Gingoog City Colleges, Inc.
Paz Village, Brgy. 24-A, Gingoog City
BSBA Department
ME13 – COOPERATIVE MARKETING
1st Semester of A.Y. 2020-2021
Introduction
IN THIS MODULE, you shall gain perspective on the principles and practices of
cooperatives which were common to all types of cooperatives. Further, you will learn
about the role of Philippine government in helping cooperatives achieve its goals and
objectives.
Rationale
There two important topics in this module; 1.) Principles and Practices of Cooperatives;
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and 2.) Philippine Coop Development
Intended Learning Outcomes
A. Be familiar with the Principles and Practices of Cooperatives.
B. Identify the need of these principles and practices in running a cooperative.
C. To know the roles that the Philippine Government play in Cooperative Management.
Activity
INTRODUCTORY TASK
Directions: Visit this link [Link] and
react base on the information you’ve read.
Discussion
LESSON 2. Principles and Practices of Cooperatives
Cooperative Principles
Every Cooperative shall conduct its affairs in accordance with Filipino culture and
experience and the universally accepted principles of cooperation such as:
Open and Voluntary membership - membership in a cooperative shall be voluntary and
available to all individuals regardless of their political, racial or religious background or
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beliefs.
Democratic Control - cooperatives are democratic organizations. Its affairs shall be
administered by persons elected or appointed in a manner agreed upon by members.
Members of primary cooperatives shall have equal voting rights on an one-member-one
vote principle, while a secondary or tertiary cooperative shall have voting rights as
delegate of members-cooperatives, but such cooperatives shall have only five (5) votes.
The votes cast by the delegates shall be deemed as votes cast the members thereof.
Member Economic Participation - members contribute equitably to and control the capital
of their cooperative. At least part of that capital is usually the common property of the
cooperative. Members usually receive limited compensation, if any, on capital subscribed
as a condition of membership. Members allocate surpluses for any or all the following
purposes: developing their cooperative, possibly by setting up reserves, part of which at
least would be indivisible; benefiting members in proportion to their transactions with the
cooperative; and supporting other activities as a approved by the membership.
Autonomy and Independence - cooperatives are autonomous, self-help organizations
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controlled by their members. If they enter into agreements with other organizations
(including governments) or raise capital from external sources, they do so on terms that
ensure democratic control by the members and maintain their cooperative independence.
Education, Training and Information - cooperatives provide education and training for
their members, elected representatives, managers, and employees so they can contribute
effectively to the development of their cooperatives. They inform the general public-
particularly young people and opinion leaders about the nature and benefits of
cooperation.
Cooperation among Cooperative - cooperatives serve their members more effectively and
strengthen the cooperative movement by working together through local, national,
regional, and international structures.
Concern for the Community - cooperatives work for the sustainable development of their
communities through policies approved by their members.
Cooperative Practices
Cooperatives follow certain operational guidelines. These are practical response to local
needs. Some are adopted from standard international practices, others are local
innovations. But all these are aimed at perfecting cooperative operations. They are:
Capital Formation - Starting a new cooperative can create a need for substantial capital.
A problem develops when trying to operate with limited membership equity capital. The
task of financing a new cooperative with member equity alone is usually impossible.
Therefore, the best source of additional funds needed is from members in the form of: a)
membership fee or purchase of stock; b) agreement to withhold portion of net earnings
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profits); c) by assessment based on units of products sold or purchased.
Cash Trading- This is business done on a cash and carry basis. The customer enjoys at
least the use of the goods and services for the cash payment he/she gives. Cash trading
promotes equality since anybody with cash can enjoy the service patronage. This practice
can train members to observe the habit of balanced spending. Furthermore, the
cooperative would be able to avoid bad debts and stabilize business operations. Finally, it
is a way of increasing growth.
Selling at market price- Cooperatives offer goods and services at prevailing market
prices. This promotes stability. It can cope with operational expenses and cover up the
negative effects of shrinkage, depreciation and losses. It helps maintain the prices of
goods;
Cooperatives can avoid destructive competition- Fostering constructive competition
among cooperatives will safeguard the interests of consumers. Cooperatives are
encouraged to cooperate in unison and bring their joint power in the market up to the
level achieved by enterprises that are operated for the benefit of other stakeholders. They
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cooperate in order to get a fair deal from the large scale buyers of their products.
Consumers cooperate to get a better deal from manufacturers and suppliers. Credit
unions are formed to counter the power of large scale financial institutions. Price fixing
agreements and cartel methods are prevented.
Constant expansion- As organizations, cooperatives have to grow for community
services. Expansion is a must. It is done intensively and extensively. New members
should be recruited to accumulate more capital and savings to support operation of the
expanded business and services which in the long run will provide more benefits for
them. However, members in this regard should undergo continuous education and
training to learn various management practices/techniques and effective financial
supervision.
Quality standardized goods- Cooperatives are intended to develop communities through
the production of high quality goods and provision of better services. Cooperatives could
help by patronizing only standardized products and services of high quality. Hence,
different types of cooperatives will strive to improve their goods and services to stand
competition with business establishments. This in turn will be instrumental in improving
life in the country.
Cooperative wholesale business or interlending (cooperative bank). Cooperatives can be
organized with enough people and capital. They respond to the needs of the community.
Needs arise when there are people. The expansion of membership may result in
wholesale business. In fact, to be effective, wholesale business, interlending (cooperative
bank), could be done by primary societies. Defects from retail business could be avoided.
