Edwin Badu Rawlings Gbargaye

Discussant

SD302

“Cooperatives are great organizations

and they have better chances of

survival and thus have the potential to

help the world to come out of

economic crisis

Ivano Barberini (2009)President of ICA

UN Declares 2012 International Year of Cooperativeshighlighting the contribution of cooperatives to economic development, in particular recognizing their impact on poverty reduction, employment generation and social integration.

• The UN declaration also emphasizes a

few key areas of cooperative strength, one

of which is the credit union and banking

sector.

• Under the umbrella of the World

Council of Credit Union some 53,000-plus

credit unions serve over 185 million

members in 97 countries. According to

World Council statistics, total assets of

credit unions worldwide in 2008 climbed to

close to $1.2 trillion.

In Europe, the European Association of Cooperative Banks has 4,200 member banks which collectively hold a 20 percent market share of the banking market and serve 160 million customers.

The UN designation also takes

note of the role of co-ops in agriculture

and rural electric production. In the

United States, the UN points out,

agricultural cooperatives account for

more than 80 percent of total milk

production, while 900 rural electric

cooperatives serve 37 million people

and own almost half of the electric

distribution lines in the country.

UN notes that co-ops also are responsible for over 80 percent of total milk production in Norway and New Zealand; 71 per cent of fishery production in South Korea; and 40 per cent of overall agriculture production in Brazil. In Bangladesh, rural electric cooperatives serve 28 million people.

• The International Co-operative Alliance (ICA) is the independent, nongovernmental association that unites, represents and serves co-ops worldwide. Founded in 1895, the ICA has 230 member organizations from 92 countries active in all sectors of the economy. Together, these co-ops represent more than 800 million people worldwide

• ICA has also created a Global 300 list that ranks the 300 largest co-ops worldwide, as well as a second Developing 300 list that ranks the 300 largest co-ops in developing countries.

Key Theorists

• Robert Owen

• Dr. William King

• François-Marie- Charles Fourier

• Friedrich Wilhelm Raiffeisen

Key Theorists

Robert Owen is considered

the father of the cooperative

movement. His idea is to form

"villages of cooperation"

where workers would drag

themselves out of poverty by

growing their own food,

making their own clothes and

ultimately becoming self-

governing. He tried to form

such communities in Oriston in

Scotland.1771-1858

Although Owen inspired the cooperative movement, others – such as– Dr William King took his ideas and made them more workable and practical. King believed in starting small, and realized that the working classes would need to set up co-operatives for themselves .

Dr William King

(1786–1865)

French social theorist. He

advocated a reconstruction of

society based on communal

associations of producers

known as phalanges

(phalanxes). His system

became known as Fourierism.

He felt that phalanges would

distribute wealth more

equitably than would

capitalism and that they

would contribute both to a

cooperative lifestyle and to

individual self-fulfillment

1772 - 1837

François-Marie- Charles Fourier

founder of the

German system of

agricultural co-

operative banks

Friedrich Wilhelm Raiffeisen

1818-1888),

A few poor weavers joined together to form the

Rochdale Equitable Pioneers Society at the

end of 1843. The Rochdale Pioneers, as they

became known, set out the Rochdale

Principles in 1844, which have been highly

influential throughout the cooperative

movement.

The successful example of cooperative business

provided by the Rochdale Society, which also

established between 1850 and 1855 a flour

mill, a shoe factory, and a textile plant, was

quickly emulated throughout the country

The Rochdale Pioneers

By 1863 more than 400 British cooperative associations, modelled after the Rochdale Society, were in operation. Thereafter the English movement grew steadily, becoming the model for similar movements worldwide.

• The number of coops have

increased dramatically by 2004.

• ICA research has identified 286,560

coops in Europe alone out of which

37% are in agricultural; 26% are in

housing; 15.5% in labor; 6.6% in

consumer sector; 6.5% in the

financial sector; and 7.8% in other

sectors.

By the mid-20th century, it

comprised almost 2400 associations of all types.

The Cooperative Wholesale

Society is the largest

distributive agency in

England.

Listed among the Global 300 are some of

the world's largest businesses. The

Global 300 co-ops had total revenue of

nearly $1 trillion in 2004. If they were a

nation, these 300 co-ops would have

the 10th largest gross domestic product

in the world, ranking just behind

Canada.

The United States is home to more of

the Global 300 than any other nation,

with 62 (or nearly 20 percent of the

total list). It is followed by France, with

45, then Germany with 33 and Italy

with 28 co-ops on the list.

Cooperatives in these four countries

represent more than 50 percent of the

Global 300.

ZEN-NOH-the National

Federation of Agricultural

Cooperative Associations is

Japan's federation of

agricultural co-ops and is the

largest co-op organization in

the world. Of the 3 million

farm households in Japan,

most belong to one of ZEN-

NOH's 1,010 primary-level co-

ops. The co-op had total sales

of $56.3 billion in 2003 and

employs about 12,500 people.

Japan : World’s Largest Co-op Organization

• In Norway: 99% of milk

production is through coops and

consumer coops cater to 25% of

the market share.

