Department of Agribusiness Management and Entrepreneurship

College of Economics and Management

University of the Philippines Los Baños
Graduate School
Los Baños, Laguna

COOPERATIVE ROADMAP OF THE

PHILIPPINES

SUBMITTED BY:
VAILOCES, MA. EMMA LUANNE
MM Cooperative Management

SUBMITTED TO:
ASST. PROF. LIEZEL S. CRUZ
COST 201 – THEORY AND COMPARATIVE DEVELOPMENT OF
COOPERATIVES

13 NOVEMBER 2019

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 A cooperative is an autonomous and duly registered association of persons, with a common
bond of interest, who have voluntarily joined together to achieve their social, economic and cultural
needs and aspirations by making equitable contributions to the capital required, patronizing their
products and services and accepting a fair share of risks and benefits of the undertaking in accordance
with the universally accepted cooperative principles. It has been a policy instrument of government
in promoting social justice and economic development and the primary objective is to help improve
the quality of life of its members.

I. Current Status of Philippine Cooperatives

As of December 31, 2018, there are 18,065 operating cooperatives in the Philippines. Out of
this figure, 11.8% came from Region 4, followed by Region 3 (10.9%) and the NCR (9.3%). The
multipurpose cooperative is the most common type of operating coop with 52.8%.

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 Out of all the operating cooperatives, there are 11,138 (62%) of which complied with the
reportorial requirements of the Cooperative Development Authority (CDA), including the submission
of audited financial statements. Out of this figure, 51.2% were micro, 26.1% small, 17.4% medium,
and 5.3% large cooperatives.

In terms of assets, the micro cooperatives comprised of PhP 5.6 Billion; small, PhP 21 Billion;
medium, PhP 74.1 Billion; and large, PhP 329 Billion thus showing an inverse relationship between size
of cooperatives and asset holdings. The figures indicate that improving the lot of micro and small
cooperatives would have an enormous effect on improving the social and economic development of
the rural and agricultural economy.

The total volume of business generated by all reporting cooperatives was PhP 429 Billion, of which
61.3% contributed by multipurpose cooperative, followed by credit (12.6%) and consumers (4.6%)
cooperatives.

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 Current Policies on Cooperative Development
The current government policy frameworks for cooperatives are as follows:
 1987 Constitution: "Congress shall create an agency that will promote the viability and
growth of cooperatives as instruments for social justice and economic development"
 Cooperative Code of 1990 (RA 6938)
o as amended by RA 9520 of 2008
o “to foster the creation and growth of cooperatives as a practical vehicle for
promoting self-reliance and harnessing people power towards the attainment of
economic development and social justice”
 RA 6939 created the CDA which is mandated, among others to:
o Formulate, adopt and implement integrated and comprehensive programs on
cooperative development;
o Develop and conduct management and training program upon request of
cooperatives;
o Support the voluntary organization and consensual development activities that
promote cooperative and provide assistance toward upgrading cooperative
cooperatives concerned;
o Coordinate the effort of the local government unit and the private sector in the
promotion, organization and development of cooperative;
o Formulate and adopt continuing policy initiative consultation with the
cooperative sector through public hearing; and
o Register all cooperatives and their federations and unions including their division,
merger, consolidation, dissolution or liquidation. The law provides that “the
history, philosophy, principles and practices of cooperatives and their role as a
factor in national economy shall be disseminated both in formal ad non-formal
education. State colleges and universities shall provide the technical assistance
and guidance to cooperative in the communities wherein they operate upon
request”.

