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Co-operatives in the

PhilippinesANALYSIS & PROGNOSIS

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A Historical Analysis

State of the Co-op System

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If you would understand

anything, observe its beginning

and its development.

-Aristotle

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A Historical Analysis

Why are most co-operatives in thePhil into financial services?

Why are there very few co-operatives involved in agriculture?

Why is government more involvedin development than in regulation?

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3 Waves of Co-ops Promotion inthe Philippines

1st Wave (1900

1960)2nd Wave (1970 1985)

3rd Wave (1986 1990)

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3 Waves of Co-ops Promotion

1st Wave (1900

1960) Govt organized

thousands of co-opsamong farmers tostimulate the rural economy

rural credit co-operatives,marketing co-operatives

provision of credit, marketing,technical support

12 co-op laws, executive orders

all are gone

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3 Waves of Co-ops Promotion

3rd Wave (1986

1990) Govt + GFIs, NGOs using

donor money spawned

thousands of co-opsnationwideDonor money spilled overto co-operatives

Easy money

most are barelyexisting

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The MANDATED Tradition of co-operatives in the Philippines

1st Wave (1900

1960)2nd Wave (1970 1985)

3rd Wave (1986 1990)

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The MANDATED Tradition ofCo-operatives in the Philippines

The first 2 waveswere driven

mainly bygovernmentwhose bias wasfor ruraldevelopment &the farmers.

The mandatedtradition continued

in the 3rd

wave,driven by govt fundsand financing,

exacerbated by theextensiveinvolvement ofdonor-driven NGOs.

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Mandated tradition

1900 1950 1970 1980

Voluntary Tradition

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The Voluntary Tradition

Is distinguishedfrom the

mandatedtradition

Internally generatedfunds (members)from the beginning

Co-op principles andpracticeswerefollowed

Social capital was keyresource at thebeginning

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The Voluntary Tradition

The voluntarytradition tookroot in the late1950s with theorganization ofcredit unions.

- Relegated to non-agriculture sector bylaw (RA 2023)

- Influenced by US &Canadian credit unionexperience

- Hence, credit unionsbecame theorganization of choiceof the voluntarysector

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The Voluntary Tradition

Credit unionsflourished in the

non-agriculturalsectors of theeconomy, in

towns & cities.

Credit unionssucceeded by

following thephilosophy (self-help & mutual

help), values andprinciples of realco-operatives.

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Mandated tradition

1900 1950 1970 1980

Voluntary Tradition

1

8

K

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This is why...

Of the 18,000+ registered co-operatives, about 78% are into

financial services, including MPCs. There are very few co-operatives

involved in agriculture (by 2010,

2% are classified as producers,3% as marketing).

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This is why...

Co-operativescontribution to

the economy ismarginal.

Co-operativeshave no

strategicpresence in

the nationaleconomy.

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This is why...

Government, byinclination &

capacity, ismore involvedin development

than inregulation.

We have aweak

regulatoryenvironment.

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Multi-purposeco-operatives

as indicative ofthe state of

our co-opsystem

any purpose co-operative

trend: pursuit ofgrowth without acommon purpose

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This is why...

Co-operativesare growing

individuallyrather than as

a movement.

There is nocommon

purpose.

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There are gnawing doubtsabout the true purpose of co-operatives and whether they

are fulfilling a distinct role as adifferent kind of enterprise.

- Dr. Alexander LaidlawCo-peratives in the Year 2000