COUNTRY STATEMENT ON PHILIPPINE COOPERATIVES By: Undersecretary Bernadette Romulo-Puyat Department of Agriculture, Philippines Good day, ladies and

gentlemen. Allow me to thank the hosts and organizers of this conference, particularly the Ministry of Agriculture and Cooperatives of Thailand and the International Cooperatives Alliance of Asia and Pacific Region for inviting the Philippine Department of Agriculture, which I am representing, to this event. Brief History of Philippine Cooperatives The first Philippine cooperatives trace their roots back to as early as 1895. Being a primarily agricultural economy then characterized by subsistence agriculture prior to foreign occupation and a feudal agricultural system afterwards, the first cooperatives in the country were understandably agriculture-based. Even then, the concerns being addressed by the formation of farmers cooperatives were mostly related to financing and marketing. No less than the countrys national hero, Dr. Jose Rizal, initiated the formation of one of the earliest cooperativesan agricultural marketing cooperativein 1896, while the first rural credit cooperative was organized at the University of the Philippines in Los Baos in 1908. Recognizing the important role cooperatives play in people empowerment and economic development, state-initiated cooperatives started to proliferate beginning in 1927 with the passage of the Cooperative Marketing Law, In particular, agricultural cooperatives increased significantly to meet with the growing demand for food especially during the war era. Challenges In spite of the success achieved by some cooperatives and cooperative federations, many cooperatives in the countryparticularly those that are agriculture-based such as farmers cooperativesgenerally remain nonviable and financially-challenged. Majority of agricultural cooperatives are composed of small, weakly- organized primary cooperatives with narrow activity (e.g. production-centered) and membership-base. Most of these cooperatives are unable to access financing from banks or other formal sources and have to rely on usurious traders and informal lenders to finance their farms. The need to cluster small farmer cooperatives into betterorganized and larger cooperatives, and insufficient access to support
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services such as markets, agricultural equipment, machineries, facilities, production technologies, and training and extension are also weaknesses that the current administration is trying to address. POLICIES Republic Act 9520: The Philippine Cooperative Code of 2008 Republic Act 9520 or the Philippine Cooperative Code of 2008 was enacted into law on February 17, 2009 amending the Philippine Cooperative Code of 1990. In general, the new law is expected to strengthen the thousands of cooperatives in the country and enable the system to contribute better to the countrys economic growth by providing better opportunities for cooperatives to offer more services to their members. The law also seeks to create a more conducive environment for the growth and development of cooperatives to encourage the private sector to undertake actual formation and organization of cooperatives. 2011-2016 Philippine Cooperative Development Plan In support of the Philippine Cooperative Code, the Cooperative Development Authority (CDA) the government institution mandated to develop and regulate the cooperative sector- developed the 2011-2016 Philippine Cooperative Medium-term Development Plan. Anchored on the realization of the realization of the collective vision and mission of the cooperatives sector, namely: An integrated and transformative cooperative system with a mission to build integrated businesses imbued with cooperative values for the improvement of the quality of life, the Plan has outlined the following policy directions: (1) strengthening and enhancing delivery mechanisms of the CDA; (2) providing an enabling environment for the strengthening and development of cooperatives; (3) ensuring local and global competitiveness of cooperatives; (4) promoting cooperativism as the vehicle for social transformation for people, planet, prosperity and peace; and (5) massive expansion of cooperative membership. The Philippine Cooperative Code of 2008 and the 2011-2016 Philippine Cooperative Medium-Term Development Plan will be discussed in detail by my colleague from the CDA. CREDIT AND COOPERATIVES MARKETING PROGRAMS FOR AGRICULTURAL

