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					Basic Economics with Cooperative and Land Reform & Taxation
                         BSCE II

                        Prepared by:
                    Blesilda B. Gonzales
 History of Cooperation
 Cooperation during Ancient

The transition from food gathering
to food production.

Discovery of agriculture paved the
way for the establishment of

With their social organizations,
communal and cooperative
activities developed.
  History of Cooperation
  Cooperation during Medieval         Medieval Guilds – formed
                                      for the purpose of defense
                                      against invasion.
Agricultural production stimulated
the creation of markets.
                                      Merchant Guilds –
                                      preserve trade monopoly
People no longer produced only
                                      in the town market,
what they can consume.
                                      maintain stable prices
                                      under normal conditions.
Trade & commerce developed, & so
does Manufacturing.
                                      Craft Guilds – artisans
                                      who manufactured
                                      commodities .
History of Cooperation
Cooperatives in the Philippines
 Rizal, after his side trip to Sandakan, Borneo
 in 1892, requested Governor Despudol that
 he and some relatives and friends be
 permitted to move to that place and found a
 colony under the cooperative plan of Robert
 Owen. Instead, he was arrested for treason
 and banished to Dapitan, Zamboanga del

In Dapitan, Rizal had his ideas in cooperation partially fulfilled.
He put up a school for the poor community on a purely
cooperative basis. He also established a cooperative store with
the help of his pupils. One noteworthy group organized by
Rizal was the La Sociedad de los Abacaleros (Society of Abaca
Producers). This functioned for only one year. Rizal returned
the members share capital without any loss.
 History of Cooperation
Teodoro Sandiko, in his travels in Europe, must have had a close
contact with the cooperative movement in Germany where he
came across with the Raiffeisen movement. He was very much
impressed by this type of cooperative and he looked forward for
an opportunity to have it introduced here in the Philippines. As
destiny might have its choice, Sandiko had his chance when he
was appointed one of the early governors when Civil
Government, under the Americans, was established.

                                          Mayor Frederic Raiffeisen of
                                          Western Germany (Father of
                                          Credit Cooperatives)
History of Cooperation
Teodoro Sandiko, then governor of Bulacan, prepared a bill
patterned after the Raiffeisen type of credit union and had
Rep. Albert Barreto of Zambales sponsor the bill in the lower
House of Congress.
The principal aim of this bill was to protect and develop
the agricultural interest of the country. When the
Barreto sponsored bill was presented it readily obtained
unanimous approval on January 20, 1908. The Philippine
Commission however, turned it down.
 History of Cooperation
 Sponsors of the bill again put it through in the Second
 Philippine Legislature. This time it was sponsored in the Lower
 House by Rep. Rafael Corpuz who succeeded Rep. Barreto from
 Zambales. The bill was ably presented in both Houses and it
 was finally passed into law on February 11, 1914 and became Act
 2508. When this Act was finally made into law, Gov. Sandiko
 earned a title of Father of Cooperation in this country.

  The first rural credit association that was organized under
  Rural Credit Law was the Agricultural Credit Cooperative
  Association of Cabanatuan, Nueva Ecija.
   At the end of 1926 there were 544 rural credit cooperatives organized in the 42
   provinces and by 1930 there were 571 associations formed all over the country.

In 1935, however, about 90% of these cooperatives were inactive with no funds left in
their treasury. The experiment on rural financing, through cooperatives was a failure.
History of Cooperation
The Cooperative Marketing Law (Act 2425) was enacted and
approved on December 9, 1927.

By 1939 only 164 societies were actually organized with
a total membership of around 5,000 farmers. With
this number only 35 reported their sale of products to
the Bureau of Commerce. The number of associations
reporting indicated that only 20% of the organized
associations were active.
  History of Cooperation
 Filipino economists and students of cooperatives in this
 country have often attributed the failure of cooperative
 societies in this country to the following causes:
•Incompetent management
•Lack of proper understanding of the principles, practices true
aims, and purposes of cooperative associations
•Improper use of credits by the borrowers who, instead of using
money borrowed for production, spent it for fiestas or luxuries.
•Defective securities.
•Lack of compensation of officers
•Political interference particularly in the collection of overdue
•Inadequate character and moral responsibility in handling the
other fellow’s money
 History of Cooperation
Filipino economists and students of cooperatives in this
country have often attributed the failure of cooperative
societies in this country to the following causes:
•Lack of adequate safeguard against unscrupulous officers
who took advantage of their position to grant loans to
themselves and their compadres which later proved disastrous
to the system.
•The dominance of the individualistic attitude instead of the
spirit of cooperation among the people.
•Inability of cooperatives to secure adequate capital
•Their dependence on alien suppliers and distributors
•Ineffectiveness of the government and promotion of
cooperative organizations
•Inadequate marketing facilities
History of Cooperation
    Congress of the Philippines in 1952 enacted
                 Republic Act 821
It also created an administrative agency known as the
Agricultural Credit and Cooperative Financing
Administration (ACCFA)
To assist small farmers in securing liberal credit.

