What is a Cooperative and What Benefit can a Member Get?

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By Art Tibaldo

Consumer Atbp.

Monday, January 27, 2014


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. That is how cooperative is defined by the country’s Cooperative Development Authority.

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

In the attainment of its goals and objectives, a cooperative shall 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.

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A cooperative shall provide optimum social and economic benefits to its members, teach them efficient ways of doing things in a cooperative manner, propagate cooperative practices and new ideas in business and management and allow the lower income and less privileged groups to increase their ownership in the wealth of the nation.

The services of cooperatives may vary according to its type of function. 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.

Consumer Cooperative’s primary purpose is to procure and distribute commodities to members and non-members while Producers Cooperative undertakes joint production whether agricultural or industrial. The later 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 and sold in the name of and for the account of the cooperative, shall be deemed a product of the cooperative and its members.

There is also a Marketing Cooperative which engages in the supply of production inputs to members and markets their products. The Service Cooperative on the other hand is one which engages in medical and dental care, hospitalization, transportation, insurance, housing, labor, electric light and power, communication, professional and other services.
The most common Multi-Purpose Cooperative combines two or more of the business activities of these different types of cooperatives.

There is also an Advocacy 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.

There is also an Agrarian Reform Cooperative organized by marginal farmers and 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.

Cooperative Bank is one organized for the primary purpose of providing a wide range of financial services to cooperatives and their members. There is also a Dairy Cooperative whose members are engaged in the production of fresh milk which may be processed or marketed as dairy products.

The CDA also lists Education Cooperative which is organized for the primary purpose of owning and operating licensed educational institutions, notwithstanding the provisions of certain Republic Acts like the Governance of Basic Education Act of 2001. The Electric Cooperative which is often heard and debated upon in Benguet is one organized for the primary purpose of undertaking power generation, utilizing renewable sources, including hybrid systems, acquisition and operation of sub transmission or distribution to its household members.

Another form of cooperative is the Financial Service Cooperative which is organized for the primary purpose of engaging in savings and credit services and other financial services. Not common in the uplands is the Fishermen Cooperative formed by marginalized fishermen in localities whose products are marketed either as fresh or processed products and Health Services Cooperative which is meant for the primary purpose of providing medical, dental, and other health services.

To home owners especially in subdivisions, the Housing Cooperative is common as it assists or provide access to housing for the benefit of its regular members who actively participate in the savings program for housing. It is co-owned and controlled by its members.

Another form of cooperative is the Insurance Cooperative which is engaged in the business of insuring life and property of cooperatives and their members. There is also the Transport Cooperative which includes land and sea transportation but limited to small vessels as defined or classified under the Philippine maritime laws. Another service oriented cooperative is the Water Service Cooperative which is organized to own, operate and manage waters systems for the provision and distribution of potable water for its members and their households and the Workers Cooperative which is organized by workers, including the self-employed, who are at the same time the members and owners of the enterprise. Its principal purpose is to provide employment and business opportunities to its members and manage it in accordance with cooperative principles.

All the cooperatives mentioned here entitles members to certain privileges like tax exemption and others which I will discuss in the part 2 of this column.

Published in the Sun.Star Baguio newspaper on January 28, 2014.

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