The document discusses the importance of cooperative values, dedicated leadership, committed membership, continuing education, and viable business operations for the success of agricultural cooperatives. It emphasizes cultivating cooperative principles at both the management and membership levels, and stresses the benefits of group action, capital formation, and cooperative marketing and business alliances. Transparency, self-discipline, and honoring contracts are also highlighted as critical for strengthening cooperatives.

1. Jo B. Bitonio
Presenter
ARD, CDA Dagupan Extension Office

2. The history of cooperatives in the Philippines is
replete with tragic stories for the downfall of many
co-ops. It is vital that part of the training deals with
the causes of co-op failures, “as an eye opener” for
all sectors involved in strengthening cooperatives
countryside development. Learning from past
mistakes, can pave the way for stronger foundation
for successful cooperativism.

3. I. Cooperative Values and Way of Life
Members of rural communities have
common, socio-economic needs of:
 Obtaining marketing and purchasing services at lower cost;
 Accessing credit at a reasonable rate of interest; and
 Securing financial assistance for provident purpose.

4. There should be a continuing effort to cultivate appropriate
cooperative values even before these needs could be answered. These are:
At the co-op management level
 Avoiding misrepresentations in any form, e.g., weight, quality,
cost and others;
 Transparent with complete disclosure at all times;
 Serving as a role model to its members, especially in honoring
pledges, contracts, and appointments and in accepting
responsibilities/commitments.
 Financially prudent;
 Giving what is due to others and overcome destructive
competition;
 Encouraging and promoting viable livelihood projects and self-
help activities among its membership; and
 Being forward-looking, innovative and dynamic.

5. At the personal (membership) level
 Doing away with the “crab mentality”
 Taking interest and active participation in all co-op
activities;
 Demonstrating unwavering loyalty to the cooperative;
 Patronizing and supporting all co-op business
undertakings and projects;
 Being constantly well-informed in all co-op matters;
 Undertaking viable livelihood projects and self-help
activities;
 Practicing and cultivating the value of honoring
pledges/promises, thrift and financial prudence, and
passing on these same values to their children.

6. II. Dedicated Leadership and Effective
Management
 An important factor in the success of a
cooperative is the presence of capable and
dedicated leaders. These are the people
expected to provide guidance and support to
the cooperative.
 Co-op leaders promote more activities
membership participation. In many case, the
absence of qualified leaders turns cooperatives
into political instruments of opportunists.
 The associations will lack proper guidance
and be susceptible to outside control and
manipulation without competent leaders.

7. Board of Directors
Many cooperatives have failed mainly because its
funds were used by their treasurers for personal
interest or borrowed by the members of the board
of directors and never paid. There is always the
danger related to handling co-op money. Therefore,
it is the task of the members to elect the people
whom they can trust to lead and manage the
cooperative’s business.
• Cooperative leaders, especially the Board of
Directors, must be chosen on the basis of good business
judgment and proven ability, and not on friendship,
neighborliness or favorable financial standing in the
community.

8. The members of the Board should:
• Assume the role models for capital
build-up, savings, transparency, and
honoring promises, pledges and
contracts;
• Represent the common interest and
genuine welfare of the members of
the co-op;
• Consistently patronize their co-op’s
services and refrain from engaging in
competing businesses;

9. The members of the Board should:
 Help disseminate information on
membership rights, duties and
responsibilities in order to gain strong
membership support and
cooperation;
 Spend cooperative money as carefully
as they would spend their own;
 Manage financial operations with a
well studied/rewarded and approved
operating budget;

10. The members of the Board
should:
• Select cooperative employees based
on appropriate qualifications such as
education, training, experience and
character; and
• Be able to analyze and consider
problems/audit reports as inputs
planning, problem-solving, conflict –
resolution, and policy review and
modification.

11. Management Officers & Staff
Management should focus its operation on efficient
service for the members and the co-operative as a whole.
Co-op managers, in particular, should:
 have an open mind, willing to adopt new ideas
and be knowledgeable in his/her field of
operation;
 act as the leader. He/she should train
understudies to take his/her place in his/her
absence or when called upon to take higher and
 maintain good record keeping. Well-maintained
records are very important in any cooperative.
This means that all minutes of meetings, records
of membership, and similar documents must be
properly filed and maintained.

