HISTORY OF

COOPERATIVES(INTERNATIONAL)

The history of mankind, in a large part, is the struggle for security against poverty.

ASIA

AFRICA

LATIN AMERICAit is a battle against debt or credit.

In many parts of

Ancient writings show that credit and interest have been mankind’s problems for more than 4, 000 years.

Interest is considered rent paid for use of other people’s money. However, the poor have always to reckon with excessive rates and harsh term of interest in their times of need. They have always been the victims since earliest times.

IN 2000 BC

Hammurabi as King of Babylon included

Some laws on credit to promote the welfare of the common people against high interest rates by few money-lenders.

In England, concern for the miserable conditions of the workers associated with the industrial revolution led to two known experiments on cooperatives.

Robert Owen of Wales in his New Lanark Mill community and

William King of Brighton in his writings maintained that

“individual competition is an evil which does not benefit the people.”

They advocated that cooperation is needed to achieve results that will benefit all. The other experiment which reached more people and had more success and lasting influence was the Rochdale Cooperative Store in 1844.

Rochdale Equitable Pioneers Society - The industrial Revolution completely changed the lives of people living in Europe. Together with progress, it brought misery. Many left the countryside to work in factories for long hours with little pay. There was no state help, no sickness benefit and no free education. Among these exploited were children who worked long hours in the factories instead of going to school. Soon there was famine. In history this was often referred to as the Hungry Forties(1840’s).

It was at this time that a group of 28 people met together to discuss what they could do to ease their suffering. It was Saturday afternoon in 1843 in the town of Rochdale, England. One member of the group, Charles Howarth, suggested that each of them save two dimes a week and use their savings to start a little store of their own. They could buy their goods cheaper at whole sale prices. Someone objected by pointing out that it had been tried but failed. Further analysing the problem, they discovered that previous ventures failed because customers were allowed to buy goods on credit. Most often they could not pay their debts so that time came when the store had to close for lack of money to pay whole sale for goods ordered. To solve the problem, there was a suggestion to make a rule of paying cash for everything bought. Then they will always have cash to pay the wholesale. 

HISTORY OF

COOPERATIVES

(PHILIPPINES)

After defeating Spain in 1898, the United States acquired the Philippines as a colonial territory. In introducing western civilization to the country, the United States included the idea of credit unions. In the fact, Edward Filene’s first thought after observing Credit Unions in India in 1907, was to introduce it to the Philippines which was a newly acquired Asian territory of the USA. Later, missionaries to the by succeeded in introducing the movement.

The Vigan Credit Union which was organized in 1938 by Rev. Allen Huber, a Protestant missionary, was a proof of this. He organized over 30 Credit Unions before he and his wife were taken prisoners by the Japanese in World War II.

Even before the advent of missionaries in the Philippines several attempts were made by the Filipinos to introduce Credit Unions to their fellowmen. Among them was Dr. Jose Rizal who must have seen them work during his travel in Europe. He tried to introduce it in Dapitan when he was exiled by the Spanish government.

In 1907, Governor Teodoro Sandiko of Bulacan drafted a bill to organize Credit Unions patterned after those of Raiffeisen’s.

Presented 1908 by Rep. Alberto Baretto of Zambales

it was approved by the Philippine Assembly (Lower House of the Legislature) but failed to get the approval of the Philippine Commission (Upper body of the Legislature).The second attempt to institutionalize rural credit cooperatives was through Act. No. 2508 it met success for it was passed in both Houses of the Philippine Legislature. However, lack of cooperative education and training resulted in its poor implementation.

In 1952, the Agricultural Credit and Cooperative Financing Administration (ACCFA) were created by Republic Act 821 to the Agricultural Credit Administration (ACA) in taking over ACCFA’s functions reported that as of 700 Farmers Cooperative Marketing Associations (FACOMAS) that ACCFA organized, only 120 were operating.Republic Act No. 2023 enacted in 1957 sought to promote, organize and supervise all types of non-agricultural cooperatives. Records, however, showed that in 1971, of the total registered 4673 cooperatives only 633 were reported active.

