When you hear the words “cooperative” or “kooperatiba,” what comes to mind?
Cooperatives are often thought of as a source of credit. You might be reminded of the school coop store where you used to buy snacks and supplies as a child or a teenager.
However, coops are more than that.
Coops may not be as popular or interesting as regular investments or enterprises. However, these groups are critical to the country’s economic progress and the improvement of people’s lives, particularly in the most marginalized sections of society.
A cooperative may be worthwhile for average people like you to invest your time and money in. Here’s all you need to know about cooperatives in the Philippines, whether you’re seriously considering joining one or just interested about what it may do for you.
In the Philippines, what is a cooperative?
The Philippine Cooperative Code of 2008 (Republic Act 9520)1 officially defines a cooperative in the Philippines as follows:
“A cooperative is an autonomous and duly registered association of people who have come together to meet their common social, economic, and cultural needs and aspirations by contributing equitably to the capital required, patronizing their products and services, and accepting a fair share of the risks and rewards of the undertaking in accordance with universally accepted cooperative principles.”
That seems like a lot to take in, doesn’t it?
Let’s simplify things by identifying the important qualities of a cooperative as defined in the official definition.
- Autonomous – A cooperative, sometimes known as a coop, is a self-contained business. This means it is unaffiliated with any political, social, religious, or other type of organization. Cooperatives, on the other hand, may form partnerships with the government, non-governmental organizations, and other cooperatives to achieve their objectives.
- Cooperatives that are legally recognized must be registered with the Cooperative Development Authority (CDA), the Philippine government organization that governs cooperatives.
- People who have a shared interest form a cooperative. Members fund their coop by contributing to the pooled cash and using the coop’s products and services to achieve their common aims. They are also a part of the coop’s benefits and hazards.
Simply described, a cooperative is a self-governing, CDA-registered organization whose members own and administer it to fulfill their common aims.
Types of Cooperatives
In the Philippines, there are 20 different forms of cooperatives. Some are founded to provide certain services (for example, financial, transportation, and healthcare), while others are for specific sorts of members with shared interests (e.g., producers, workers, fishermen, etc.).
Here’s a basic rundown of each cooperation type.
A credit coop is a group of small borrowers and savers who can’t afford standard banking services (usually micro and small company owners, small farmers, and low-wage workers). This sort of cooperative allows members to save and/or borrow money at a lower rate than banks.
Consumers own and control a consumer cooperative, which they use to buy the goods and services they require. Consumer cooperatives buy and distribute products to members and non-members at better costs, with superior quality and delivery service.
Consumers Cooperatives in Baguio Teachers Camp, Basao Farmers Cooperative, and Tiwi Indigenous Peoples Asenso Consumers Cooperative are among examples.
This form of cooperative is founded, owned, and run by people who produce similar things for sale to members and non-members, such as crafts and agricultural products.
Producers coops help farmers, fishers, and artists by providing processing, marketing, and distribution services. They assist members in obtaining better prices and gaining access to larger markets.
Sulu Indigenous Resource Cooperative, Nueva Ecija Goat and Sheep Raisers Association Producers Cooperative, and Calinog Small Sugarcane Planters and Farmers Producers Cooperative are only some of the cooperatives that exist.
Producer-members (usually farmers) are served by marketing cooperatives, which provide services such as product packing, promotion, and sale. By doing so, intermediaries between producers and customers are eliminated, allowing members to maximize the revenues from their produce.
Sunflower Farmers Marketing Cooperative of Palawan, Bacacay Fisherfolk Marketing Cooperative of Bacacay, and Teachers and Employees Marketing Cooperative of San Miguel Central School are some examples.
Members of an insurance cooperative pool their premiums to insure the cooperative’s and members’ lives and property.
CLIMBS Life and General Insurance Cooperative, 1 Cooperative Insurance System of the Philippines Life and General Insurance, and Coop Life General Insurance & Financial Service Agency are all examples of cooperative life insurance.
How Do Cooperatives Work?
Before you invest in a cooperative, you must first gain a thorough understanding of how coops in the Philippines operate. You’ll be able to tell if investing in coops is a good fit for your aims and needs as an investor if you do so.
Here are the fundamentals of cooperative operations that every new investor should be aware of.
- People form a cooperative to pursue their joint objectives.
- A cooperative is formed by members.
- Members contribute to the cooperative’s funding and profit sharing.
Why should you join a cooperative?
“Is it wise to invest in a cooperative?”
” This is one of the most popular coop-related Google searches. You’re probably reading this to find out if it’s actually worth your money to invest in cooperatives.
Let’s start by ensuring that your expectations are met. There is no such thing as “investment in cooperatives,” according to the CDA, which published an advisory2 urging the public to be cautious and not be confused with the word.
The cooperative regulating agency emphasized that the Cooperative Code does not specify enabling investments from any interested investor, citing Article 72 of RA 95203. Cooperatives, on the other hand, are funded by their members’ share capital rather than by outside sources.