Module 1: The Concept, Principles, Types of

Cooperatives

By: ARD Jo B. Bitonio CDA Dagupan Extension Office

OBJECTIVES:

When you finish the module, you should be able to:

1. be aware of the state of the cooperative movement, its prospects and challenges ;2. understand the general concept of cooperatives; differentiate cooperative from other form of

business;3. appreciate the cooperative principles; and4. ascertain the types of cooperatives

Worldwide, some 1 Billion people (ICA, 2011) are members of cooperatives, and it is estimated that cooperatives employ more than 100 million jobs worldwide. The United Nations estimated in 1994 that the livelihood of nearly 3 billion people, or half of the world's population, was made secure by co-operative enterprise. These enterprises continue to play significant economic and social roles in their communities. Below are some facts about the Movement that demonstrate their relevance and contribution to economic and social development.

Source ICA: 2011

Global Perspective

Euros 11B

housing healthCredit union

doctor

Football club

buyingWhole foods

careleisure

consumers

workers

Euros 1.3 B

Source: Mr. Bob BurltonMidcounties Co-operative, United KingdomAug. 2006

agriculture

• Nestle• Dean Food• Dairy Farmers of America - Coop• Danone• Fonferra - Coop• Kraft• Land o’Lakes - Coop• Lactalis• Aria Foods - Coop• Meilli Dairies• Friesland Foods - Coop• Uniliver• Morinaga Milk Industries• Parmalat• Campina - Coop• Bongrain• Human Milchunion - Coop• Saputo• Nordmilch - Coop • Sodiaal - Coop

World’s Dairy Top 20 includes 8 co-operatives

Source: Mr. Bob BurltonMidcounties Co-operative, UKAug. 2006

• JA Chuoukal - guidance• JA Zenchu guidance• JA Shinren credit business• Norinchukin Bank credit business• JA Keizairen purchasing & marketing related business• JA Zen-noh purchasing & marketing related business• JA Kyosairen mutual insurance business• JA Kosairen welfare business• JA Zenkoren welfare business• Nihon Nogyo Shimbun newspaper related information service• JA Shinmbunren newspaper related information service• ie-no Hikari Kyoki publication, educational and cultural activities• Nokyo Kanko travel business

Activities of JA Group Organization

Thai Agricultural Coops

State of the Cooperative Movement:

Selected StatisticsAs of December 31, 2010

- 18,205 Registered under Art 144 of RA 9520 7,196,097 Total membership Php 35,663,870,937.23 Paid Up Micro 14,135 with TA of Php 8583391.82 Small 2,893 with TA of Php 19,599.345.803 Medium 1,199 with TA of PhP 43,201,503,119.11 Large 257 with TA of PhP 87,198,088,899.18 Php 1,417,087,459 2008 GROSS REGIONAL DOMESTIC PRODUCT At Constant 1985 Prices Php 83,043,820.20 COOPERATIVE REGIONAL DOMESTIC PRODUCT Constant 1985 Prices 5.86%% CONTRIBUTION OF COOPERATIVES TO GRDP At Constant 1985 Prices

REGIONTOTAL MEMBERSHIP

OF NEWLY REGISTERED COOPERATIVES

TOTAL NUMBER OF NEWLY REGISTERED

COOPERATIVES

AVERAGE NUMBER OF NEWLY REGISTERED

COOPEARTIVES I 400,365 1,133 353II 368,818 628 587

CAR 247,487 628 394III 616,267 1,696 363

NCR 1,305,364 1,749 746IV 568,293 2,175 261V 239,330 718 333VI 416,080 1,247 334VII 585,996 1,431 410VIII 276,554 634 436IX 297,587 685 434X 389,183 1,333 292XI 1,098,545 1,505 730XII 186,897 879 213