All the sad experiences on cooperatives were due to a large extent to insufficient cooperative education and experience and the lower standard of living caused by the war. The advent of Martial Law in the country in September, 1972 sought to remedy the situation.

Presidential Decree 175 entitled “Strengthening the Cooperative Movement’ provided the basis for a “sound and systematic program’. It sought to make cooperative a means of affecting income redistribution so that they were tied up with the land reform program. It required attitudinal change by emphasizing learning, discipline, and saving. Believing that cooperatives should be started by the mass base, the then Bureau of Cooperatives introduced the Samahang Nayon Stage. Only after meeting the requirements of at least 250 members and pooled savings in shares worth at least P25 000 000.00 can the Samahang Nayon be registered as a Kilusang Bayan or a full-fledged cooperative.

As of December, 1974, the cooperatives development program had reached 71 out of the 73 target provinces. It covered 22, 808 barrios with a total collection in shares and savings of P23 803 251. 05. The average membership per Samahang Nayon was 46 with an average collection of p1 952.67.The cooperatives program included the establishment of the following development projects.

• Cooperative Insurance System of the Philippine (CISP)•Area Marketing Cooperatives (AMC)•National Publishing Cooperative (NPC)•Cooperative Rural Bank (CRB)• Cooperative Marketing System of the Philippines (CMSP)

Since 1915 (Republic Act 2508 providing for Agricultural Credit Cooperative Associations), many laws have been passed including P.D. 175 in 1973. On March 10, 1990, Pres. Corazon C. Aquino signed into law R.A. 6938 – the New Cooperative Code of the Philippines and R.A. 6939 – The Act Creating the Cooperative Development Authority (CDA).It was hoped that the enactment of these new laws would pave the way for the accelerated growth and development of Cooperatives in the Philippines. The new laws simplified and synchronized the registration and administration of cooperatives of all types.

Credit Unions were born of adversity amidst an atmosphere of extreme poverty in Europe. Just who started them is vague. It is believed that in France, Buchez, Proudhon, and Louis Blanc as early as 1796, in their discussion first evolved the cooperative idea.

A cooperative federation is formed primarily to engage in business needed by its member cooperatives. Membership in a federation requires primary cooperatives to invest or give capital contribution to be used by the federation in its business operations. Members of a federation equitably receive share of the net surplus based on their transactions or economic participation.

A cooperative union engages in non business or non-surplus generating services that are needed to build the institutional capability of cooperatives and to strengthen the movement in general. Examples of these services are representation of members in various for a, advocacy work, information dissemination, research, education, publication and networking. A union may raise funds from private and government donors.

What are COOPERATIVES?

COOPERATIVE

A CO-OPERATIVE is an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owed and democratically-controlled enterprise.

Biblical Foundation of Cooperatives Acts 4:32-34“All the believers were one in heart and mind. No one claimed that any of his possessions was his own, but they shared everything they had. 33 with great power and apostles continued to testify to the resurrection of the Lord Jesus and much grace was upon them all. 34 There were no needy persons among upon them. From t time to time those who owned lands or houses sold them, brought the money from the sales and put it at the apostle’s feet and it was distributed to anyone as he had need”

Main characteristics of Coop Enterprise

Owned and controlled by members who use its services (identity of owner &user)

Has both economic and social purpose

DISTINGUISHING COOPS FROM OTHER BUSINESS

Main purpose is to provide service & savings to members.Essentially union of persons.

Control is democratic; each member has one voteOwnership in the hands of members who use the service

Surplus refunded to members in proportion to

COOPS OTHER BUSINESS

Essentially a union of capital

Main purpose is to make profit for investors

Control is based on number of voting sharesOwnership in the hands of investorsSurplus allocated in proportion to investment

Shares may be freely traded & fluctuate in value

PHILOSOPHY

“Not for PROFIT not for CHARITY but for SERVICE”

Services over and above profit shall be overriding consideration of the cooperative in the pursuit of its goals and in the operation of its business.

