Transcript The Philippine Cooperative Movement: Problems and Prospects

The Philippine
Cooperative Movement:
Problems and Prospects
(1986 – present)
Prof. Jorge V. Sibal
UP-Diliman
<[email protected]>
People Empowerment and
Cooperative Movement


People empowerment is the correct path in
solving the problems of poverty and income
inequity.
It is the process of transferring economic and
social power from one center to another
and/or the creation of a new center
complementary to or in competition with the
traditional center (H. Morales).
People Empowerment and
Cooperative Movement


Cooperatives and other labor enterprises are
among the major pillars of the people
empowerment movement (Sibal, 1991).
This movement aspires for a strong propeople mixed economic society where the
state, private and civil society sectors are
harnessed in the development efforts of the
society.
Brief History of the Philippine
Cooperative Movement
The first stage (1896 to 1941) Pre-formation- germination of coops by
revolutionary illustrados
 Formation- Raiffeisen-type agri-based coops
introduced by U.S. missionaries and teachers
and western-educated Filipinos
 State-initiated farmers coops by the American
colonial administrators.
Second stage (1941 to 1986),
5 phases



1st phase (Japanese occupation)- rapid
increase in cooperatives as a result of food
shortages
2nd phase- Rehabilitation period after WW II
3rd phase- Resurgence of the state-initiated
coops)
Second stage (1941 to 1986),
5 phases
4th phase- Introduction
and rise of the nonagricultural coops
 5th phase- Martial law
period and the
“politization” of the coop
movement.

3rd stage of the Philippine coop
movement (1986 to present)

Emerged as a potent political force



1998 party list elections, elected 3 sectoral
representatives
2010, 5 Party list representatives in the Philippine
Congress
Various cooperative laws were codified under
RA 6938 in 1990 and amended by RA 9520
in 2009.
3rd stage of coop movement
(1986 to present)- Highlights


The coop movement’s
involvement in parliamentary
struggle avoided “politization” and
too much state intervention under
the principle of subsidiarity.
Operating coops increased by
393 percent from 1983 to 1993,
and by 540 percent from 1993 to
2009.
3rd stage of coop movement
(1986 to present)- Highlights


The coops’ businesses shifted to higher value
added multi-purpose coops and its total
assets leaped from a measly P1.05 Billion in
1985 to P176 Billion in 2009.
The movement’s contribution to the country’s
GDP has reached 5.14 percent in 2007.
Pres. Pnoy’s Path of
Inclusive Growth



The focus of President PNoy Aquino’s
Philippine Development Plan is an “inclusive
growth” strategy.
It means active participation of the citizenry in
the country’s growth and a major beneficiary
at the same time (ILO, 2010).
It is focused in maximizing job creation in
reducing poverty. Hence, the role of the
cooperative sector is a vital component in this
national endeavor.
Table 1. Philippine
Cooperatives, 1939-2009
1939
1969
1977
1980
1985
1993
2009
Number
570
1,530
1,897
2,941
3,350
25,125
78,611
No. (Confirmed)
--
--
--
--
1,142
4,494
23,836
Membership
(000s)
105
Year
Assets (million)
Capital (million)
3.4
n.a.
555
460
223
337
30
129
280
1,503
129
194
627
n.a.
Sources: 1939-1985- Gray Wine Think Tank, 1993- CDA, 2009- CDA & DOF
*1993 (Braid) & 2009 membership covers only confirmed coops
3,200
5,856*
118,400
176,020
--
--
Chart 1- Phil. Cooperatives-1939-2009
(Number, No. Confirmed, Members and
Assets)
200000
150000
Number
No. Confirmed
100000
Members (000)
50000
Assets (Million)
0
1939
1969
1977
1985
1993
2009
3rd stage of coop movement
(1986 to present)- Highlights

The total registered
cooperatives increased
dramatically by 7.5 times
from 1985 to 1993
compared to an increase
of only a little over 3 times
from 1993 to 2009 (Table 1
& Chart 1).
3rd stage of coop movement
(1986 to present)- Highlights


The performance of operating
cooperatives increased by 3.9
times from 1985 to 1993, and 5.3
times from 1993 to 2009.
This means that more cooperatives
are becoming viable after they are
registered in 1993-2009 compared
to those registered in 1985-1993.
3rd stage of coop movement
(1986 to present)- Highlights


The increases in the number of operating
cooperatives were bigger in multipurpose
cooperatives at 790 percent in 2009, followed
by services at 448 percent, producers at 316
percent and marketing at 235 percent. Credit
was steady at 157 percent in 2009 (Table 1).
Cooperatives now engage in higher value
processes compared to lower value
processes involved in credit and consumer
store operations.
3rd stage of coop movement
(1986 to present)- Highlights