CARAGA 153,982 952 162ARMM 45,349 812 56

TOTAL 7,196,097 18,205 395

8th

6 %

REGION AUTHORIZED SUBSCRIBED PAID-UP

I 3,768,523,210.38 1,556,743,490.73 1,260,098,478.06II 4,179,314,112.75 1,167,750,330.24 1,135,462,664.79

CAR 8,842,644,216.50 3,287,583,281.69 2,635,725,609.88III 8,828,265,924.82 3,673,739,808.25 2,850,093,601.88

NCR 29,398,882,551.60 9,595,443,089.40 4,711,095,325.80IV 14,250,626,053.12 6,294,690,215.04 4,970,288,646.43V 2,230,777,543.76 589,128,895.94 597,419,239.78VI 4,422,908,630.92 1,334,153,786.91 1,758,724,799.99VII 10,188,262,343.69 2,980,318,956.92 2,698,180,800.69VIII 2,942,614,009.48 918,699,238.08 1,188,911,918.87IX 2,770,269,552.66 1,447,380,284.34 1,147,983,644.07X 85,324,994,955.44 22,349,725,223.05 7,184,713,004.29XI 2,147,773,795.32 567,862,931.20 262,762,003.97XII 4,849,727,126.12 1,280,122,281.04 1,057,127,290.22

CARAGA 2,003,383,419.00 533,284,482.75 170,522,109.97ARMM 3,617,428,520.00 905,253,570.00 226,441,242.50

CO 7,229,113,337.00 2,315,431,436.40 1,808,320,556.04TOTAL 196,995,509,302.56 60,797,311,301.98 35,663,870,937.23

11th 10th 11th

Capitalization of Coops Registered Under Art 144

Authorized Capital Subscribed Paid Up0.00

20,000,000,000.00

40,000,000,000.00

60,000,000,000.00

80,000,000,000.00

100,000,000,000.00

120,000,000,000.00

140,000,000,000.00

160,000,000,000.00

180,000,000,000.00

200,000,000,000.00

196,995,509,302.56

60,797,311,301.98

35,663,870,937.23

Coops Re-registered under Art 144

Region Micro Small Medium LargeI 985 113 37 7II 469 102 56 5

CAR 487 95 44 12III 1,302 295 102 16

NCR 1,103 400 230 54IV 1,618 405 154 24V 591 103 31 2VI 927 229 104 5VII 1,117 231 77 20VIII 495 102 35 7IX 558 90 42 4X 1,108 169 60 13XI 1,181 218 94 26XII 640 176 60 12

CARAGA 782 136 42 2ARMM 772 27 10 9

CO 2 21 39Total 14,135 2,893 1,199 257

Categorization by Asset

0.00

10,000,000,000.00

20,000,000,000.00

30,000,000,000.00

40,000,000,000.00

50,000,000,000.00

60,000,000,000.00

70,000,000,000.00

80,000,000,000.00

90,000,000,000.00

100,000,000,000.00

8583391824.23

19,599,345,872.27

43201503119.11

87198088899.18

Total Assets of Cooperatives Categorized into Micro, Small, Medium & Large Cooperatives

LARGE COOPERATIVES

MEDIUM COOPER-ATIVES

SMALL COOPERATIVES

MICRO COOPERATIVES

14,135

2,8931,199 257

3M & Below3M - 15 M15M- 100Above 100M

9th

Reg. I 2.5 % Contribution

REGION

2008 GROSS REGIONAL DOMESTIC PRODUCT

COOPERATIVE REGIONAL DOMESTIC PRODUCT % CONTRIBUTION OF

COOPERATIVES TO GRDPAt Constant 1985 Prices At Constant 1985 Prices

(In Thousand Pesos) (In Thousand Pesos) At Constant 1985 Prices

I 41,168,347.00 1,445,256 3.51%II 27,638,771.00 1,230,609 4.45%

CAR 30,920,809.00 4,103,711 13.27%III 117,622,250.00 3,652,250 3.11%

NCR 467,453,002.00 11,360,522 2.43%IV 206,986,903.00 22,933,346 11.08%V 39,634,904.00 765,190 1.93%VI 103,145,489.00 4,959,302 4.81%VII 101,292,120.00 1,085,922 1.07%VIII 29,939,775.00 3,642,438 12.17%IX 35,761,837.00 1,457,983 4.08%X 71,133,097.00 7,790,653 10.95%XI 63,928,106.00 11,510,777 18.01%XII 49,896,778.00 2,672,483 5.36%