II. Strengths and Opportunities

The cooperative movement in the Philippines clearly manifest its participation in the
achievement of the Sustainable Development Goals (SDGs) in seven areas, namely:

a. Eradication of Poverty and Hunger. More than 78% of cooperatives in the country are
composed of multi-purpose, agrarian reform, dairy and agriculture. All of them are engaged
in food production. Although many of them are in micro and small categories, the government
is on track in providing technical, financial and institutional development assistance to
transform them into medium and large cooperatives, thus making them profitable,
sustainable and competitive in the market. The transformation of these cooperative into
viable and sustainable status is projected to have an impact on creating broad productive
agricultural and rural enterprises, thus, contributing to the eradication of poverty and hunger.

b. Quality Education. Education Training and Information comprise the Number 5 principle of
cooperatives. 2/ Since the founding of Rockdale Society of Equitable Pioneers in 1844 and the
formulation of cooperative principles in 1937, 1965 and 1996, by the International
Cooperative Alliance (ICA), “education and training” has been included as principle of
cooperatives. Recently, the Philippines has started the K-12 education program which
essentially added two (2) years of academic training in the secondary education to further

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 improve the quality of education in the Philippines. The CDA, in response to improving the
quality of education and training program in the country, expands its traditional accreditation
of training service providers as partners in the conduct of mandatory and optional training
program for cooperatives by recognizing the state and private colleges and universities to
conduct the training of trainers, to participate in developing research agenda, and to conduct
research as a strategy for expanding the capacity of the CDA to extend academic services to
the cooperative sector. The CDA is also looking forward to instituting a Cooperative College in
partnership with the state and private colleges and universities that will provide formal and
non-formal education for cooperatives, conduct research, and assist in developing a system
of data warehousing, retrieval, processing and dissemination that will provide readily available
information useful for policy-making, program implementation, academic studies and
advocacy on cooperatives.

c. Decent Work and Economic Growth. The institution of the labor service and workers
cooperatives and government policy of ending contractualization of labor are projected to
develop a vigorous workers cooperative that will provide alternative employment to members
of workers cooperatives better than contractual arrangement. The workers cooperative is
projected to create better employment opportunities, wage, and income than the present
set-up and consequently will provide a decent work for members of workers cooperatives and
economic growth by creating an environment for workers not only to sell labor but also to
create goods/products.

d. Reduce Inequalities. The promotion of cooperatives in various areas of business interest is a

direction towards promoting the social and economic status of the less privileged members
of the society and to enjoin them to participate in national social and economic activities. The
continuous education program for cooperatives is a strategy to build the technical expertise
and entrepreneurial capacities of cooperative members, thus improving their capacities to
participate in enterprise and business development. The continuous capital build-up and
savings mobilization programs for cooperative members facilitate the financial capacity of
cooperatives and their members to finance enterprises that will generate income and uplift
their economic status. The build-up of their human resource capacities and financial resources
are strategies that can immensely contribute to uplifting the social and economic status of the
poor and close the social and economic gaps between the rich and the poor.

e. Responsive Production and Consumption. The promotion of organic farming which primarily
promotes the avoidance of the use of harmful pesticide and inorganic fertilizer encourages
the production and consumption of healthy food, thus promoting a healthy life for
cooperative members as well as the general consumer. The production and consumption of
healthy food is envisioned to create healthy consumers, reduce the cost of health
maintenance, and increase the allocation of financial resources to productive activities.

f. Climate Action. Cooperative members are already much aware of the change in weather and
climate and their impact on production, food consumption and human habitat. Cooperatives
as community organizations are potent institutions for inducing communities to adopt to
climate change by introducing production system and community ecology in harmony with
climate change.

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g. Peace, Justice, and Strong Institutions. The Muslim Mindanao of Southern Philippines has
been an area of strife and conflict. The search for solutions for lasting peace has been costly
in terms of resources, human lives and lost opportunities for better living. The idea of using
cooperatives as a solution to the conflicts and promotion of peace is being discussed and
explored. The diversion of energies and resources from arms to enterprise development of
each and every member of the community could be the solution for having lasting peace and
promoting the socio-economic well-being of community members.
h. Gender Equality. The Philippines has a Gender and Development Program which mandates,
among others, every government agency to allocate 5% of its budget for Gender and
Development or GAD. The CDA has an issuance called “Guidelines on Mainstreaming GAD in
Cooperatives” that seeks to disseminate to the cooperative sector the GAD mandate of
government and to ensure the promotion of gender equality (GE), the institutionalization of
GAD policies, programs and activities in each and every cooperative, and to monitor the
progress of GAD programs and activities towards achieving GE.