Compared to the first and second stages of
the coop movement where the government
initiated and organized coops for political and
anti-insurgency purposes, the third stage of
the coop movement avoided these past
mistakes with the government supporting the
movement with emphasis on the principle of
subsidiarity or non-interference on internal
coop affairs.
3rd stage of coop movement
(1986 to present)- Highlights

Cooperatives during the third stage of the
coop movement became more viable and
productive. There were lesser coop
failures. The operating coops grew rapidly
since the total assets of the coop
movement leaped from a measly P1.05
Billion in 1985 to P118.4 Billion in 1995,
and to P176 Billion in 2009.
Table 4. Total Assets of Operating Cooperatives
(2009)
Category of
Coop
No. of
Coops
Micro (up to P3 19,961
Million)
Small (P3 to
2,594
P15 Million)
Medium (P15
to P100
Million)
Large (Over
P100 Million)
Totals
Source: CDA and DOF
% to
Assets
Total No.
of Coops
% to
Total
Assets
83.7%
P 7.88 Billion
4.5%
10.9%
P 17.59 Billion
10.0%
1,015
4.4%
P 37.83 Billion
21.5%
230
1.0%
P112.71 Billion
64.0%
23,836
100.0%
P176.02 Billion
100.0%
3rd stage of coop movement
(1986 to present)- Highlights

Micro coops dominate the coop sector at 84
percent. If combined with small coops, their
numbers reach up to 95 percent. Their assets
however total only 14.5 percent compared to
the large coops which number only 1 percent
but own 64 percent of the total assets.
3rd stage of coop movement
(1986 to present)- Highlights

The good thing about this is
that micro coops, even with
small capitalization, are able
to provide more jobs to the
poor. Large coops, on the
other hand are able to engage
in higher value production
processes as shown in Tables
3 and 4.
3rd stage of coop movement
(1986 to present)- Highlights



The concept of “big brother, small brother”
cooperation among cooperatives is
necessary.
Federation and union work has now become
very crucial in furthering the growth of the
coop movement.
Big coop primaries and federations need to
merge or consolidate like the NATCCOMASS-SPECC consolidation plan in 2012.
3rd stage of coop movement
(1986 to present)- Highlights


The big coops, acting as big brothers, need
to harness the capabilities of micro and small
coops by technology transfers and joint
cooperative business ventures like the
MICOOP program of the NATCCO.
Other new trends in coop business ventures
include branding of coop products and
services, franchising or networking
arrangements, or even outsourcing.
Performance of coops in the
regions

Davao (Region XI) highlights the coop
movement’s successes in the regions.



leads in coop membership at 54.4% of the
population of 19 years old and above.
with 1.2 million members, it has an average coop
membership of 523 per cooperative
contributed nine percent to the region’s GDP,
following Socsargen (Region XII) at 12%
contribution to the regional GDP and Western
Visayas (Region VI) at 4.5% contribution to the
regional GDP (Tables 5 and 6).
Performance of coops in the
regions



Bicol (Region V) and Southern Tagalog
(Region IV) are the least performers in coop
membership and in regional contribution to
GDP.
Region IV is a fast growing region in
manufacturing and services, hence coops
cannot compare with the output of big
manufacturing enterprises.
Bicol region, being a depressed region in
terms of manufacturing, needs more intense
coop development to help empower the poor.
Table 5- Membership of Operating Cooperatives by
Source: CDA and DOF
* Population of 19 years old and above
Region, 2009 (Top 5 and Bottom 3)
Member-ship
Membership/
Coop
(Ave.)
% of Coop
Membership vs
Population
Rank –
Highest/
(lowest)
1,201,830
523
54.5%
1
IX- Zamboanga
321,917
321
20.6%
2
II- Cagayan
245,640
283
14.64%
3
CAR
124,130
166
14.61%
4
NCR
780,555
297
13.95%
5
V- Bicol
145,440
195
5.55%
VII- Western Visayas
238,770
124
6.37%
IV- Southern Tagalog
497,085
234
6.80%
5,856,074
246
13.04%
Region
Top 5
XI- Davao
Lowest 3
Philippines
(1)
Table 6- Cooperative Contribution to the GDP, 2007 using the
income approach
Region
Percent contribution to
regional GDP
Rank
XII- Socsargen
11.91%
1
VI- Western Visayas
11.49%
2
XI- Davao
9.07%
3
X- Northern Mindanao
8.89%
4
CARAGA
7.45%
5
V- Bicol
1.43%
1
IV- Southern Tagalog
1.55%
2
Cordillera Administrative Region (CAR)
1.84%
3
Philippines
5.14%
Top 5 Regions
Lowest 3 Regions
Source: CDA and DOF
Problems of the Coop Movement
1. Lack of education and training[1]
2. Lack of capital
3. Inadequate volume of business
4. Lack of loyal membership support
5. Vested interest and graft and corruption
among coop leaders
6. Weak leadership and mismanagement
7. Lack of government support
*From more than 80 researches which assessed the growth and
development of coops which included the studies of Emmanuel
Velasco, the Cooperative Foundation of the Philippines, Inc.
(CFPI) and Leandro Rola (1989).
Challenges for the coop
movement (NATCCO)






