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Cooperatives in the Philippines

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Alvin Song

on 19 September 2012

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Transcript of Cooperatives in the Philippines

COOPERATIVES IN THE PHILIPPINES The History and overview of one of the first organized economic institutions in the country. COOPERATION BUSINESS EQUALITY 3 KEY CONCEPTS OF
COOPERATIVE SYSTEMS MUTUAL UNDERSTANDING WHAT IS A
COOPERATIVE? A Cooperative is a duly registered association who have voluntarily joined together to achieve a lawful common social or economic end, making equitable contributions to the capital required, accepting a fair share of the risks and benefits of the undertaking in accordance with universally accepted cooperative principles. As defined by RA 6398
(New Cooperative Code of the Philippines) ` Basic Definitions A Cooperative is an institution or association of individuals in a mutually helpful undertaking to supply members with essential goods and services at cost.

A voluntary association of individuals with a common objective and a bond of interest. Etymological Definition Cooperative is derived from the Latin word "cooperatus". Co means "with" and operatus means "to work" Thus, the word cooperative is synonymous to the phrase "working together". Legal Definition 1800 2010 1850 August 1815 A TIMELINE OF THE HISTORY OF WORLD AND PHILIPPINE COOPERATIVES Robert Owen, a Welsh industrialist proposed a system of cooperation among his village members through the sharing of resources in order to steer away of the concept of oligarchy at that time and social inequalities at that time. His proposals were shunned away by his village folk for being too anti-religious and anti-government The Rochdale Society of Equitable Pioneers, the first truly successful cooperative venture, was founded by 28 impoverished weavers from Rochdale, England. They were inspired by the ideas of Robert Owen and went on to form a business institution deemed firstly as socialist and anti-capitalist by the British people. July 1884 The Rochdale Principles Principle of Democratic Control - Principle where each member is only given one vote in assemblies regardless of the amount of shares the member has. This ensures equality and non-dominance in management and policy making. Principle of Open-Membership - The principle of accepting membership from anyone regardless of race, class, occupation and social status. The Rochdale principles are cited as being among the least racist and discriminative organizations in the business industry during the 19th century. Principle of equal distribution - Equal distribution of profits, saving and earnings to members proportionate to the amount of their patronage of the cooperative's products/services. The Philippine Setting 1907 - 1951 1907 - Senator Teodoro Sandiko of Bulacan attempted to introduce the cooperative system through a Rural Credit Cooperative bill. The bill was trashed by the commission In 1914, Repesentative Rafael Corpus filed his version of a Rural Credit law. It was enacted on February 5, 1915 under Act No. 2508. It sparked the beginning of Cooperatives in the country. The first rural credit cooperative was established in the Philippines in 1916 with the help of the government. On December 9, 1927, the Cooperative Marketing Law was enacted. Its function is to allow cooperatives to organize farmers and other market participants to allow for better channels of sales of their products. It was also known as Act No. 3425 Other important progresses in cooperative development c. 1927-1951 1938 - The consumers cooperative league was established and is the first organization dedicated to help fostering cooperatives in the Philippines.

1939 - Commonwealth Act No. 565 was enacted. Also known as the Cooperative Law, it exempted newly formed cooperatives from paying taxes during its first 5 years of operation. 1951 - RA 386 was enacted. It paved the way for the founding of the Agricultural Credit Cooperative Financing Administration (ACCFA). It served as an efficient medium to which farmers, through their cooperatives, can sell their produce at competitive yet profitable prices. The ACCFA was also known as FACOMA or the Farmers' Cooperatives Marketing Association. After the declaration of the Martial Law, on September 1972, President Marcos implemented the Land Reform Code. He issued Presidential Decree No. 2 which placed the entire country as a land reform area. It paved the way for the development of more cooperatives which numbered 150,000 by the year 1980s. On March 10, 1990, The Cooperative Development Authority was created through Republic Act 6939. It absorbed the functions of the Regional Cooperative Development Assistance Office and the Bureau of Agricultural Cooperatives Development of the Department of Agriculture; Thereby creating a single government institution responsible for the promotion of the viability and growth of cooperatives in the country. Along with the CDA, the Cooperative Code of the Philippines was also created which aims to put into legal context the cooperative system in the country.

It is from this Cooperative Code of the Philippines that all principles we maintain about cooperative systems in the country are based upon. Principles which we'll discuss. TYPES OF COOPERATIVES UNDER RA 6939 THE CREDIT COOPERATIVE -Also called as a credit union, it is a cooperative which promotes thrift among its members and creates funds in order to grant loans for productive and provident purposes. Consumer Cooperative A cooperative whose primary purpose is to produce and distribute commodities and products to members and non-members. Purchasing prices are higher for non-cooperative members than for cooperative members. Producer's Cooperative A cooperative where members undertake joint production activities be it industrial or agricultural. They share technologies, ideas and expenses and in return, divide profits equally among cooperative members. MARKETING COOPERATIVES Cooperatives which aid in producing inputs and provides means by which members can market their products to customers by providing retailing facilities and marketing tools with the common aim of increasing unitary sales for a common profit. MULTI-PURPOSE COOPERATIVE A cooperative which combines 2 or more business activities in order to produce more profit. Finished STEPS IN FORMING A
COOPERATIVE IN THE PHILIPPINES GET ORGANIZED You must have at least 15 members. Determine the common problems that you want to solve and the basic needs you want to be provided for by the cooperative. Prepare a general statement called an economic survey to which you will be able to measure your cooperative's success by studying the feasibility of business opportunities to be pursued by the cooperative. Draft the cooperative's By-laws. The By-laws contain the rules and regulations governing the operations of cooperatives. Draft the articles of the cooperation. You must indicate the name of the cooperative and its members, term of existence and other pertinent information about the cooperative. All paperwork should also be taken cared off during the process. Consult with CDA regarding the necessary documents. Register your cooperative wih the Cooperative Development Authority (CDA) and the Securities and Exchange Commission (SEC). You must submit four copies of the economic survey, by-laws, articles of cooperation and board of accountable officers. ADVANTAGES OF A COOPERATIVE
1. A captive market in the form of patronage by its members of the cooperative's products and services.

2. Tax-advantages. Cooperatives are exempt from all income and sales taxes for the first ten years of operation.

3. Democratic control through the principle of the one man vote. Unlike corporations where large investors dominate decision making processes because of share voting power, cooperatives are democratic in theory and in practice.

4. Privileged access to government facilities under the cooperative support program of the cooperative development authority. DISADVANTAGES OF COOPERATIVES 1. The rule of one man one vote and the restriction on individual ownership may limit the amount which individuals are willing to invest in the cooperative.

2. The orientation towards maximizing direct member benefits and participation can complicate business operations. IN CONCLUSION..... Cooperatives are generally good and profitable so long as the basic principles are maintained and the value of individual participation is stressed and given emphasis throughout the venture.
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