III. Weaknesses and Threats (Issues and Challenges)

a. Lack or Absence of Development Plan, Budget, and Operational Policies. These documents
serve as guide for the cooperative officers and staff to maximize the use of limited resources
to prevent high receivables or past due that further stifles the growth of the cooperative. All
cooperatives, regardless of size or category must have a crafted manual of operations or
policies that provides the safety nets especially in the internal control on use of funds and the
allowable limits of exposures to individual members.

b. Financing System for Cooperatives Development. The current enabling laws on cooperatives
have no budgetary provisions on cooperative development. This is a reason why different
types of cooperatives are in various stages of development. Since under the principle of
subsidiarity the initiative to develop the cooperative is vested on the private cooperative
movement, the absence of financial support from government accentuates the uneven
development of cooperatives across types. For instance, the agricultural cooperative sector is
relatively underdeveloped due to the absence of active federations/unions of cooperatives in
agriculture which can provide financial support to cooperatives and the absence of unified
financial and technical supports from government to promote and develop cooperatives.

Also, micro and small cooperatives have limited capital for operations. It can be
attributed to the business orientation of the cooperative to rely on share capital and retained
patronage or interest on share capital as the source of fund.

c. Integrated Education and Training Program. Some officers miss the need for harmonious
relationship within the organization as they have objectives not aligned with organizational
goals. One way of correcting these flaws is to encourage all officers to attend trainings and
seminars and revisit the vision, mission and goals of the cooperative can help motivate and
empower them perform their functions. Enhancing the capabilities of officers to be familiar
with their functions and be equipped with the needed attitude, skills and knowledge allow
them to conceptualize and implement measures to improve the delivery of quality of services
of their respective organization. Hence, the need for relevant seminars to address the
prevailing issues must be undertaken by stakeholders.

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 Furthermore, an integrated education and training system for regulators of the
cooperative, implementers of the cooperative development plan, leaders and members of
cooperatives, and the general public is necessary to have a successful cooperative
development program.

d. Indifference among Stakeholders and Cooperative Leaders. This creates problems in the
operations of cooperatives. Some institutions prefer to organize new cooperatives or
organizations as channels of assistance than making use of existing cooperatives in the
community. This further divides the community instead of promoting cohesion.

e. Data Base for Cooperatives. There is a lack of data on cooperatives thus it is impossible to
analyze the trends of development of cooperatives in the country. Besides, the classification
of cooperatives is usually amended when a new law on cooperative is passed by Congress
which makes analysis of growth and trends of development of a particular type or class of
cooperative difficult.

f. Research Agenda for Cooperatives. Sustained efforts for the development and promotion of
cooperatives should be supported by a research program that can provide data/information
on assessing the performance of cooperatives, on identifying courses of action to enhance the
viability and competitiveness, on addressing the needs of cooperatives, and in evaluating the
economic and social impacts of cooperatives on members and their communities.

IV. Proposed Solutions and Recommendations

a. Formulate a Comprehensive Development Plan (short term). There is a need to formulate a
comprehensive plan of action for the development of a vibrant and competitive cooperatives.
The plan should be initiated by government in coordination with the cooperatives, and
academic sectors. Among others, the plan should provide for the building-up of technical,
financial, managerial, and entrepreneurial capabilities of leaders and members of
cooperatives. The creation of a sound data base and a monitoring and evaluation system are
indispensable in planning, designing, implementing and evaluating partnership program
between the government and cooperatives.

b. Stabilization Fund System (medium term). This is a “solidarity fund” patterned after the
models in Germany, Netherlands, Canada and South Korea, where membership for co-ops is
mandatory. This system will provide inspection, supervision, diagnosis and financial assistance
to prevent insolvency.

c. “Koopkapatid” Program or Big Brother helping Small Brother Cooperative (medium term).
Cooperatives serve their members most effectively and strengthen the cooperative
movement by working together through local, national, regional, and international structures.
Big Brother, Small Brother cooperation will further the growth of the cooperative sector. This
means more intensive partnership, collaboration, creative cooperation and advocacy among
federations and unions, not to compete but strengthen the operations of the primary coops.

