A cooperative is an autonomous and duly registered
association of persons, with a common bond of interest, who
have voluntarily joined together to achieve their social,
economic and cultural needs and aspirations by making
equitable contributions to the capital required, patronizing
their products and services and accepting a fair share of risks
and benefits of the undertaking in accordance with the
universally accepted cooperative principles.
What are the objectives and goals
of a Cooperatives?
The primary objective of every cooperative is
to help improve the quality of life of its
Towards this end, the cooperative shall aim
(a) Provide goods and services to its members to enable
them to attain increased income, savings, investments,
productivity, and purchasing power, and promote among
themselves equitable distribution of net surplus through
maximum utilization of economies of scale, cost-sharing and
(b) Provide optimum social and economic
benefits to its members;
(c) Teach them efficient ways of doing things in
a cooperative manner;
(d) Propagate cooperative practices and new
ideas in business and management;
(e) Allow the lower income and less
privileged groups to increase their
ownership in the wealth of the nation; and
(f) Cooperate with the government, other
cooperatives and people-oriented
organizations to further the attainment of
any of the foregoing objectives.
Cooperatives operate on a set of basic
principles and practices that distinguish them
from other forms of social and economic
1.Open and voluntary membership. Membership of any
cooperative should be voluntary and available without
artificial restriction on any gender, social, political or
religious discrimination to all persons who can make use
of its services and are willing to accept the responsiblities
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
cooperatives 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 cooperatives by laws.
2.Democratic Control. Cooperatives are democratic organizations;
their affairs should be administered by persons selected or appointed
in a manner agreed to by the members and accountable to them.
3.Limited interest on share capital. Share capital should only receive a
strictly limited rate of interest, If any.
4. Patronage refund. Surplus or savings, if any, arising out of the
operation of a cooperative belongs to the members and should be
distributed in such manner to avoid member gaining at the expense
of the other.
The profits of a cooperative are called “net savings” or “surplus
funds”. This is in keeping with the idea that a cooperative operates
not to make profit but products and services to its members.
primarily to provide needed
5. Continuing cooperative education and training. All cooperatives
should make provision for the education of their members, officers
and employees and of the general public, in the principles of
cooperation both economic and democratic.
6. Cooperation among cooperatives. All cooperative organizations,
in order to best serve the interest of their members and their
communities, should actively cooperate in every practical way
with other cooperatives at local, national and international levels.
B. Cooperative Practices /guidelines.
1.Capital formation. Capital structure highly influences the success
and the failure of cooperatives.
2.Cash trading. This business is done on a cash and carry basis.
3.Selling at market price. Cooperatives offer goods and services at
prevailing market prices.
4. Constant expansion. Cooperatives are association for development
and business for community services. As an organization they have to
grow for community services. Expansion is done intensively and
5. Quality standardized goods. Cooperatives are intended to develp
communities through the production of high-quality goods and
provision of better services.
6. Cooperative wholesale or interlending (cooperative bank).
The benefits derived from the wholesale are considerable.
Members can market and acquire there right goods and
services at ther right price and quality. They can even lower
and raise savings. They can also influence the production of
goods and services needed badly.
7. Minimize Expenditures. A significant factor favoring the growth
of cooperatives is their being a community project. Officers do not
receive compensation. When the audit shows the cooperative
cannot yet financially give minimum wage, the government can
give exemption. Furthermore, laws may allow exemption from
income and sales taxes.
Types of Cooperatives
Cooperatives may fall under any of the following types:
(a) 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
(b) Consumer Cooperative : is one the primary purpose of which is to
procure and distribute commodities to members and non-members;
(c) 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 non-members.
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
shall be deemed a product of the cooperative and its members;
(d) Marketing Cooperative : is one which engages in the supply of
production inputs to members and markets their products;
(e) Service Cooperative : is one which engages in medical and dental
care, hospitalization, transportation, insurance, housing, labor, electric
light and power, communication, professional and other services;
(f) Multi-Purpose Cooperative : combines two (2) or more of the
business activities of these different types of cooperatives;
(g) 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
(h) 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.
Secondary-the members of which are primaries.
Tertiary-the members of which are secondary cooperatives.
Thus, those with cooperative memberships are considered federations
or unions as the case may be. In terms of territory, cooperatives shall be
categorized according to areas of operation which may or may not
coincide with the political subdivisions of the country.
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.
The Cooperative Development Authority (CDA) is the sole
government agency mandated to register all types of