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Cooperative Management

Prelim Hand-outs

Prepared by: Adessa Bianca G. Navarro


What is a cooperative?

-- a cooperative Is an autonomous association of persons united

voluntarily to meet their common economic, social and cultural needs
and aspirations through a jointly owned and democratically controlled
--although capital, employees, business volume, and good
management practices are all very important for successful operations;
a co-op’s members are its most important asset.
--The earliest cooperative associations were created in Europe and
North America during the 17th and 18th centuries.
--Only co-op members can vote to elect their board of directors and on
cooperative actions. Voting rights are generally tied to membership
status—usually one-member, one-vote—and not to the level of
investment in or patronage of the cooperative.
--Cooperatives do not, as is sometimes assumed, contradict the goals
of capitalism.

Why cooperate?

--people who organize and belong to cooperatives do so for a

variety of economic, and social, and even political reasons.
Cooperating with others has often proven to be a satisfactory way of
achieving one’s own objectives while at the same time assisting others
in achieving theirs.
--cooperatives do not, as is sometimes assumed, contradict the
goals of capitalism. If that were the case, cooperatives would not play
such an important role in the american economy.
--example: cooperatives are especially important to agriculture. In
2012, 3,120 agricutural cooperatives provided roughly 3.1 million
farmers with agricultural marketing, farm supplies, and other farm-
related services.
-- the involvement of so many people in cooperatives reflects the
general satisfaction of members toward their companies and the
apparent efficiency and solid financial performance of these
--in short, cooperatives are organized to serve member needs and
are focused on generatig members benefits rather than returns to

--To prosper, cooperatives ust be well organized, well financed, well

managed, and governed well by a committed membership.
--Members, the board of directors, and management each have
responsibilities within the cooperative.
--FACT: although capital, employees, business volume, and good
management practices are all very important for successful operations,
a co-op’s members are its most import/ant asset.
--/Cooperative success also depends on effective member
education and comunication (by p/roviding education, training, and
information to members).
/--cooperative financing is also critical and in today’s complex
cooperative organization it/ can be quite complicated.

-- the historical development of cooperative businesses cannot be

disconnected from the social and economic forces that shaped them.
Co-ops then, as now, were created in times and places of economic
--The first cooperative businesses created in europe arose during
periods of great social distress caused by dramatic shifts in agricultural
and industrial production practices. The industrial revolution
introduced the factory system of production and was marked by a
rapid succession of remarkable inventions that accelerated the
industrialization of business. --


Reference: Atty.Fred | Cooperatives, Corporate and Investments
A cooperative is a duly registered association of persons with a
common bond of interest, who have voluntarily joined together to
achieve a lawful common social or economic end, making equitable to
contribution to the capital required and accepting a fair share of the
risks and benefits of the undertaking in accordance with universally
accepted cooperative principle.

The declared purpose of the law governing cooperatives (Republic Act

6938, also known as the Cooperative Code of the Philippines) is 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. The law
provides important benefits to the cooperative and its empowered
members, based on our experience in handling client-cooperatives.

The following are the declared principles of cooperativism:

Open and voluntary membership. Membership in a cooperative is
voluntary and available to all individuals regardless of their social,
political, racial or religious background or beliefs.
Democratic control. Cooperatives are democratic organizations.
Their affairs are administered by persons elected or appointed in a
manner agreed upon by the members. Members of primary
cooperatives have equal voting rights on a one-member-one-vote
Limited interest in capital. Share capital shall receive a strictly
limited rate of interest.
Division of net surplus. Net surplus arising out of the operations of a
cooperative belongs to its members and shall be equitably distributed
for cooperative development common services, indivisible reserve
fund, and for limited interest on capital and/or patronage refund in the
manner provided by law.
Cooperative education. All cooperatives shall make provision for the
education of their members, officers and employees and of the general
public based on the principles of cooperation.
Cooperation among cooperatives. All cooperatives, in order to best
serve the interest of their members and communities, shall actively
cooperate with other cooperatives at local, national, and international
There are different kinds of cooperatives. In general, these are:
(1) Credit cooperative, which promotes thrift and savings among its
members and creates funds in order to grant loans for productivity;
(2) Consumer cooperative, the primary purpose of which is to procure
and distribute commodities to member and non-members;
(3) Producers cooperative, which undertakes joint production whether
agricultural or industrial;
(4) Service cooperative, which engages in medical, and dental care,
hospitalization, transportation, insurance, housing, labor, electric light
and power, communication and other services; and
(5) an organization in which many small farms work together as
abusiness, especially to help each other produce and sell their crops:
(6) Multi- purpose cooperative, which combines two or more of the
business activities of these different types of cooperatives.
(7) Cooperative marketing can be defined as an agreement between two
companies to promote or sell each other's product while selling their own. The
products can either be complementary or might have different seasonal cycles

In terms of membership, cooperatives are classified as: (a) Primary,

wherein the members are natural persons of legal age; (2) Secondary,
the members of which are primaries; and (3) Tertiary, the member of
which are secondaries upward to one or more apex organizations.
Cooperatives whose members are cooperatives are called federations
or unions.

1. How many cooperatives are there in the Philippines 2018?
There are a total of 20,792 cooperatives registered in the
Philippines as of December 31, 2018. It increased by 12.49% as
compared to the previous year. Region 4 has the most number of
cooperatives with a total of 2,450 registered cooperatives.
2. The National Capital Region has the most number of
cooperatives registered in 2011 with a contribution of 15.10% to
the total newly registered, which is then followed by Region IV
with 12.62% contribution.
3. The high number of registered cooperatives in most of the
regions for the year 2011signify that cooperatives are gaining
recognition especially in regions with high rate of poverty like

4. 27.56% of cooperatives registered in 2011 are credit

cooperatives. The Producers Cooperatives came in next with a
total percentage of 18.80%. However, Marketing Cooperatives
have the highest increase in growth rate posting 34.75%
increase compared to 2010 newly registered coops.