The idea is for big brother coops to serve as mentor and the small brother as mentee
willing to undergo on-the-job training to learn skills they need in managing their coops and
observe and replicate practices of big brothers. Mentors can also offer keen advices and

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 insights on cost reduction, help in establishing organizational and operations systems, sharing
of best practices among others.

d. Horizontal and Vertical Integration among existing Coops (long term). In order to sustain
micro and small cooperative operations, the support of all stakeholders to harness existing
CDA issuances on cooperatives must be strengthened to prevent the notion of “divide and
rule”. Vertical integration is a competitive strategy by which a company takes complete
control over one or more stages in the production or distribution of product. On the other
hand, Horizontal Integration is another competitive strategy that is used by acquiring business
activities that are at the same level of the value chain in similar or different industries. These
business strategies would help cooperatives in consolidating their position among
competitors or investor-owned firms.

e. Develop a system of data and information warehousing, storing, retrieval, processing and
dissemination for a systematic and sustained development of cooperatives (long term).

V. Idea Source: Benchmarked Countries and Situations

Stabilization Fund System (Canada and Philippines)

The Federal Co-operative Housing Program (FCHP) is often called the ILM program. It
was the federal government's third co-op housing program. Canada Mortgage and
Housing Corporation delivered the program. The FCHP began in 1986 and ran until its
cancellation in early 1992. More than 460 co-ops were developed under the FCHP, adding
over 15,000 units to the supply of co-op housing in Canada. The program makes use of a
different kind of mortgage, called the Index-linked Mortgage, or ILM. Unlike other
mortgages used in Canada, ILM payments are linked to inflation. The monthly ILM
payments are more affordable in the early years of a co-op's operation. FCHP co-op
mortgages are insured by CMHC.
Almost all FCHP co-ops receive continuing federal assistance to help with their
operating costs. This assistance enabled the co-ops to reduce their initial regular
occupancy charges to the level of rents for comparable housing in the surrounding
market. FCHP co-ops that run into financial difficulty can ask for help from the Canada
Mortgage and Housing Corporation (CMHC) or the provincial or territorial agency or
department that administers the agreements. Each co-op paid an enrollment fee to the
Federal Co-operative Housing Stabilization Fund equal to 3% of its capital costs. The Fund
ended in 2012 and responsibilities for assisting housing co-ops with financial difficulties
was assumed by CMHC or the provincial or territorial agency that administers the
agreements. These fees, together with income earned from investing them, provide the
means to lend money to FCHP co-ops in difficulty.
In the Philippines, The National Confederation of Cooperatives (NATCCO Network)
formed by cooperators who believed that the task of co-op development lay primarily in
the hands of the private sector. These leaders believed in self-help and in the idea that
people in poverty need to create opportunities for themselves to improve their economic
well-being.
The NATCCO Network established the SFS in 2008 with 3 elements that ensure
sound business operations, and maintain depositors’ trust and confidence:
1) SUPERVISION & MONITORING;
2) OFF-SITE MONITORING AND FOLLOW-THROUGH; and

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 3) FINANCIAL ASSISTANCE as last resort.
2018 saw the highest membership growth rate, bringing membership to 73. Risk-
Based Evaluation (RBE) began in 2017 with billionaire co-ops. In 2018, Annual RBEs were
conducted and will soon be automated. Risks covered are Compliance, Credit, Financial,
Governance, Operational, Security, and Strategic & Organizational. Offsite Monitoring
Process Flow has been established, and will enable the issuance of a Network-wide Annual
Performance Report. With the Stabilization Fund System as the core of co-op self-
regulation, the NATCCO Network will lobby with the Cooperative Development Authority
and with Legislation for participation of co-ops SFS to be included in co-op requirements.