Section 12 Constitution and By-Laws

ANCHORS OF DECISION IN MAKING COOPERATIVES

International Coop-Alliance Principles and Practices

RA 6938

CDA/DOF Manual of Regulations

Art of Cooperation/Constitution and By-Laws

Coop Policies and Procedures

Rules and Regulations

Government Regulations

•Dole•SSS/Philhealth•LGU-Permits•HDMF•BIR-Taxation

Membership Control. Subject to provisions of RA 6938 and the rules and regulations prescribed by the authority, the final decision in the management and administration of the affairs of the cooperative is vested in the General Assembly.

GENERAL ASSEMBLY. The General Assembly of the cooperative is composed of all the members entitled to vote duly assembled and constituting a quorum. In the case of cooperatives with numerous and dispersed membership, the general assembly may be composed of delegates elected by each sector, chapter or district of the cooperative in accordance with the rules and regulations of the authority.

GENERAL ASSEMBLY

ETHICS MEDIATIO/ CONCILIATION COMMITTEE

ELECTION COMMITTEE

AUDIT COMMITTEE

CREDIT COMMITTEE

SPECIAL COMMITTEE

TREASURER

BOARD OF DIRECTORS

GENERAL MANAGER

SECRETARY

EDUCATION AND MEMBERSHIP COMMITTEE

MANAGEMENT STAFF

Subject to RA 6938, relevant rules and regulations, the GA is the supreme body where all authorities emanate from

Decide intra-cooperative

disputes, sets

Performs study function for the

BOD Ad Hoc

Processes and decides on loan

application* Applicable for coups with credit services*

Conducts financial, management, property and social audit

Prepares minutes and safe keeps of

official documents

Prepares for and facilitates the conduct of

election

Performs specific tasks related to the day-to-day operations

In-charge of overall financial management of the coop and acts as chief financial officer

Sets the strategic

direction and formulates

policies

Manages the day-to-day operations

Plans and implement s education and training programs

UNIQUENESS OF COOP AS BUSINESS ENTERPRISE

1. Big Business

2. Small Scale Business

3. Cooperatives

Those Who Own Those Who Control Those Who Use

Investors Management Costumers

Those Who Own and Control

Those Who Use

The same body of people who own, control and use the service

• Illustrative ExamplesOwners Controllers Costumers

Corporation e.g. San Miguel Corporation

Stockholders Management General Public

Variety Storee.g. Nana's Sari-sari store

Owner [Nena] Owner [Nena] General Public

Cooperative MemberMember thru the GA elect BOD and Committees who manages the coop

Member

Coops Do All Types of Economic Activities

Financial services

retail, insurance, agricultural production & marketing, industrial production, fisheries, dairy, housing, transport, utilities (electricity, water, gas, etc.), travel, other services.

New generation coops

medical, child, care, social care, funeral, tourism, sports, schools, orchestras, etc.

Credit Cooperative is one which promote thrift among its members and creates funds in order to grant loan for productive and provident purposes;

Consumers cooperative is one of the primary purpose of which is to procure and distribute commodities to members and non members;

TYPES OF COOPERATIVES

Producers Cooperative is one that undertakes joint production whether agricultural or industrial.

Marketing Cooperative is one which engages in the supply of production inputs to members and markets their products;

Service Cooperative is one which engages in medical and dental care, hospitalization, transportation, insurance, housing, labor, electric light and power, communication and other services;

Workers Cooperative is a type of cooperative which creates work through collective self-employment

Multipurpose Cooperative is one which combines two or more of the business activities of these different types of cooperatives.

PRINCIPLES AND PRACTICES

PRINCIPLES

an embodiment of ideas that determinate

the essential characteristics of an

organization, distinguishing it from

all other organizations.

PRACTICES

a specific and practical application of a principle developed and agreed on among co-operators of a

given country.

Practices are in accordance with unique conditions and circumstances, and thus may vary as to both time and space. In no situation however should a practice run counter to the essence of a given principle.