The benefits from the wholesale are considerable - Members can market and acquire the
goods and services at the right price and quality. They can even lower and raise savings.
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They can also influence the production of badly needed goods and services;
Minimize expenditures - A significant factor favoring the growth of cooperative is its
being a community project. Their officers do not receive remuneration. If they get
compensation, it is only in the form of allowances, per diems, or honoraria. When audit
shows that the cooperative is not capable or can afford the minimum wage, only
employees get paid regularly. The government can give exemption. Furthermore, laws
may allow exemption from income and sales taxes. Minimizing expenses should not be
taken as a remedy to cover up the weaknesses of the system. It is not to be conceived as
a form of dole-outs, but rather, it should be considered as motivation to make the
movement stand on its own and soon attain its objectives. Once its objectives are
achieved, the movement can take its rightful place in the development of the country.
LESSON 2.1. Philippine Cooperative Development
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,
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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.
The Cooperative Development Authority (CDA) is the lead government agency mandated
by virtue of Republic Act No. 9520 (Philippine Cooperative Code of 2008) to promote the
viability and growth of Philippine cooperatives. It is the only government agency that
registers cooperatives.
Objectives and Goals of a Cooperative
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:
1. 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;
2. Provide optimum social and economic benefits to its members;
3. Teach them efficient ways of doing things in a cooperative manner;
4. Propagate cooperative practices and new ideas in business and management;
5. Allow the lower income and less privileged groups to increase their ownership in
the wealth of the nation; and
6. Cooperate with the government, other cooperatives and people- oriented
organizations to further the attainment of any of the foregoing objectives.
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Privileges Enjoyed by Cooperatives
Cooperatives shall enjoy the privilege of depositing their sealed cash boxes or
containers, documents or any valuable papers in the safes of the municipal or city
treasurers and other government offices free of charge, and the custodian of such
articles shall issue a receipt acknowledging the articles received duly witnessed by
another person;
Cooperatives organized among government employees, notwithstanding any law or
regulation to the contrary, shall enjoy the free use of any available space in their
agency, whether owned or rented by the Government;
Cooperatives rendering special types of services and facilities such as cold
storage, ice plant, electricity, transportation, and similar services and facilities
shall secure a franchise therefore, and such cooperatives shall open their
membership to all persons qualified in their areas of operation;
In areas where appropriate cooperatives exist the preferential right to supply
government institutions and agencies rice, corn and other grains, fish and other
marine products meat, eggs, milk, vegetables, tobacco and other agricultural
commodities produced by their members shall be granted to the cooperatives
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concerned;
Preferential treatment in the allocation of fertilizers and in rice distribution shall
be granted to cooperatives by the appropriate government agencies;
Preferential and equitable treatment in the allocation or control of bottomries of
commercial shipping vessels in connection with the shipment of goods and
products of cooperatives;
Cooperatives and their federations, such as market vendor cooperatives, shall
have preferential rights in management of public markets and/or lease of public
market facilities, stall or spaces;
Credit cooperatives and/or federations shall be entitled to loans, credit lines,
rediscounting of their loan notes, and other eligible papers with the Development
Bank of the Philippines, the Philippine National Bank, the Land Bank of the
Philippines and other financial institutions except the Central Bank of the
Philippines;
Cooperatives transacting business with the Government of the Philippines or any of
its political subdivisions or any of its agencies or instrumentalities, including
government-owned and controlled corporations shall be exempt from
prequalification bidding requirements; and
Cooperatives shall enjoy the privilege of being represented by the provincial or city
fiscal or the Office of the Solicitor General, free of charge, except when the adverse
party is the Republic of the Philippines.
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Exercise
Discussion Questions
Directions: Read carefully and comprehend the topics above. Answer in a clear, concise,
and organized manner. Provide example(s) if necessary. Consider the rubric below.
1. Self-help is important in the development of cooperatives. Why?
Rubric
Content/Ideas 10 points
Error Free (grammar/spelling) 3 points
Timeliness (submission) 2 points
TOTAL 15 points
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Assessment
Discussion Questions
Directions: Read carefully and comprehend the topics above. Answer in a clear, concise,
and organized manner. Provide example(s) if necessary. Consider the rubric below.
1. In less develop country; the government takes a more active role in the economy.
Why?
2. Would you consider being a member of a cooperative? Why or why not?
Rubric
Content/Ideas 10 points
Error Free (grammar/spelling) 5 points
Timeliness (submission) 5 points
TOTAL 20 points
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Reflection
A Facebook Profile
Directions: Research and choose one successful cooperative in the Philippines and build a
personal profile of the cooperative including awards received by the cooperatives as
recognition of their success. You may also include Government interventions/ assistance
in achieving such success. Present your report as if it were a Facebook page. You may
submit the hard copy of your output or you download it to our LMS Account. Consider the
given rubric below.
Rubric
Content 15 points
Relevance to the given topic 15 points
Error Free (grammar/spelling) 5 points
Timeliness (submission) 5 points
TOTAL 40points
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Resources and Additional Resources
Fajardo, F., Abella, F. (2015). [Link] Edition. Sampaloc Manila: Rex
Bookstore.
Additional Resources
Arellano Law; Republic Act 9520.
USDA’s Rural Business Cooperative Services publication, “Strategic Planning Handbook
for Cooperatives”
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