Quality growth
Consolidation
Differentiation
Social relevance
National, market presence
Poor image- The image of coops is small,
inefficient, individual performers with low
standard of service, or an image of a
jeepney.
Problems of the cooperative
movement
A large number of cooperatives remain
unviable. Only 23,836 or 30 percent of the
78,611 registered coops in 2009 are
reporting/operating.
1.

There is a need to further strengthen coop
education and training through the coop
federations, councils and unions, NGO training
centers, state colleges and universities, etc.
Problems of the cooperative
movement

Under RA 9520, all officers (including directors)
are required to undergo training conducted by
cooperatives, federations and/or other trainers
or training institutions duly accredited by CDA.

The training modules/curricula prescribed by CDA
are: Basic Cooperative Course; Cooperative
Management and Governance; Policy Development;
Financial Management; Parliamentary Procedure;
Leadership and Values Re-Orientation; Strategic
Planning; and Labor and Other Related Laws.
Problems of the cooperative
movement
2. With globalization, small, medium and big
coops are exposed to strong competition.
 Electric coops are threatened by private
electric utility distributors for possible buyins. Coop rural banks have not grown, some
are in difficult situation and have not coped
up with the trends in the banking industry.
Consumers’ coops (mostly university and
institution-based) are caught in a competitive
squeeze.
Problems of the cooperative
movement
3. 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.
 This has affected some electric coops and
large producer coops in Batangas. RA 9520
mandates additional committees of
Mediation and Conciliation, and Ethics.
Problems of the cooperative
movement
4. Agri-based cooperatives like those in the
agrarian reform communities and
plantations are not showing improvement in
productivity.
 Some are mismanagement. Strong support
services are needed in order to preserve the
gains of the coop movement under the
Comprehensive Agrarian Reform Law
(CARL).
Problems of the cooperative
movement
5. The mentality of relying state protectionism,
parochialism and close-doorism still prevails
among many cooperatives.
 The present policies of the state have
changed and subsidies are being done
away with especially during these times of
fiscal deficits and global financial crisis.
Those that will be affected are the electric,
transport, water and irrigation coops.
Prospects of the cooperative
movement
1. President PNoy Aquino is cooperative friendly.
Some key players in the administration are
advocates of cooperativism. President PNoy
pledged to “continue the revolution that my
mother (President Cory) and others started in
making entrepreneurship among the poor a
strategy for poverty alleviation".

Planning Secretary Cayetano Paderanga- “Cooperative
development would create jobs and spread wealth”. The
coop movement can capitalize on the current boom in the
microfinancing business.

DSWD Secretary Dinky Soliman is on top of the anti-poverty
program of the government.
Prospects of the cooperative
movement
2. Operating coops increased 4 times from
1985 -1993 and 53 times from 1993-2009.
Coops engaged in high value operations
increased higher than credit coops.
 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.
Prospects of the cooperative
movement
3. The total assets of the coop movement
increased by 78 times in 9 years from P1
Billion in 1985 to P118 Billion in 1993, and
117 times in 2009 at P176 Billion.
 Researches and documentation of the good
cooperative practices should be intensified
and disseminated to other coops.
Prospects of the cooperative
movement
4. Coop membership increased by almost 10 times
from1985-1993 and 17 times to 5.8 million in 2007.
The family beneficiaries are around 19.2 million in
1993.

In Davao region, coop members account for more
than half (54.5%) of the region’s population of 19
years and older and contributed 9% to the region’s
contribution to the regional GDP.

Socsargen and Western Visayas contributed to
their respective regional GDP at 12% and 11.5%
respectively.
Prospects of the cooperative
movement
6. “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.