• In Finland: 97% of dairy

production and meat products

50% of egg output, 34% of

forestry products and 34% of total

deposits in banks are through

coops.

• Nestle

• Dean Food

• Dairy Farmers of America - Coop

• Danone

• Fonferra - Coop

• Kraft

• Land o’Lakes - Coop

• Lactalis

• Aria Foods - Coop

• Meilli Dairies

• Friesland Foods - Coop

• Uniliver

• Morinaga Milk Industries

• Parmalat

• Campina - Coop

• Bongrain

• Human Milchunion - Coop

• Saputo

• Nordmilch - Coop

• Sodiaal - Coop

World’s dairy top 20 includes 8 co-operatives

• In Holland: 95% of Dutch flour

sales are by coops; Sweden :

66% of daycare centers are run

by coops

• Germany: 50% of German farm

sector is controlled by coops

• Switzerland: coops are the

second largest employer

• France: the fifth and the sixth

largest banks owners are coops.

• Colombia: Saludcoop health coop is

the 2nd largest employer caring for

25% of the population

• Israel: World’s 5 largest producers

of drip irrigation equipment are

coops.

Italy: Social Cooperative

• This gives totals of 7,100 social co-operatives, with 267,000 members, 223,000 paid employees, 31,000 volunteers and 24,000 disadvantaged people undergoing integration. Combined turnover is around 5 billion euro. The co-operatives break into three types: 59% type A (social and health services), 33% type B (work integration) and 8% mixed. The average size is 30 workers.

Euros 11B

housing health

Credit union

doctor

Football

club

buyingWhole

foodscareleisure

consumers

workers

Euros 1.3 B

Source:

Mr. Bob Burlton

Midcounties Co-operative, United Kingdom

Aug. 2006

agriculture

Seven principles that define the

identity of cooperatives:

1. open and voluntary membership

2. democratic control

3. limited interest on shares

4. return of surplus to members

5. cooperative education

6. cooperation among cooperatives

7. concern for the community

Today, civil society performs inevitable

roles in eradicating poverty, promoting

democracy and good governance,

promoting sustainable development,

resolving social conflict-among myriad of

other areas related in enhancing total

human development.

It is common now to see civil society

represented at local, regional

,national and international

conferences and meetings together

with their governments in discussing

social, political, environment issues

and problems of the day. One of these

kinds is the Cooperative Movement

Cooperative Defined

An autonomous and duly registeredassociation of persons, with acommon bond of interest, who havevoluntarily joined together to achievetheir social, economic and culturalneeds and aspirations by makingequitable contributions to the capitalrequired, patronizing their productsand services, and accepting a fairshare of the risks and benefits of theundertaking in accordance withuniversally accepted cooperativeprinciples (RA 9520)

Cooperatives in the Philippines

According to the CDA (2008) the number

of cooperatives registered since 1990

are:

Savings and Credit coops 4,812

a.Consumer coops: 1,369

b.Producer coops: 911

c.Marketing coops: 1, 806

d.Agricultural and 60,000

Non-Agricultural

Financial Strength of the Coop Sector in the Philippines

Assets Size (in

Million of Pesos)

Total Assets

in Billion

Pesos

% Share

No Of

Coop

s

% No. of

Coops

Large (100M) 61.57 54.09 161 0.88

Medium (15 to 100M) 30.15 26.49 859 4.71

Small (3M to 15M 14.76 12.97 2.197 12.04

Micro (below 3M) 7.35 6.46 45.037 82.38

Total 113.83 100 18.254 100

Source: CDA(2008)

Why Cooperatives

Survived?

• Cooperatives are borne out of the

need of the members & their

members take responsibility of

their decisions. Cooperatives are

the top survivors of Global

Economic Crisis.

Why Cooperatives

Survived?

Self-help

Self-

Responsibility

Equity

Equality

DemocracySolidarity

Cooperative

Principles and

Values that we

practice, and

our ethical

practices

Parameters of Cooperative Governance. Good governance in a cooperative society will largely depend upon the following factors:

Why Cooperatives

Survived?

• Autonomy & Democratic Leadership

• Awareness to Elected Representatives

• Cooperative Law

• Role of Government

• Federal Structure

• Value-based Professional Management;

• Social Audit

• Social capital through coops is

about the ability of people to be

architects of their own personal and

social histories on the basis of their

shared norms, value and collective

empowerment.

• The habit of citizenship is formed

among the members, and they

acquire ability to identify local needs

and ways of meeting these needs in

a unified action.

Why Cooperatives

Survived?

Cooperative model is a better model of business.

• It is not linked to Stock Markets.

• Relies on Member funds for its operation.

• Controlled by Local people for Local people

• Know individual need & repayment capacity hence loans are not unfettered.

• Hardly any exposure on mortgage-securities.

• Not motivated by profiting and capitalistic gains.

Why Cooperatives

Survived?

• Cooperatives work within a long-term time

frame. They do benefit from long-term

perspective in their investment strategies.

• They are modest and realistic in planning

the Growth of the Business with

manageable control on costs and

aspirations giving them a greater power of

flexibility.

Why Cooperatives

Survived?