CO-OP VALUESCo-operatives are based on the values of self-help, self-responsibility, democracy, equality, equity, and solidarity.In the tradition of their founders, co-operative members believe in the ethical values of honesty, openness, social responsibility and caring for others:

1.Self-help - the act of helping of improving

yourself without relying on anyone else

-All people can and should strive to control their own destiny

-Full individual development can take place only in association with others .

-Members need to help themselves

2. Self-responsibility (fact of being responsible)

Members have responsibility :-for the establishment and continuing vitality their co-operative-for ensuring that their co-operative remains independent-of promoting their co-operative among their families, friends and acquaintances

-includes considerations of rights and responsibilities

of members-participation in the

decision-making in the general assembly,

members/ ownership meeting

3. Democracy (rule by-for-of the people or political authority)

4. Equality (likeness or sameness in quality, power, status or degree)

-Members should be equitably rewarded for

their participation in the co-operative, through:-Patronage dividends-allocations to capital reserves in their name-reduction in charges

-members have rights of participation, information, a right to be heard, and making decisions.

5. Equity (the state, quality, or

ideal of being just, impartial, and fair)

6. Solidarity (a union of interests or purposes or sympathies among members of a group, interdependence)

-

means that co-operators and co-operatives stand together-members have the responsibility to ensure that all members are treated as fairly as possible

7. Honesty (quality of being honest; integrity)

-Honest dealings with members such as honest measurements, high quality, fair prices and calculation of interest payments.

-coops are distinguished in the market-place partly because they insist on honest measurements, high quality, and fair prices.

-co-operatives have aspired honest dealings with their members, which in turn has led to honest dealings with non-members

8. Openness (an attitude of ready accessibility, not

secretive)

-reports to the General Assembly-conducts consultation-accepts suggestions

 

-regularly reveals to their membership, the public and government important information on their operations

9. Social Responsibility (the idea that businesses should not function

immorally, but instead should contribute to the welfare of their communities)

-they are open to the members of the community, and they have commitment to assist individuals in helping themselves

-concerned about the health of individuals within the

community.

-they therefore, have an obligation to strive to be

socially responsible “in all their activities”

-within their financial capacity to do so, many cooperatives have made significant contributions of human and financial resources to their communities.

-big coops have provided extensive assistance to the growth of cooperatives throughout the developing world.

10. Caring for others (assisting/helping other coops)

PRINCIPLES1. Voluntary and Open Membership

2. Democratic Member Control

3. Member Economic Participation

4. Autonomy and Independence

5. Education, Training and Information

6. Co-operation Among Co-operatives

7. Concern for Community

 Cooperatives are voluntary organizations, open to all persons able to use their services and willing to accept the responsibilities of membership, without gender, social, racial, political or religious discrimination.

Practices: -No compulsory membership

-No discrimination against any person on account of religion, race or political belief.

First Principle: Open and Voluntary Membership

Second Principle:

Co-operatives are democratic organizations controlled by their members, who actively participate in setting their policies and making decisions. Men and women serving as elected representatives are accountable to the membership. In primary Co-operatives members have equal voting rights ( one member, one vote) and Co-operatives at other levels are organized in a democratic manner. Practices:-One man, one vote & No proxy voting-General assembly as supreme authority-Decision-making by majority vote-Direct or indirect participation of all members in the control of the organization (i.e. through the election of officers, board of directors, audit committee, other committees).

Third Principle: Member Economic Participation

 Members contribute equitability to, and democratically control, the capital of their Co-operative. At least part of that capital is usually the common property of the co-operative. They usually receive limited compensation, if any, on capital subscribed as a condition of membership. Members allocate surpluses for any or all of the following purposes; developing the co-operative, possibly by setting up reserves , part of which at least would be indivisible; benefiting members in proportion to their transactions with the co-operative, and supporting other activities approved by the membership. 