To promote the effective groupings of farmers into cooperative

To establish an orderly and systematic marketing machinery
for, and controlled by, the small farmers.

To place agriculture on a basis of economic equality with other
  Functions of the Cooperative
     Development Program

 (a) Formulate, adopt and implement integrated
 and comprehensive plans and programs on
 cooperative development
   Functions of the Cooperative
      Development Program
(b) Develop and conduct management
and training programs upon request of
(c) Support the voluntary organization and
consensual development of activities that promote
cooperative movements and provide assistance
towards upgrading managerial and technical
expertise upon request of the cooperatives
(d) Coordinate the efforts of the local government units
and the private sector in promotion, organization, and
development of cooperatives;
   Functions of the Cooperative
      Development Program
(e) Register all cooperatives and their
federations and unions, including their
division, merger, consolidation, dissolution
or liquidation.
(h) Assist cooperatives in arranging for financial and
other forms of assistance under such terms and
conditions as are calculated to strengthen their
viability and autonomy;

(j) Impose and collect reasonable fees and
charges in connection with the registration of
   Functions of the Cooperative
      Development Program
(k) Administer all grants and donations coursed
through the Government for cooperative development,
without prejudice to the right of cooperatives to
directly receive and administer such grants and
donations upon agreement with the grantors and
donors thereof;
(l) Formulate and adopt continuing policy initiatives
consultation with the cooperative sector through public
(m) Adopt rules and regulations for the conduct of its
internal operations;
   Functions of the Cooperative
      Development Program
(o) Exercise such other functions as may be necessary
to implement the provisions of cooperative laws
 Cooperative Principles
 Open and Voluntary
 membership - membership in a
 cooperative shall be voluntary
 and available to all individuals
 regardless of their political, racial
 or religious background or
Democratic Control - cooperatives are democratic organizations.
Its affairs shall be administered by persons elected or appointed in
a manner agreed upon by members. Members of primary
cooperatives shall have equal voting rights on an one-member-one
vote principle, while a secondary or tertiary cooperative shall have
voting rights as delegate of members-cooperatives, but such
cooperatives shall have only five (5) votes. The votes cast by the
delegates shall be deemed as votes cast the members thereof.
 Cooperative Principles
Member Economic Participation - members contribute equitably
to and control the capital of their cooperative. At least part of that
capital is usually the common property of the cooperative. Members
usually receive limited compensation, if any, on capital subscribed
as a condition of membership. Members allocate surpluses for any or
all the following purposes: developing their cooperative, possibly by
setting up reserves, part of which at least would be indivisible;
benefiting members in proportion to their transactions with the
cooperative; and supporting other activities as a approved by the
Cooperative Principles
Autonomy and Independence - cooperatives are autonomous,
self-help organizations controlled by their members. If they
enter into agreements with other organizations (including
governments) or raise capital from external sources, they do so
on terms that ensure democratic control by the members and
maintain their cooperative independence.
Cooperative Principles
Education, Training and Information - cooperatives provide
education and training for their members, elected
representatives, managers, and employees so they can contribute
effectively to the development of their cooperatives. They inform
the general public-particularly young people and opinion leaders
about the nature and benefits of cooperation.
Cooperative Principles
Cooperation among
Cooperative - cooperatives serve
their members more effectively
and strengthen the cooperative
movement by working together
through local, national, regional,
and international structures.

Concern for the Community -
cooperatives work for the
sustainable development of their
communities through policies
approved by their members.
How to Organize a Cooperative?
There are six steps suggested in setting up a
FIRST.Get organized.You must have at
least 15 members to do that.
 You may want to include increasing your production, marketing
 your produce, credit assistance, power generation, banking or
 insurance and other similar needs.
  Even before a cooperative is set up, a dedicated core group people who will
  do all the organizational and paper works is a must. From this core group,
  working communities may be formed to set things moving.

 These committees may include membership,
 finance, executive, secretariat to name a few.
      How to Organize a Cooperative?
There are six steps suggested in setting up a
SECOND. Prepare a general statement
called an economic survey
        measure your cooperative’s chances of success