Projects Implemented by the Agricultural Credit Policy Council (ACPC) With the policy direction established by the CDA, the Department of Agriculture (DA), for its part, has been implementing interventions for strengthening agricultural cooperatives, particularly in terms of improving their access to financial and marketing support. Currently, the DA through its attached agencythe Agricultural Credit Policy Council (ACPC) is implementing two (2) credit programs for cooperatives namely: (i) Cooperatives Agri-Lending Program (CBAP); and the Cooperatives Agricultural Lending Program (CALP). Cooperative Banks Agri-Lending Program (CBAP) The CBAP was launched in September 2011 and is being implemented by the ACPC in partnership with cooperative banks. This program employs a depository mode of credit delivery wherein special time deposits (STDs) are placed directly in partner cooperative banks, eliminating the need for a wholesaler, resulting in lower pass-in rates to small farmers and fisherfolk. With an initial funding of Php 400 million, CBAP is implemented in areas where participating cooperative banks operate. Priority commodities financed under the program are rice, corn, high value crops, fishery, and other commodities prioritized by the DA. As of 2011, Php 333.5 million out of the PHp 378.0 million approved allocation to 12 cooperative bank partners were already released. Of the amount released, Php 195 million loans were released to some 3,090 borrowers. Cooperatives Agricultural Lending Program (CALP) The CALP, launched in June 9, 2011, is also being implemented by ACPC in partnership with the Development Bank of the Philippines (DBP), government financing institution. CALP aims to strengthen the lending programs of cooperatives and cooperative banks servicing small farmers and fishers. DBP serves as the wholesaler lender and as such, assumes full credit risk of the credit funds borrowed from ACPC which it relends to retailer-institutions, which include stable cooperative banks and viable cooperatives. DBP also evaluates and approves loan application from retailers as well as repay back the CALP loan fund to ACPC as per agreed terms and conditions of the fund.

Following the program launching on June 9, 2011, 13 cooperatives have already applied for accreditation/credit lines to DBP amounting to Php 167.0 million. To date, the credit line of one cooperative, Sta. Cruz Development Cooperative, which amounts to Php 20 million, has been approved and will be released within the quarter. Projects Implemented by the Landbank of the Philippines The Landbank of the Philippines is a government financial institution that strikes a balance in fulfilling its social mandate of promoting countryside development while remaining financially viable. The profits derived from its commercial banking operations are used to finance the Banks developmental programs and initiatives, wherein the farmers and fisherfolk, agribusiness, agri-infrastructure, and other agri and environment-related projects are among its priority areas. Landbank has several programs for agricultural cooperative which include, among others, a lending window for cooperatives, a lending window for countryside financing institutions including cooperative banks, and the TODO UNLAD Program of the Total Development OptionsUnified Landbank Approach to Development. Loans for Cooperatives Through this lending window, the following cooperatives may apply for loans: (i) agricultural cooperatives composed of small farmers and fisherfolk; (ii) non-farmers or credit cooperatives, for purposes such as agricultural production (i.e. crop production, livestock and poultry raising/breeding, fishery and aquaculture projects, etc. ) Loans for Countryside Financing Institutions Landbank has several programs for countryside financing institutions, one of which is a rediscounting facility that seeks to augment the operating capital of eligible countryside financing institutions including rural banks, cooperative banks, and thrift banks. Loans eligible for rediscounting, include, among others, loans to small farmers and fisherfolk and small and medium enterprises for the following purposes: (i) crop production, poultry, livestock, aquaculture, and other agricultural production loans, (ii) agri-based projects, and (iii) other income-generating livelihood projects. NATIONAL CONVERGENCE DEVELOPMENT INITIATIVE FOR SUSTAINABLE RURAL

