than 70 cooperatives in New Zealand generate 19 per cent of the national gross domestic product, employ 50,000 people and have 1.5 million members, either as consumers or product/service users.

They range in size from small and medium enterprises to major companies such as Fonterra, Zespri, Farmlands, Alliance Group, Silver Fern Farms, Southern Cross, Market Gardeners and SBS Bank.

They cover sectors across all of New Zealand business – Dairy, meat, horticulture (kiwifruit, boysenberries, grapes, hops, walnuts, blackcurrants), fertiliser, utilities, banking, financial services, grocery, trades and services, and health.

“The cooperatives are a series of hardworking Kiwi businesses which need the continued support of consumers, suppliers and government alike to get through the economic crisis caused by COVID-19,” said Ms Henry.

As the majority of cooperative businesses open up for business under Alert 3, they have one thing on their mind: “What is the public’s appetite for spending following the lockdown.”

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