12. Management Officers & Staff
This also means that all financial transactions should be
properly recorded. Receipts should be issued for all
contributions and other collections of members. These
receipts must be properly recorded in the books of the
cooperative. All expenditures incurred by the cooperative
must be supported with invoices or vouchers and properly
recorded. Records must be accurately recorded to prevent
numerous problems to occur.

13. Management Officers & Staff
 practice sound financial management. No
one person should be responsible for the
release of funds while at the same time
maintaining the books and be on top of co-op
operations.
 submit to frequent audits. The financial
records of the cooperative should be checked
and audited regularly be competent auditors.
They may either be co-op member or
external auditors to uncover errors in
recording and detect irregularities.
 The audit process should be welcomed to
assure the members that their interests
(funds and property) in the cooperative are
properly spent and adequate protected.

14. Committed
Enlightened and responsible membership who recognize a common
need and direction.
• The cooperative is of, for, and by the people. The hallmark of a
successful cooperative is an enlightened and responsible
membership that:
• Have definite financial stake in the cooperative;
• Take active interest in voting and in other important matters
presented during meetings;
• Demonstrate unswerving loyalty to the cooperative;

15. Committed Membership
• Patronize the cooperative;
• Help to maintain their co-op’s sound
financial structure and performance;
• Well-formed about the operation of the
cooperative; and
• Actively recruit more members to help
increase volume of business and co-op
capital

16. The cooperative is organized mainly
because of the members’ recognition
of common needs and concerns, to
serve as the vehicle for obtaining
solutions to these problems. As such,
the members should protected the
interests of their respective
cooperatives and capitalize on the
realization that there is strength in
members.

17. 2. Self-determination of cooperative
members to help themselves and
do away with the “dole-out
mentality”
• Members must be willing and determined to
help themselves to meet their problems. The
government may assist by putting up the
needed infrastructure and other related basic
service but, much of the effort, the planning
and the sacrifices must come from them.

18. In this regard, members should
be willing to meet their
obligations and work hard so
their cooperative can provide
the desired services. Members
must be committed to the
success of the cooperative by
generously contributing to
build-up capital by increasing
their stockholdings.

19. IV. Continuing Cooperative Education
• Continuous membership education.
Successful cooperatives recognized the
education necessity and importance of cooperative
education. All members should be
informed on the objectives, functions,
structures and policies of the cooperative
even before being accepted into the
organization. This is the reason why Pre-
membership Education is necessary.
•

20. IV. Continuing Cooperative Education
Even among long-standing members,
membership seminars should be
conducted to keep them informed
of their cooperative’s services, new
t io n
policies, plans, and ongoing
ca
activities and projects.
edu

21. Specialized Training for Officers and
Management Staff.
Officers and committee members have specific functions in the
cooperative requiring certain knowledge and skills. For
example, members of the audit and inventory committee,
should learn how to audit the association’s book of accounts.
Similarly, the Board of Directors should be able to develop
co-op plans and programs and formulate sound policies
appropriate for their implementation and the efficient
operation of the co-op.

22. Specialized Training for Officers and
Management Staff.
The efficiency and effectiveness
of cooperative leaders,
officers and staff performing
their duties will undoubtedly
build and strengthen
members’ trust, confidence,
patronage and loyalty to their
cooperative.

23. • Leadership Training
Officers, committee • Values Orientation
members and • Project Management and Monitoring
employees, therefore, • Credit and Collection Management
should be well-trained • Members Saving Operation Orientation
for their jobs. Such • Co-op Financial Intermediation
trainings may comprise Development
any of the following, • Co-op Marketing and Business Alliance-
among others: Building
• Tellering and Cashiering
• Forgery Detection
• Conflict Management
• Membership Training

24. Viable Cooperative Direction
and Business Operations
The viability of a co-op’s business operation and
overall direction can only be ensured by:
1. Promoting cooperative marketing to ensure
adequate volume to co-op business. A member
must promote and contribute to the building up
of patronage and co-op capital.
Members’ patronage is the lifeblood of any
successful business enterprise. Sufficient volume
of business is necessary for the cooperative to
render maximum service at the lowest possible
cost and maintain a strong bargaining position in
marketing farm products and procuring goods and
services.