 

Practices: -Limited interest on share capital

-Limitation of individual share contribution, not more than 20% of total capital

-Provision of reserve funds

-Provision of reserves for the development of the coop

-Distribution of interest on Capital and Patronage refund

Fourth Principle Autonomy and Independence

Co-operatives are autonomous, self-help organizations controlled by their members. If they enter into agreement with other organizations, including governments, or raise capital from external sources, they do so on terms that ensure democratic control of their members and maintain their co-opreative autonomy.

Practices:

-The General Assembly is the coop’s supreme authority.

-Leadership is confined to the coop members.

-The control and leadership is through members democratically -elected to high responsibilities and the independence of the coop remains even when the coop becomes involved with other organizations such as funding agencies.

Fifth Principle: Education, Training and Information

Co-operatives provide education and training for their members, elected representatives, managers and employees so that they can contribute effectively to the development of their co-operatives. They inform the general public- particularly young people and opinion leaders- about the nature and benefits of co-operation.

Practices:

-Appointment of an education committee

-Provision of an education fund out of net income or from gross income

-Requirements of pre-membership education before admission

-Ownership or membership meetings-Continuous training of officers and staff.

Sixth Principle: Cooperation Among Cooperatives

Cooperatives serve their members most effectively and strengthen the co-operative movement by working together through local, national, regional and international structures.

Practices:

-Membership in secondary and tertiary organization

-Participation in economic integration projects, like central fund, inter-coop trade, cooperative insurance, local, national, regional and international linkages.

Seventh Principle:

Co-operatives work for the sustainable development of their communities through policies accepted by their members.

Practice:

Members ensure that the policies they make will benefit the whole cooperative community (work towards improving their living standards based on their social values without compromising the resources available for future generations)

Koop Aralan (overview)There is one reality in cooperatives that many of us already know but which is not given much importance: Many rank and file staffs have no or very little training on cooperatives.

This often results in low morale, low commitment of the staff while performing their jobs in the cooperative. To address this, the Coop Institute has developed the KoopAralan program. This project aims to provide training to the coops’ rank and file, who are mostly left out of training programs (most programs are directed to managers and elected officers). These training programs will be delivered through distance education, reaching a wide audience simultaneously across the country.The education materials of KoopAralan are in the form of easy-to-read booklets. Organized in a series, these booklets are meant to increase and broaden the staff’s knowledge of the coop enterprise and address work-related issues.

Specifically, the KoopAralan: Equips enrolees with working knowledge in coop. Modules are divided into sub-modules:

Time and reader friendlyCan be completed on weekly basis Institutionalizes staff training with merit system Is part of staff development programIs short-term, ladderized system of educationIs evidenced by a certificate of Completion to be issued by Coop Institute

Features-A distance education course designed to imbue the staff with coop knowledge needed to make them appreciate and value their work in the cooperative.

-This is a program designed to institutionalize staff training at the coop level, involving the Human Resource staff and the coop Training Coordinator as the lead mentors.

-This can be considered a foundation for a long-term staff development program in the coop.

-It is short-term, ladderized system of education.

-Modules are divided into sub-modules which is time friendly to enrolees as they can be read/absorbed on a weekly basis.-The modules can be completed within two to three months depending on the pace of students.-After each module, a test will be given to the enrollee to ascertain if the enrollee is ready to proceed to the next module; passers shall be given a certificate of module completion issued by the Coop Institute.-The certificate of course completion can be used as basis for staff evaluation as it can carry additional merits for career advancement, personal growth, promotion and salary increase.-The Coop Institute will provide the participating coop with the grades of its enrollees.

PROCEDURES1.

• Interested staff/officer enroll to the KoopAralan Distance Education Program

2.• Coop Institute provide handbooks to

enrollees [administered by Coop Hr/Training Officer or EDCOM Chairman

3. • Enrollees read handbook on weekly basis

4. •Enrollees take tests per sub-modules

5. •Coop Institute computes result of exam and issues Certificate of Course Completion

6. • Coop uses Certificate of Course Completion for merit rating purposes