The Philippine Development Plan for 2010-2016 is the Aquino Administrations development framework for translating the Presidents Development Agenda, as contained in his Social Contract with the Filipino people, into strategies, policies, programs, and activities for six years. The Social Contract envisions a country with an organized and widely shared rapid expansion of our economy through a government dedicated to honing and mobilizing our peoples skills and energies as well as the responsible harnessing of our natural resources. The agro-forestry and fishery sector in the Philippines is one such sector that has, based on past performance, proven to immensely contribute towards the realization of the national goals in general. Along with the National Convergence Initiative for Sustainable Rural Development (NCI-SRD) of the Departments of Agriculture (DA), Agrarian Reform (DAR), and Environment and Natural Resources (DENR) efforts for the next six years, it has formulated, through a consultative process, the sectors own development framework through the Local Agro-Enterprise Clusters Development Plan. It is an attempt to intensify promotions of small to medium scale agribusiness investment opportunities through public-private partnerships for agribusiness ventures and pursue capacity building towards developing stronger farmer cooperative organizations that are entrepreneurially-oriented and market driven through the agribusiness projects identified in the convergence clusters. The NCI-SRD promotes efficient and responsive government support agency for cooperatives by providing the following: (1) continuing consultation with stakeholders; (2) encouraging stakeholder participation in cooperative development to allow complementation of efforts, maximize use of limited resources, and achieve greater strategic impact from collaboration; (3) appropriate communication and advocacy support for partnership; (4) access of cooperatives to global markets and market information; (5) linkages and networks to support global competitiveness; (6) Development and sustainability of competitive products and services of cooperatives and new markets; (7) creates and sustains the appropriate environment for partnership among cooperatives, both local and international, local government units, national agencies, NGOs, POs, and the private sector; (8) intensify monitoring of integrated support on cooperative development programs and projects for stakeholders; and (9) harmonize cooperative plans and programs at all levels.
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The realization of the collective services will contribute towards the overall realization of the societal goal of poverty reduction and improvement of the quality of life and its members. The principle of partnership and complementation guides NCI SRD and its cooperative partners in their joint pursuit of growth and development through critical collaboration or strategic alliances with external organizationsincluding non-government organizations (NGOs) and the business sector. SUCCESS STORIES: COOPERATIVISM AT ITS BEST Gawad sa Pinakatangning Cooprative) Kooperatiba (Award to the Best

Every year, LANDBANK awards the Gawad sa Pinakatanging Kooperatiba (Award to the Best Cooperative) or Gawad PITAK to the countrys most outstanding cooperatives to reward exemplary performance. Through Gawad Pitak, LANDBANK honors the achievements of cooperatives to replicate their success. A Hall of Fame award is given to a cooperative that has already won a grand prize, as well as a second or third prize in previous Gawad Pitak searches. A very special award called the Ginuntuang Gawad PITAK (Golden Award), is given to the crme of the crop, the best agri based cooperative among the Gawad PITAK Hall of Fame awardees. The Ginuntuang Gawad PITAK encourages Hall of Famers to build on their success by improving even further on their performance. The following are two examples of a highly successful cooperative and cooperative bank which are recipients of the much coveted Ginuntuang Gawad PITAK award. Lamac Multipurpose Cooperative Little would anyone expect that this cooperative, which traces its humble beginnings to a far-flung and little-known barangay in Cebu called Lamac would soon grow to be a super cooperative with Php 570 million (more than USD 13 million) worth of assets, a 51,000-strong membership, and 18 branches, enough to merit the prestigious Ginuntuang Gawad PITAK of Landbank with a prize of Php 1 million in fixed assets, further adding to its considerable list of assets which already include a three-storey building/office, bakery, pharmacy, rice, corn mill, water refilling station, a grocery store and a famous resort. Its harder to imagine still considering that 39 years ago, in 1973, the Lamac Multi Purpose Cooperative started with 70
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farmers members and capital build-up of only Php 3,500.00 (USD 82.00) to start a store that could provide the basic needs of the members families. So how did they do it? Ms. Elena Limocon, general manager of the coop, reveals the guiding principles behind their success, namely: Understanding and alignment to the Coops Vision and Mission- with emphasis on an in-depth understanding of the vision and mission and strict adherence by everyone from the members to the management and the leadership; Leadership by example- with the coops leaders and managers possessing business acumen and an openness to new ideas and learnings, the coop has been able to serve as an example and provide new livelihood opportunities for its members; Sound and effective management- management provides structure and system for organization to follow. Through proper management, everyone working for the organization receives due compensation. Perhaps unique to this particular cooperative is a management system rooted in unselfishness and grounded in the true spirit of cooperativism as during the first 18 years of the cooperative, everyone worked for free; Transparent governance- to avoid nepotism and favoritism, transparency is strictly practiced, which is the essential building block for creating trust between the members and management. It has been a tradition of Lamac to show financial statements, status of operations, and plans to its members on an annual basis or whenever they are asked for; Dynamic, active and empowered membership- according to Ms. Limocon, membership fuels the coops existence. Knowledge about the coop and its operation is critical in ensuring membership participation in initiated activities. Membership strength can be attributed to the coops well-organized and planned incentive programs, services offered, and livelihood opportunities provided; and
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Entrepreneurial spirit- seeing problems as opportunities, according to Ms. Limocon, is the key to Lamacs growth. Everyone from the leaders to the members were trained to spot opportunities, i.e. funding the means to build roads when there arent any; or establishing their own rice and corn mills instead of renting.