25. Cooperative Business Concerns include:
• Sufficient volume and adequate variety of
goods on sale to effectively reduce
operating cost;
• Availability of quality goods for sale to
members at reasonable prices;
• Sale of commodities at the proper time
and place to maintain low inventory
carrying costs;
• Sustainable networking relationship with
viable markets; and
• Active membership in co-op federations
and business alliances

26. 2. Encouraging the internal generation of funds through
capital build-up and member savings operation (MSO) to
ensure availability of funds for financing co-op and
members’ livelihood projects.
Every member should have enough investment to feel a
definite responsibility and loyalty to his co-op. membership
stakeholders and savings deposits can serve as co-op equity for loan
financing or the means of gaining the confidence of financial
institutions. These funds can also spur co-op business diversification
and enhance its on-lending performance:

27. To be successful, a cooperative must have:
 Workable and practical financing program
for members’ provident needs;
 A program for promptly liquidating all its
current borrowings;
 A fair policy on lending and collection;
 A vigorous members savings program;
 An effective program for building up co-op
capitalization;
 An increasing volume of business;
 An established systems and procedures;
and
 An honest and competent leadership and
management staff.

28. 3. Developing and promulgating sound
operating policies applicable to all.
Cooperative members have an important voice in the
development of their co-op’s policies. An enlightened
Board of Directors would do well in heeding the wishes of
the members, specially when these would redound to the
benefits of everyone. These policies are usually those that
address the economic and provident needs of the
membership.

29. On the other hand, it is the managers, officers, and management
staff who usually recommend the adoption of policies
governing their co-op’s operation and management. Such
operating policies should include, but not be limited to:
 Internal resource generation/capital build-up;
 Members saving operation;
 Interco-on alliance;
 Co-op marketing;
 Continuing education and skill training programs;
 Lending/re-lending;
 Membership (recruitment, dropping from the rolls, members-
in-
good-standing, and others); and
 Accounting.
Operating policies
must be conservative
and not speculative

30. 4. Practicing transparency and self-discipline
 Successful cooperatives practice transparency and self-discipline. This
implies that these co-ops:
 Subject themselves to periodic, unannounced audit;
 Have sound and update bookkeeping and accounting systems;
 Maintain clean, orderly, and updated files;
 Are open to members’ scrutiny of all co-op records and documents at
all times during office hours;
 Have responsible and competent officers and staff holding accountable
positions;
 Welcome all recommendations, comments and observation to improve
their systems and business operations; and
 Are dynamic, flexible and willing to adopt new/improved systems and
project;

31. 4. Practicing transparency and self-discipline
 Successful cooperatives practice transparency and
self-discipline. This implies that these co-ops:
 Subject themselves to periodic, unannounced audit;
 Have sound and update bookkeeping and
accounting systems;
 Maintain clean, orderly, and updated files;
 Are open to members’ scrutiny of all co-op records
and documents at all times during office hours;
 Have responsible and competent officers and staff
holding accountable positions;
 Welcome all recommendations, comments and
observation to improve their systems and business
operations; and
 Are dynamic, flexible and willing to adopt
new/improved systems and project;

32. VI. Cooperative Marketing & Business Alliance
The cooperative has a better chance for success if
members are convinced of the advantages of
doing things as a group. This is the underlying
principle behind all co-op business undertakes
and the rationale for implementing co-op
marketing and business alliance-building.

33. a. Advantages of group action
 By pooling their resources and efforts, the
members have a better chance to obtain more
benefits than if they were each on their own. A
broom can sweep dirt because the sticks are
bound together. This same principle also applies to
the members of any co-op.
 As a group, the co-op wields a better bargaining
power than when its members transact business
individually. They are in a better position to obtain
higher prices for their produce and lower costs for
their purchases.
 By pooling their produce and purchases, they can
distribute and effectively decrease their individual
cost of transportation. They are able to obtain
discounts on bulk purchases. As a group, they may
also be granted access to facilities and services not
available to them if they act individually.

34. b. Importance of discipline and honoring
contracts/pledges
 One must do his as a member of the
group. There are times when decisions
of the group may be contrary to his/her
own wishes but should this decision be
for the good of the majority, he/she
should abide by the decision.
 The members of the cooperative must
work hard to preserve the value of
honoring contracted agreements and
pledges.

35. c. Benefits of capital formation and savings
mobilization
When co-ops rely on external funding for their
business operations, they lack the flexibility to
undertake business ventures that would require
additional capital, specially when such projects are
not consistent with the lending programs of their
assisting financial institutions.
 In business alliance, may opportunities for market
networking could crop up. The co-ops would be in a
position to grab such opportunities and earn
additional income if they had managed to raise
funds, through capital build-up and member-savings
campaigns that will give them more investible
resources.