• Cooperatives are organizations with human face and soul. They are in position to retain their workforce and continue to provide services to members at reasonable cost & affordable prices.

Why Cooperatives

Survived?

• The Principles that from the heart of

cooperation are not independent of each

other. They are subtly linked; When one

is ignored all are diminished.

• Coops should not be judged exclusively

on the basis of any one principle; rather,

they should be evaluated on how well

they adhere to the principles as an

entirety.

Why Cooperatives

Survived?

Economic and Social

Returns

• Coops have a special

responsibility to ensure that the

development of their communities-

economically, socially and

culturally-is sustained.

• They have a responsibility to work

steadily for the environmental

protection of their communities.

Cooperative as Poverty

Reduction Strategy

In light of the numerous squabbles

and controversies created by the

ever mutating dimensions of poverty

and poverty alleviation, emerged

coop as one of the solutions to the

problem.

Coop is a tool used and a goal for

poverty reduction and human development. Human development is therefore, ‘the development of people investing in their education and health for the people, generating adequate income, satisfying their basic needs and offering sufficient employment opportunities and allowing them fully participate in every process of their lives.

Strategies

• Capital endowment

• Credit system

• Resource allocation

• Livelihood

• Educational Assistance

• Mutual Aid Fund

• Health and Members Benefit

• Employment

• Community Involvement

• Linkaging/networking

Best Practices and Awards

• San Joaquin MPC, Ilocos Norte Ist

Place Gawad Pitak Awardee 2010

Landan Multipurpose Coop –Coop in Polomolok, South Cotabato , composed of indigenous people referred to as B’laans, the coop heavily depended on dole-outs from charitable groups but now it has turn the wheels and boast of 773 members and Php 60.1 Million assets-corn production, pineapple contract and others.

BEST Practices and Awards

• Novaliches Development Coop

(NOVADECI) –After 26 years of

existence, in 2002, the coop has total

membership of 6,727 regular and

3169 associate members with Php

318 Million assets. Its services

include health and medical services,

loans, consumer retail among others.

• Lamac Multipurpose Coop –Started

with 70 farmer-tenants contributing

initial capital of Ph50 each in the

70’s. At the end of 2002, it had an

asset of Php 63.8 Million. It is

engaged into day care center,

reforestration projects, postal

service, clean and green program,

among others.

Best Practices and Awards

Experience in Region I

a. Galimuyod Savings and Development

Coop: organized in April 1972 by a group

of 32 parishioners of the Sacred Heart of

Jesus Parish in Galimuyod, Ilocos Sur.

As of 2007 it has total membership of

around 3000 with a capitalization of over

Php 9 Million. It had been awarded by

Land Bank of the Phil.

b. Government of Laoag

Employees Development Coop:

Organized by employees o local

government of Laoag in 1992. As

of Dec 2008, it has 848 members

and Php 10 Million.

Criticisms and Limitations

Given the reduction in global

poverty has been rather sluggish,

even the promoters of cooperative

do not disagree that cooperative

alone is enough to reduce poverty.

• Coops are faced with striking the balance between the two:

a.Fulfillment of their mission of alleviating poverty, they also charge high interest rates to survive.

b.While they are not charitable groups they charge interests to cover operational costs and avoid risks.

• Concerns have been raised that the

reliance on coop programs to help the

poor escape poverty results in cuts in

government expenditure in public

safety net programs (Neff 1996).

• Cooperative programs often claim to

empower their clients who are mostly

women.

• Many coops have predominantly

female clients and members.

Challenges of Cooperative

• Cooperatives today are confronted

with massive issues and problems

as a result of globalization. Coops

are operating in an environment

that has the following

characteristics: .

Challenges of Cooperative

• Deregulation of markets; intensive

competitive pressure; withdrawal

of government sponsorship;

declined in traditional community

base for coops; rapid technology

led transformation of process and

markets; and lack of management

development opportunities within

the cooperative movement.

Challenges of Cooperative

Mismanagement, financial

scandals, poor management

control, growing distance between

members and their cooperative

society, failure of democracy and

an unbalanced relationship

between management and elected

directors.

Problems of Cooperatives

1. There is duplication of series and

functions within the coop movement

because coop organizations are not

merging and consolidating fast enough

to match their competitive

environment.

2. Coops have been slow to develop in the

fastest growing technology based

leisure, information, manufacturing

and pharmaceuticals.

3. Only a small proportion of primary coops operate at national level and even fewer can trade internationally.

4. Most primary coops operate as the low value added link in their industries’ supply chain..

5. Coops are characterized by the

absence of a substantial degree of

entrepreneurial spirit or culture leading

to missed opportunities and lack of

innovation.

6. Coops lack a commitment or

awareness of the need to develop coop

executive management and generally

do not recognize management’s crucial

leadership role in defending coop

purpose and values.

7. There has been no real attempt

by the movement to incorporate

coop management within the

statement of cooperative identity.

Personal Views

Cooperatives have contributed

significantly to poverty reduction

through their provision of services,

and direct investments on community

projects and programs.

Personal Views

Co-operatives are the better

socio-business model

http://www.facebook.com/photo.php?pid=117456&id=100000046579224