Cooperative

What is a cooperative?

A cooperative is an autonomous and duly registered

association of persons, with a common bond of interest, who have voluntarily joined together to achieve their social, economic and cultural needs and aspirations by making equitable contributions to the capital required, patronizing their products and services and accepting a fair share of risks and benefits of the undertaking in accordance with the universally accepted cooperative principles.

What are the objectives and goals of a Cooperatives?

The primary objective of every cooperative is to help improve the quality of life of its members.

Towards this end, the cooperative shall aim to: 

(a) Provide goods and services to its members to enable them to attain increased income, savings, investments, productivity, and purchasing power, and promote among themselves equitable distribution of net surplus through maximum utilization of economies of scale, cost-sharing and risk-sharing;

(b) Provide optimum social and economic benefits to its members; 

(c) Teach them efficient ways of doing things in a cooperative manner; 

(d) Propagate cooperative practices and new ideas in business and management; 

(e) Allow the lower income and less privileged groups to increase their ownership in the wealth of the nation; and 

(f) Cooperate with the government, other cooperatives and people-oriented organizations to further the attainment of any of the foregoing objectives.

 

 

Cooperative Principles

 

Cooperatives operate on a set of basic principles and practices that distinguish them from other forms of social and economic organizations.

1.Open and voluntary membership. Membership of any cooperative should be voluntary and available without artificial restriction on any gender, social, political or religious discrimination to all persons who can make use of its services and are willing to accept the responsiblities of membership.

A cooperative has two kinds of members: regular members and associate members.

A regular member is entitled to all the rights and privileges

of membership as stated in the Cooperative Code and the cooperatives by laws.

An associate member has no right to vote and be voted upon and is entitled only to such rights and privileges provided by the cooperatives by laws.

2.Democratic Control. Cooperatives are democratic organizations; their affairs should be administered by persons selected or appointed

in a manner agreed to by the members and accountable to them.

3.Limited interest on share capital. Share capital should only receive a strictly limited rate of interest, If any.

4. Patronage refund. Surplus or savings, if any, arising out of the operation of a cooperative belongs to the members and should be distributed in such manner to avoid member gaining at the expense of the other.

The profits of a cooperative are called “net savings” or “surplus funds”. This is in keeping with the idea that a cooperative operates not to make profit but products and services to its members. primarily to provide needed

5. Continuing cooperative education and training. All cooperatives should make provision for the education of their members, officers and employees and of the general public, in the principles of cooperation both economic and democratic.

6. Cooperation among cooperatives. All cooperative organizations, in order to best serve the interest of their members and their communities, should actively cooperate in every practical way with other cooperatives at local, national and international levels.

B. Cooperative Practices /guidelines.

1.Capital formation. Capital structure highly influences the success and the failure of cooperatives.

2.Cash trading. This business is done on a cash and carry basis.

3.Selling at market price. Cooperatives offer goods and services at prevailing market prices.

4. Constant expansion. Cooperatives are association for development and business for community services. As an organization they have to grow for community services. Expansion is done intensively and extensively.5. Quality standardized goods. Cooperatives are intended to develp communities through the production of high-quality goods and provision of better services.

6. Cooperative wholesale or interlending (cooperative bank). The benefits derived from the wholesale are considerable. Members can market and acquire there right goods and services at ther right price and quality. They can even lower and raise savings. They can also influence the production of goods and services needed badly.

7. Minimize Expenditures. A significant factor favoring the growth of cooperatives is their being a community project. Officers do not receive compensation. When the audit shows the cooperative cannot yet financially give minimum wage, the government can give exemption. Furthermore, laws may allow exemption from income and sales taxes.

Types of CooperativesCooperatives may fall under any of the following types:

(a) Credit Cooperative : is one that promotes and undertakes savings and lending services among its members. It generates a common pool of funds in order to provide financial assistance and other related financial services to its members for productive and provident purposes;

(b) Consumer Cooperative : is one the primary purpose of which is to procure and distribute commodities to members and non-members;

(c) Producers Cooperative : is one that undertakes joint production whether agricultural or industrial. It is formed and operated by its members to undertake the production and processing of raw materials or goods produced by its members into finished or processed products for sale by the cooperative to its members and non-members.

Any end product or its derivative arising from the raw materials produced by its members, sold in the name of and for the account of the cooperative, shall be deemed a product of the cooperative and its members;

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

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

(f) Multi-Purpose Cooperative : combines two (2) or more of the business activities of these different types of cooperatives;

(g) Advocacy Cooperative : is a primary cooperative which promotes and advocates cooperativism among its members and the public through socially-oriented projects, education and training, research and communication, and other similar activities to reach out to its intended beneficiaries;

(h) Agrarian Reform Cooperative : is one organized by marginal farmers majority of which are agrarian reform beneficiaries for the purpose of developing an appropriate system of land tenure, land development, land consolidation or land management in areas covered by agrarian reform;

What are the categories of Cooperatives?

Cooperative shall be categorized according to membership and territorial consideration. In terms of membership, cooperatives shall be categorized into:

Primary-the members of which are natural persons.

Secondary-the members of which are primaries.

Tertiary-the members of which are secondary cooperatives.

Thus, those with cooperative memberships are considered federations or unions as the case may be. In terms of territory, cooperatives shall be categorized according to areas of operation which may or may not coincide with the political subdivisions of the country.

Those organized by minors shall be considered a laboratory cooperative and must be affiliated with a registered cooperative. It is governed by special guidelines promulgated by the CDA.

The Cooperative Development Authority (CDA) is the sole government agency mandated to register all types of cooperatives.