State of Philippine Co-operatives: Current Analysis

o-operatives in the Philippines may be entering a new era at the start of the next decade in 2010. There are forces already at work that can bring co-operatives to a new level of development. But like any human and social endeavour, the character and shape of that development would depend on how the key stakeholders co-operatives and government would read, interpret and respond to the events that will impact on cooperatives. If positive consciousness is generated and channelled to common action, we may yet see opportunities for real change happen in the country in the years ahead. But, first, an analysis of what has happened since the 1950s, the time when real1 cooperatives started to take root in the country. 1950 1970s: Three Decades of Self-Awareness Before the 1950s, co-operatives in the country were organized mostly by government as part of a series of programs to develop agriculture and energize the rural economy. Cooperatives that were organized on self-help and voluntary basis were far between and did not prosper because of the war (WWII) or the lack of support systems. Because of the fundamental difference in the character of these development efforts, we can refer to the former as mandated tradition and the latter the voluntary tradition. The 1950s saw the voluntary tradition take root when the Catholic Church in particular put credit union promotion at the fore front of its social action. Credit unions were organized on the basis of self-help and mutual help, following the universally accepted co-op values and principles. Many successful co-operatives in the country today trace their roots to this decade and many of them still carry the names of their patron saints or the parish where they originated. By the time the martial law regime brought back the mandated tradition with its samahang nayon program this time extensively and with full force the voluntary tradition was firmly rooted because of the success credit unions already achieved. The move of the Marcos government to suppress and eradicate them only strengthened their resolve to persevere and protect their tradition. This strengthened their awareness of the value of cooperation. Many more credit unions were organized and prospered, as well as other types of co-operatives that were inspired by the voluntary tradition. This was also the time when the co-op unions and federations they organized became rallying points for common action and protection against government interference as well.
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Organized on the basis of self-help and mutual help and adhering to the universally accepted co-op values and principles.

1980 2009: Three Decades of Confusion The EDSA Revolution of 1986 changed all this when the flood of donor money spilled over to co-operatives. NGOs, foundations, international organizations, government agencies, even politicians, organized co-operatives using donor money2. Co-operatives literally mushroomed throughout the country. In a sense, these donor-driven initiatives with the culture of dependence replaced the mandated tradition with the same result i.e. organizations came and went almost as fast, contributing to the bad image of co-operatives. This haphazard development corrupted the environment although co-operatives of the voluntary tradition continued to grow. But it exacted a heavy toll: Co-operatives started to look inward as if to defend their own territory. It is as if towns became cities overnight, and neighbours became strangers. Connections and relationships between co-operatives were disrupted; they increasingly became conscious only of their own existence. Co-op unions and federations no longer played the role of unifying centers able to provide direction to their co-op members; eventually they prioritized their own interest, supported by donor funds, in order to survive. This process of looking inward can be described as atomization (the process of reducing to small particles or the act of dividing) to describe the current phenomenon of cooperatives growing individually but not as a sector. This also explains why big co-operatives divide markets, small already as they are, among themselves. This has led to the second phenomenon of competition among co-operatives, depriving the co-op sector of a vital source of strength in a competitive marketplace.3 Unfortunately, these two phenomena have given way to increasing commercialization of the policies and business practices of cooperatives. This refers to the tendency to imitate the market behaviour of their competition, resulting in the gradual departure from the Co-op Values and Principles that guide co-op practice around the world. The loss of the co-op identity has changed public perception of co-operatives: Some (the Church, in particular) see them now as purely economic entities and not serving their social purpose. Others see them as organizations of the elite rather than of the poor, who make up the bulk of its membership. As one observation goes, co-operatives have become richer but members have remained poorer.

Co-op unions and federations also used donor money more for developing existing co-operatives rather than organizing new ones.
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The 6 Co-op Principle of co-operation among co-operatives is a source of strength for co-operatives in many parts of the world.

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2010s: A Period of Reawakening This is the issue of social relevance that co-operatives will increasingly face and deal with in the coming decade: Co-operatives have grown and many are considered successful. But to what extent is their contribution to the economy and to society? Are they seen as really contributing to solving the problems of society? Co-operatives claim most of their members are poor. But are they really improving the lives of their members? How are they contributing to solving the problems of poverty in the country? These questions are real and could signal a period of reawakening. In the event, we could see real change happen in the co-op movement in the country. This change could be forced upon the movement by external factors like a public criticism of the performance of cooperatives or a demand for accountability for public or private monies channelled through co-operatives. Or the trigger for change can come from an internal disaster like the collapse of a big co-operative or a similar event. To prevent this from happening, this change process should be managed. And its about time for real change, if co-operatives are to play a meaningful role in the economy and society. This would require conscious effort to build awareness on the realities obtaining in the co-op movement and the possibilities for real contribution by co-operatives to be felt by society as well as the risks that can otherwise negate these possibilities. This would also mean constant effort to develop industry consciousness or the awareness that cooperatives should strengthen themselves as a sector able to contribute meaningfully to society. Conditions are ripe for this awareness building. First, the enactment of the new Co-op Code RA 9520 is an opportunity to take stock of whats happening and what could be done. The new Code is supposed to be an improvement over the old one and purports to offer new possibilities for organized co-operation. Discussions about its provisions and their implications on co-op development can help bring to the fore issues and concerns affecting the co-op sector as a whole.4 Second, there are already efforts to bring co-op sector issues in the minds of co-operatives. The cluster meetings tackling co-op issues along industry lines, organized by the Philippine Co-operative Center, are an example of these efforts. The monthly Co-op Education Forum initiated by the Institute for Co-op Excellence with the CDA have broken down organizational boundaries that separated co-op unions and federations, which are now joining hands with government agencies and some universities in undertaking programs that will have long-term impact on the co-op education and training system in the country.