THIRD. Draft the cooperative’s by-laws.
  The by-laws contain the rules and regulations
  governing the operation of the cooperative.
     How to Organize a Cooperative?
There are six steps suggested in setting up a
 FOURTH. Draft the articles of cooperation.
  (a) the name of the cooperative, which must include the word
  (b) the purpose or purposes and scope of business of the cooperative;
  (c) the term of existence of cooperative;
  (d) the area of operation and the postal addresses of the registrant-
  (e) the common bond of membership;
  (f) the names of the directors who shall manage the cooperative;
  (g) the amount of share capital;
  (h) the names and residences of its contributors, and
  (i)the type of cooperative, whether it is primary, secondary or tertiary.
    How to Organize a Cooperative?
There are six steps suggested in setting up a
 FIFTH. Secure bond for accountable
  The accountable officers normally are the Treasurer
  and the Manager. The amount of the bond is to be
  decided upon by the Board of Directors, based on the
  initial net worth of the cooperative which includes the
  paid-up capital, membership fees and other assets of
  the cooperative at the time of registration.
      How to Organize a Cooperative?
There are six steps suggested in setting up a
SIXTH. Register your cooperative with the
Cooperative Development Authority (CDA).
 Four (4) copies each of the Economic Survey, Articles of Cooperation and By-
 Laws duly notarized;

 Bonds of accountable officer(s) (any directors, officers and employees)
 handling funds, securities, of properties in behalf of the cooperative;

 Sworn statement of the treasurer duly notarized showing that at least 25% of
 the authorized share capital has been subscribed, and at least 25% of the total
 subscription has been paid. The paid-up capital must not be less than Php

 It must be noted that no member may own more than 20% of the subscribed
 share capital and each share must not be less than Php 1.00
What are the Types of Cooperatives?
Credit Cooperative: is one
that promotes and
undertakes savings and
lending services among its
members. It generates a
common pool of funds in
order to provide financial
assistance and other related
financial services to its
members for productive and
provident purposes;
What are the Types of Cooperatives?
Consumer Cooperative: is one the
primary purpose of which is to procure
and distribute commodities to members
and non- members;
What are the Types of Cooperatives?
Producers Cooperative: is one that undertakes joint
production whether agricultural or industrial. It is
formed and operated by its members to undertake the
production and processing of raw materials or goods
produced by its members into finished or processed
products for sale by the cooperative to its members and

Any end product or its derivative arising from the raw
materials produced by its members, sold in the name of
and for the account of the cooperative, shall be deemed
a product of the cooperative and its members;
What are the Types of Cooperatives?
Marketing Cooperative: is one which
engages in the supply of production inputs
to members and markets their products;
What are the Types of Cooperatives?
Service Cooperative: is one which
engages in medical and dental care,
hospitalization, transportation, insurance,
housing, labor, electric light and power,
communication, professional and other

   Tarlac-San Fenando Transport
   Service Cooperative Inc.
What are the Types of Cooperatives?
Multi-Purpose Cooperative: combines
two (2) or more of the business activities
of these different types of cooperatives;

 Multi-Purpose Cooperative (LMPC) in
 the barangays of Edwards and Laconon
 in Tboli, South Cotabato
What are the Types of Cooperatives?
Advocacy Cooperative: is a primary cooperative
which promotes and advocates cooperativism
among its members and the public through
socially-oriented projects, education and training,
research and communication, and other similar
activities to reach out to its intended
What are the Types of Cooperatives?
Agrarian Reform Cooperative: is one
organized by marginal farmers majority of
which are agrarian reform beneficiaries for
the purpose of developing an appropriate
system of land tenure, land development,
land consolidation or land management in
areas covered by agrarian reform;
What are the Categories of Cooperatives?
Cooperative shall be categorized according to membership
and territorial consideration. In terms of membership,
cooperatives shall be categorized into:

Primary-the members of which are
natural persons of legal age.
Secondary-the members of which
are primaries.
Tertiary-the members are
secondaries upward to one (1) or
more apex organizations.
What are the Categories of Cooperatives?

In terms of territory, cooperatives shall be
categorized according to areas of operation
those organized by minors shall be considered
a laboratory cooperative and must be
affiliated with a registered cooperative

 It is governed by special guidelines
 promulgated by the CDA.
Who can be Members of a Cooperative?
A cooperative has two kinds of members:
regular members and associate members

A regular member is entitled to all the rights
and privileges of membership as stated in the
Cooperative Code and the coops’ by laws.

An associate member has no right to vote
and be voted upon and is entitled only to such
rights and privileges provided by the
cooperative’s by laws.
Tax Treatment of Cooperatives
1) Duly registered cooperatives under the
Cooperative Code which do not transact any
business with nonmembers or the general
public are not subject to any government
taxes or fees imposed under the internal
revenue laws.
2) Cooperatives transacting business with
both members & nonmembers shall not be
subject to tax on their transactions to
  Cooperative Updates

You joined a health cooperative where personal dollars or tax dollars are not
required, only service in return for service. The health co-op is voluntary
cooperation, which is the solution to the health care crisis within our nation.

Universal health care is socialism or forced cooperation, which denies the
individual freedom. Capitalism is premised on the notion that we are put here to
beat each other and fuels the notion of greed, which is both destructive to the
well-being of humanity, since we were not put here to beat each other.

Cooperativism or voluntary cooperation is the only sound and sane solution to
the health care crisis and to what an economy must be.