Big coop primaries and federations need to merge or
consolidate like the NATCCO-MASS-SPECC
consolidation plan in 2012.

The big coops should harness the capabilities of
micro and small coops through technology transfers
and joint business ventures like the MICOOP
program of the NATCCO.
Prospects of the cooperative
movement
7. 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.

The coop representatives in Congress, aside from
their legislative work, should also be active in
further uniting and consolidating the coop
movement. They should lead the coop movement
nationwide together with other coop legislatoradvocates:
Prospects of the cooperative
movement


Strengthen all LGU Development
Councils and exhort strong coop
participation;
Work for the creation of Cooperative
Development Offices in all LGUs that
have not yet created said office and the
corresponding appointments of the LGU
Cooperative Development Officers
ideally coming from the coop sector;
Prospects of the cooperative
movement


Strengthen the Cooperative Development
Councils at the national, regional, provincial,
municipal and barangay levels;
Participate in LGU affairs through involvement
in the LGU Pre-Bids and Awards Committees
(PBAC), the Local Health and School Boards,
to participate in future elections of sectoral
representatives for workers, women and other
sectors in the LGU councils, and to lobby for
the creation of committees on cooperatives
in said councils if not yet created.
References:
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Barce, Jo Anne, 1995, “The Effects of Education in Membership
Participation in Cooperative Activities”, QC: UP SOLAIR (unpublished
paper).
Borja, Ignacio, 1996, “Cooperative Education: Problem or Answer”,
paper presented at the first National Convention of the National
Association for Cooperative Education (NACE), August 8-9, 1996, Hotel
Danarra and Resort, QC.
Braid, Rosario (Ed), 1993, “Political Parties, Programs and Platforms for
Cooperatives as a Third Sector”, Sustainable Development Through
Cooperatives, Manila: Asian Institute of Journalism, p. 136.
COOP NATCCO, 2007, website- : http://www.natcco.coop , (opened
August 4, 2011)
Coloma, Teresita, 1996 “The Cooperative Development Framework: A
Blueprint for People Empowerment and Global Competitiveness”, paper
presented at the National Conference Workshop on Strengthening
Cooperative Banks, February 21-22, 1996 at Great Eastern Hotel, QC.
References:
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Cooperatives Philippines, 2011, http://cooperativessociety.blogspot.com/2011/03/p-noys-govts-development-plan-lists.html
Gonzales, Araceli, “The NGOs, their Impact to the IR Environment”, UP
SOLAIR, QC (unpublished paper).
ILO, 2010, Overcoming the jobs crisis and shaping an inclusive
recovery: the Philippines in the aftermath of the global economic turmoil
(forthcoming).
Moralez, Horacio, “Strategies and Mechanisms for Empowerment of
People in the Rural Sector”, Lambatlaya, QC: UP ISWD, p. 2.
Ong, Jose, 1997, “Market Projects Financed by Municipal Development
Fund: An Evaluation”, Philippine Women’s University-Quezon City,
September 1997 (masteral thesis).
Paderanga, Cayetano, 2011, Keynote Speech, PICPA's "Cooperative
Forum Day," July 22, 2011, Hotel Intercontinental, Makati City,
References:
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Remo, Amy, 2011, “NEA, DBP to finance co-ops’ fund requirements”, Philippine
Daily Inquirer, July 11, 2011.
Rola, Leandro, 1989 “Cooperative Education and Training Issues/Problems and
Recommendations”, The State of Cooperative Development in the Philippines,
QC: Cooperative Foundation of the Philippines, Inc.
Santiaguel, Mannie, 2011, “The Role of Cooperative in Poverty Reduction”,
cooperativeunionofcavite.com/.../The%20Role%20of%20Cooperatives%20In
%20Global%20Poverty... (opned Aug. 201)
Scott, William, 1992, The Union Obrera Democratica: The First Filipino Labor
Union, QC: New Day Publishers.
Sibal, Jorge, 1991, “The Self-managed Enterprises and the Vision of a Mixed
Economy”, paper read at the PEDF Seminar-Workshop on Issues in Community
Enterprise Management, August 16-18, 1991, Pansol, Laguna sponsored by
People’s Enterprise Development Council.
Sibal, Jorge, 2001, “A Century of the Philippine Cooperative Movement”, Co-op
News from UWCC, University of Wisconsin Center for Cooperatives, August
2001, http://www.wisc.edu/uwcc
Wikipedia, 2011, “Fiscal Policy in the Philippines”,
http://en.wikipedia.org/wiki/Fiscal_policy_of_the_Philippines (Opened Aug.
2011)