Pondering on the list, there does not seem to be any secret to Lamacs success. If there is indeed any secret perhaps it lies in the extent to which the members of the coop are willing or dedicated to follow or live by these principles. Cooperative Bank of Misamis Oriental The Cooperative Bank of Misamis Oriental has long been a staunch partner of ACPC and is currently one of its partner banks under the Cooperative Banks Agri-lending Program. The coopbank was likewise awarded the Ginintuang Gawd Pitak by LANDBANK for the cooperative rural bank category in 2010 wherein the bank received a prize of Php 500,000 worth of fixed assets. The Cooperative Bank of Misamis Oriental was formed nearly 33 years ago in 1979 with an initial paid up capital of only Php 576,087.53 with 268 Cooperatives and Samahang Nayons as member-incorporators. Its goal is to provide an efficient, responsive, and innovative financial and technical services to its members and contribute to the socio-economic development of the entire Mindanao. Barely a year after its formation, it was awarded the Most Outstanding Cooperative Bank in 1980 by the Bangko Sentral ng Pilipinas (Central Bank of the Philippines). In May of 1996, its first branch was opened and since then a total of 10 branches have been openend- 6 branches in the province of Misamis Oriental and 4 branches outside of the province but within Mindanao. This has earned them the distinction of being the biggest cooperative bank in the country in terms of area covered and client-based reach. From 1998 to 2006, the bank was a consistent awardee of the Gawad Pitak by LANDBANK. It was elevated to the Gawad Pitak Hall of Fame award in 2007 and finally earned the pinnacle of distinctions with the conferment of the Ginintuang Gawad Pitak in 2010.

According to the bank, there is likewise no great secret to their success other than their strong desire, determination and commitment to uphold the guiding principles by which their bank was established- cooperation, honesty, integrity, professionalism, and social responsibility. Right now, the driving force behind the banks aspiration to reach even greater heights is its vision of becoming: a billionaire bank, a premier investment banker and wholesaler, transformation into the Cooperative Bank of Mindanao, and establish a Foundation that will manage the banks social responsibilities. The foundation will be the banks expression of generosity in sharing its blessings with our less fortunate countrymen. It shall be responsible for the management of its microfinance operations, community development undertakings, and other social responsibility endeavors. Placing equal importance to social responsibility among the banks other functions and, in the process, earning the trust, dedication, and commitment to the banks of its members and the community, is perhaps the key to the banks success. THE WAY FORWARD The different government institutions responsible for the development of cooperative should work in a concerted effort to provide a conducive policy environment and the requisite support services necessary for the formation, development and strengthening of the cooperative sector. With regard to agricultural cooperatives, the following interventions are recommended: increase membership and capital base of cooperatives; provide opportunities for production-driven cooperatives to evolve into cooperatives engaged in agro-industrial activities such as processing; and provide support and incentives for the formation of secondary and tertiary cooperative federations. The Department of Agriculture is currently working on these interventions through support services on credit, capacity building, marketing, irrigation, infrastructure, and farm facilities, machineries and equipments. Nonetheless, even with the full support of the government, the success of a cooperative will be short-lived unless it is imbued with the same guiding principles that have propelled the Lamac Multi Purpose Cooperative and the Cooperative Bank of Misamis Oriental to greater heightscooperation, honesty, integrity, professionalism and social responsibility- and the extent to which the cooperative is willing to live by these principles. Only then can the cooperative realize its potential as a vehicle for people empowerment and economic development. ****
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