CARAGA 18,466,367.00 2,042,358 11.06%ARMM 12,098,904.00 2,391,021 19.76%

TOTAL 1,417,087,459.00 83,043,820.20 5.86%

9th

CREDIT

CONSUM

ERS

PRODUCERS

MARKETIN

G

SERVICE

MULT

I-PURPOSE

COOPERATIVE BANK

UNION

FEDERATIO

N

INSU

RANCE

TOTAL0

200

400

600

800

1000

1200

98 67 9 12 14

931

3 8

1142

CDA Dagupan Registered Cooperatives per TypeAs December 31, 2010

Products

Products

Self-Administered Question (SAQ) 1

• What is your analysis of the state of the cooperative movement of the Philippines?

•What are the strengths/weaknesses of the cooperative movement?

•How would you help your cooperative to increase its membership, assets and capitalization?

ProspectsProspects for the cooperative movement is bright. Sibal (2011) in his paper diagnosed the prospects of the movement:

a) No less than the President of the Republic Benigno S. Aquino III (2010) made a pronouncement that cooperatives have played a crucial role in democratizing opportunities, capital, and investments in the country by complementing the efforts of government to alleviate poverty and achieve social justice

b) Multi-purpose coops increased by 8 folds, service coops by 4.5 folds, and coop federation by 4 folds. Marketing coops increased by 3 folds and producers coops by 2 folds this manifest that cooperatives have engaged in high value operations dramatically and their number increased higher than credit coops;

Prospects

c) increased total assets of the coop movement;

d) intensified campaign of the CDA to increase cooperative membership to 20 million (2011 -2013);

e) “Big brother, small brother” cooperation among cooperatives will further the growth of the coop sector. This means more intensive Federation and union work and advocacy that will not compete but will strengthen the operations of the primary coops;

Prospects

Prospects

f) The coop group within the party list bloc in Congress should play its cards well. Although in the minority bloc, the coop legislators are actually representatives of the marginalized sectors of society which comprise the majority of the country’s population; and

g) strengthening of partnership with all the development partners of the CDA from the NGAs, LGUs, NGOs and Councils at the national/regional/provincial/city and municipal.

Prospects

From more than 80 researches which assessed the growth and development of coops from 1989 to present, Sibal (2011) listed the following challenges:

a) majority of the cooperatives are young and start up cooperatives (CDA, 2010);

b) with globalization, small, medium and big coops are exposed to strong competition;

Challenges

ProspectsChallenges

c. unionization in some medium and big size coops continues. This implies that the coop management practices in some cooperatives are still very reactive and less participative

d) agri-based cooperatives like those in the agrarian reform communities and plantations are not showing improvement in productivity; and

e) the mentality of relying state protectionism, parochialism and close-doorism still prevails among many cooperatives.

f. As the global economy reels under the financial crisis, the cooperative movement is not immune to it. The primary impact of the financial crisis on coops is that it has led to a significant decrease in much needed capital by members/clients as many of them depend on its for resource economic demands. The long term effect of the financial crisis on coops would be: more stringent lending policies, tighter filtering of clients, liquidity shortages and increasing costs of funds amidst declining economies (Llanto et al; 2009). The deposits of coops members/clients are expected to decrease due to the increase in food and fuel prices that are dwindling as coops struggle with low profit margins.

ChallengesChallenges

Reference:

1. CDA Statistics www.cda.gov.ph2. Prof. Jorge V. Sibal The Philippine Cooperative

Movement: Problems and Prospects (1986 – present)

UP-Diliman3. RA 95204. ICA 20115. Mr. Bob Burlton Midcounties Co-operative, United

Kingdom, Aug. 2006

end of presentation