Big Brother Movement (US)

This movement began in Cincinnati in 1903 when a small group of men led by
stockbroker Irvin F. Westheimer agreed to mentor fatherless boys in that city. The
movement was formalized in New York City a year later by Ernest K. Coulter, clerk of the
children's court. Big Brothers of America, a national body, was formed in 1947. That
organization merged with Big Sisters in 1977 to form Big Brothers and Big Sisters of
America, with headquarters in Philadelphia. By 2000 the organization operated more than
five hundred programs, all of which mentored children living in single-parent families. Big
Brothers Big Sisters International was formed in 1998.
With more than 360 affiliates throughout the nation, Big Brothers Big Sisters’ mission
is to provide children facing adversity with strong and enduring professionally supported
one-to-one mentoring relationships that change the lives of the youth for the better,
forever. The organization’s vision is that all children achieve success in life. In addition to
carefully screening and matching its mentors and mentees, Big Brothers Big Sisters
provides ongoing professional staff support to the volunteers, youth and
parents/guardians throughout the course of their matches to keep the mentoring going
strong. The organization is backed by independent research that finds children enrolled
in the program are more likely to achieve in school; avoid risky/delinquent behaviors and
have higher self-esteem and aspirations. The organization holds itself accountable for
these youth outcomes.

Horizontal and Vertical Integration among Coops (Japan)

The National Federation of Agricultural Cooperative Associations (ZEN-NOH Group)
are the trusted and reliable go-between linking producers and consumers. Headquartered
in Tokyo and with 32 other prefectural and municipal headquarters all over Japan, this
cooperative union work together to promote their businesses, thereby increasing the
production efficiency of the work of member farmers, improving their economic
conditions, and contributing to the raising of their status in society.
With the aim of contributing to sustainable agriculture and invigorating local
communities, as well as providing a wealth of safe dietary choices for consumers, ZEN-
NOH does business covering the whole process from production to sales, namely: (1) Rice
and Grain Production Business, (2) Fresh Produce Business, (3) Agribusiness, (4)
Agricultural Materials and Machinery, (5) Livestock Production Business, (6) Consumer
Business, and (7) Export Business.
Furthermore, the ZEN-NOH Group also has their own agricultural research and
development center which undertakes research and development to meet the needs of
producers and consumers in such areas as new varieties, cultivation technologies and

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 production materials. It also carries out inspections to ensure product safety and
reliability.

VI. Cooperative Roadmap

VII. References
 https://www.ica.coop/en/media/news/co-operatives-and-asean-economic-blueprint-
call-greater-co-op-engagement-and-visibility
 http://www.fftc.agnet.org/library.php?func=view&id=20110726085817&type_id=1
 https://www.cda.gov.ph/resources/updates/statistics/1205-statistics-as-of-december-
31-2018
 http://www.baguioheraldexpressonline.com/issues-and-challenges-confronting-
cooperatives/
 https://cda.gov.ph/transparency/name-of-officials/board-of-administrators/adm-
eulogio-t-castillo-ph-d/894-opportunities-and-challenges-to-cooperatives-in-attaining-
sustainable-development-goals
 http://nepa1934.org/articles-and-statements/papers/the-philippine-cooperative-
movement
 https://www.ica.coop/en/media/news/co-operatives-and-asean-economic-blueprint-
call-greater-co-op-engagement-and-visibility
 http://www.fftc.agnet.org/library.php?func=view&id=20110726085817&type_id=1
 https://www.slideshare.net/coopjbb1/dar-cda-big-brother-helping-small-brother-
cooperatives
 http://www.natcco.coop/service-article/stabilization-fund
 https://pia.gov.ph/news/articles/1004875
 https://www.mbacrystalball.com/blog/strategy/vertical-horizontal-integration-strategy/
 https://www.encyclopedia.com/history/dictionaries-thesauruses-pictures-and-press-
releases/big-brother-movement

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