Renewed discussions on the MORR could take a new tack in the light of the new Co-op Code. Historically, the opposition to the MORR can be seen as the last gasp from a dying decade of confusion as described above.

The national elections next year should also offer opportunities for change. If this political exercise ushers in better government and improved economy it will open up new opportunities for co-operatives in the economy and society at large. If it fails and signals further deterioration of our political system, co-operatives will once again close ranks to face common threats and find collaboration a necessary strategy for survival and growth. Indeed, the period of re-awakening may have started and should become the hallmark of co-op development in the coming decade. But the process should not be left to chance, if co-operatives are to take the step towards real change. New Areas for Co-op Development Co-operatives in the country right now are too concentrated in the financial services sector. This may be because financial co-operatives are easier to organize than other types. But the financial services market is a fairly sophisticated and even saturated one, given that even commercial banks are now reaching out to the C and D market. In addition, given the size of the bulk of their loans, the contribution of financial co-operatives to productivity and economic output is marginal. This is one reason why their contribution to the economy is not significant. The perception that co-operatives have become richer but members have remained poorer may be due to the fact that overall their contribution to poverty reduction is not visible. In this period of re-awakening co-operatives have to explore other areas of development where they can have the most impact on the economy and society. Poverty still remains a big problem as poverty incidence continues to rise.5 Co-operatives cannot tackle this problem by credit granting activities alone; they have to deal directly with the problem of unemployment. They have to engage in production or in employment creating activities. Creating employment, especially among the poor, is critical in the fight against poverty. Other areas of development where co-operatives can make significant contributions are in health and education. As the NSCB data indicate (refer to footnote below), poverty is directly related to the problems of health and education. Indeed, co-operatives in the country need to break new grounds. RA 9520 can provide the framework and should give impetus. Some areas of development can be cited: Employment. The type of co-operative that deals directly with employment is the workers co-operative. It has a great potential for the country, involving even the poorest of the
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There were 27.6 million poor Filipinos in 2006, a 3.8-million increase from the 2003 data (UN). According to the National Statistical Coordination Board, poverty incidence rose to 26.9 percent in 2006 from just 24.4 percent in 2003, a period in which the average economic growth was 5.4 percentThe Philippines child development index (CDI) which measures childrens health, education, and quality of life has slightly deteriorated by 0.003 points between 2000 and 2004 and by 0.050 points between 2003 and 2006 In 2006, there were 14.41 million poor Filipino children, higher than the 2003 levels of 13.47 million.

poor.6 Employment is really about creating opportunities for income. Businesses, big and small, are precisely important to the economy because they put capital to work to employ people and afford them the purchasing power that keeps the economy going and growing. But the focus of business is on capital, not on people. This is where co-operatives can fill the gap and make the most impact. Production & Marketing. Poverty is still rampant in rural areas where people are dependent on agriculture. Co-operatives claim to success is hollow if they dont impact on agriculture or the rural economy. This is the most undeveloped part of the co-op movement in the country but opportunities still abound. New initiatives have to be taken here. The current program of CRS linking farmers directly into the supply chain of Jolibee is a good example of a new initiative with good promise. Tourism. According to World Travel Organization, tourism contributes at least 30% to GNP in both poor and developed countries because of the jobs it generates in the economy. At present, the tourism industry in the country is structured to benefit the rich. Its impact on the community, where tourist destinations are located, are minimal, if not destructive. As community-based organizations, co-operatives should offer an alternative; they should orient tourism to the community, which should benefit directly from tourism activities.7 Health. The structure of the health services industry is such that even basic health services are inaccessible to the majority of the rural population and unaffordable to majority of Filipinos, especially the poor. This is a clear indication of market failure. The health services market right now is serviced by government-run hospitals and clinics, private hospitals and clinics, with insurance and pre-need companies providing the additional financing that allows the system to work. Health maintenance organizations (HMO) came to the picture purportedly to fill the huge gap between supply and demand. But HMOs are profit-oriented organizations and their contribution to improving affordability and access of health services to majority of Filipinos is doubtful. Co-operatives can fill the gap here and take up another opportunity to be socially relevant8. Romulo M Villamin June 2009
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For example, the Kaibigan Multipurpose Co-operative has brought 77 former street dwellers, who are now earning steady income as construction & building maintenance workers, to the mainstream economy.
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An advocacy co-operative to promote community tourism throughout the country is in the process of organizing now.
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Dr. Jaime Galvez Tan, former Health Secretary and a development advocate, is offering his Get Well Medical Clinic (GWMC) for franchise to co-operatives to bring a one-stop-shop ambulatory clinic to the rural areas. GWMC promises to provide five star service at one star cost so that the poor will have access to quality health services.