Analysis of the Cooperative Sector
Strengths

1. Number: There are over 61,000 registered cooperatives embracing up to some 4 million Filipinos. Cooperatives are probably the most widespread form of popular organization in the country. Since all of these cooperatives at least formally subscribe to the international cooperative principles, there is an enormous latent social and economic capital in the cooperative sector.

2. Economic performance: The cooperative sector's contribution to the total national output has been modest but increasing.

3. Strengths in specialized areas: Cooperatives are strongest in mobilizing savings from the lower income groups and in catering to their needs for financial services. The most successful cooperatives are of the savings and credit types. Credit cooperatives have a proven track record as effective conduits for servicing the poor.

4. Existence of federations and unions: This means that cooperatives have available venues for expanding their economic linkages and cooperation with one another and also as sources of support services and information.

Weaknesses

1. Numerous but small and weak cooperatives: This means that cooperatives are not able to maximize scale and points to the need to encourage viable mergers and consolidation, resulting in fewer but better cooperatives. The proliferation of cooperatives is due to a certain extent to the intervention of politicians and other entities who look at cooperatives as vehicles for their programs/projects. In addition, improper infusion of external assistance has in numerous cases, led to opportunism and loss of self-reliance among coop members.

The situation is further compounded by rivalry and lack of cooperation among cooperatives (including secondaries).

2. Weak and fragmented federations and unions: Aside from their unstable membership base, a number of federations are unable to deliver support services and integrate the economic activities of their members. This leaves primary cooperatives at the base with limited sources of support services in terms of education and training, management consulting, and guidance. Only about 20% of the primary coops are active members of the federations.

In Germany, strong federations provide quality services to their members. Federations enforce compulsory auditing system. Federations also provide professionalized and sustained training and education for common members, board members and officers, and management staff.

One critical weakness is in the area of provision of education and training for common cooperative members. Common members undergo pre-membership education training, which in many coops is a requirement for membership. However, there are no systematic and continuing education programs for common members to develop a strong sense of ownership in the cooperative.

3. Generally, there is a lack of systems and structures for financial integration, cooperation in marketing and distribution, auditing and management consulting services, and education and training. For instance, many cooperatives are not able to maximize the allocation of available resources within the cooperative movement. This is reflected in the lack of a centralized system to manage liquidity across cooperatives.

In Korea, although there is not a single apex organization, there are strong national federations of agricultural coops, credit unions, community credit coops, and fisheries coops. Cooperatives of other sectors, e.g., forestry, women, and youth, are not as strong but are also organized nationally. For each federation, there is a centralized banking system that acts as a depository, provides credit, acts as a guarantee system, and operates a mutual loan fund for the member-cooperatives. The federations provide training and education and technical assistance to member cooperatives. Each federation also operates auditing services for members.
Member-cooperatives of the federations operate independently, even with the existence of strong centralized systems and structures above them.

Threats

1. Globalization, resulting in increased competition among enterprises, especially in marketing and distribution, insurance, and other services; coupled with the lack of safety nets for vulnerable groups that are the traditional cooperative clientele.

2. Undue political intervention that may compromise cooperative autonomy and self-reliance.

Opportunities

1. Emergence of new cooperative structures of integration that may facilitate renewed cooperation among coops - e.g. , Philippine Cooperative Center (national level) and Cooperative Development Councils (local levels).

2. Positive policy environment for cooperatives in the Philippines, coupled with economic reforms (e.g., some forms of privatization) that can work to the advantage of cooperatives.

3. Promotion of greater understanding on the role and potentials of cooperatives among lawmakers, local officials, and policy makers.

4. Emergence of new information and communication technologies - e.g., the Internet - that can facilitate and encourage broad cooperative linkages at greatly reduced cost.

5. Participation of cooperatives in the party-list system will provide a means whereby coops can unite and directly shape policies at the highest levels of government decision-making.

Recommendations

1. Strengthen the cooperative federations in savings-and-credit, housing, transportation, and in the various agricultural and fisheries sectors. Organize a central auditing system for each federation.

2. Strengthen the position of cooperatives in financial services through the establishment of central financial organizations and a central cooperative bank.

3. Improve management standards, expand capabilities, and ensure the financial integrity of cooperatives

4. Upgrade and professionalize education and training provision in all levels, especially among common cooperative members.

5. Provide access to modern technology, especially information and communication systems

6. Establish distribution and marketing networks of farm inputs and agricultural products. Market vendors' and consumers' cooperatives can operate as outlets for farm products and consumer items, similar to the Hanaro marketing and distribution system in Korea.

7. Enhance business development in key areas, such as insurance, housing, transportation, exports, and others.

8. Work out a more precise definition of the respective roles of the CDA (and other government agencies and units) relative to development and regulation of cooperatives and in a manner that will attain of objectives of self-reliance and autonomy of cooperatives.

9. Encourage more cooperation among cooperatives and other sectoral groups for greater effectiveness in policy advocacy.