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Friday, February 13, 2009

Why Do Coops Fail?


You ask a most relevant question:


Why did/do cooperatives fail?


But you prefaced it with the phrase: "With all the members' trust, participation and continuous CBU...why..." You were hinting at something missing.


Here is what CDA says in its website about causes of failure.


"Causes of the failure of early cooperatives in the Philippines. Filipino economists and students of cooperatives in this country have often attributed the failure of cooperative societies in this country to the following causes:


Incompetent management Lack of proper understanding of the principles, practices true aims, and purposes of cooperative associationsImproper use of credits by the borrowers who, instead of using money borrowed for production, spent it for fiestas or luxuries.Defective securities.Political interference particularly in the collection of overdue accountsLack of compensation of officersInadequate character and moral responsibility in handling the other fellow¢s moneyLack of adequate safeguard against unscrupulous officers who took advantage of their position to grant loans to themselves and their compadres which later proved disastrous to the system.The dominance of the individualistic attitude instead of the spirit of cooperation among the people.Inability of cooperatives to secure adequate capitalTheir dependence on alien suppliers and distributorsIneffectiveness of the government and promotion of cooperative organizationsInadequate marketing facilities"


Add to this a cryptic comment of Fr. Mar Arenas: "structural weakness."


Now the leaders know all these and more...so the nest question is: What next?" Which causes of failure do you want to focus on?


You guys have to do the work.


At 68 years old, at best, I am a kantiyawero and asker of impertinent questions. Enjoyable but frustrating too.


It is not so much the causes of failure, but what is the movement doing about it? Solidarity, greater understanding focus on a few problems?


I believe that you will see much greater progress in the cooperative sector in the next decades. In agricultural production like livestock and dairy, in food processing, in retailing, in small scale production using better tools. The examples of supersize credit coops like FICCO, Cebu CFI, NOVADECI, etc, will probably be replicated. Cooperative banks will probably have to rethink their systems in the light of MetroSouth Coop Bank with soon to be a billionaire coop. And what do the Unions have to say about all this? Continue fighting specific points of law?


Development is not nit-picking points of law or causes of failure.


Development is about growth and taking hold of economic power. No need to flogging the causes of failure.


Best to have articulate leaders who will get others to join and concentrate on creating success and overcoming obstacles. So where are these leaders? Doers and leaders not nitpicking lawyers and regulators


NAMVESCCO for example was built by leaders and doers.Who is building the federations?

Source: KoopForum

12 comments:

Anonymous said...

I am planning to work on my thesis the topic of which was suggested to me by my thesis professor, something about the liability of the officers of the cooperatives or the cooperatives themselves, in case of their failure which in turn cause loss to the members or depositors. My professor said that they do not become liable or personally liable or become liable with their personal properties. This must have been due to the limited liability provision provided by the Cooperative Code. I inquired with the CDA and they said that this is true. They told me that some cooperative officers invest the coop money into something else or disappear with the money or spend it but they are not bound to pay the corresponding amount of money they took away from the cooperative. I still don't have a broad background about cooperatives and this work is kind of hard for me. The problem is, the CDA had confirmed to me that the legal issue i'm supposed to work on is true. And now I'm seemed to have gotten drawn into this. I want to know more. I have a whole year to work on this thesis and I want it to be good. I just want to get some advice if I should pursue working on this topic or work on something else (if you could kindly recommend a current more important legal issue regarding cooperatives on which I can make a study or research). I hope you could somehow enlighten me. Thank you.

Anonymous said...

I am planning to work on my thesis the topic of which was suggested to me by my thesis professor, something about the liability of the officers of the cooperatives or the cooperatives themselves, in case of their failure which in turn cause loss to the members or depositors. My professor said that they do not become liable or personally liable or become liable with their personal properties. This must have been due to the limited liability provision provided by the Cooperative Code. I inquired with the CDA and they said that this is true. They told me that some cooperative officers invest the coop money into something else or disappear with the money or spend it but they are not bound to pay the corresponding amount of money they took away from the cooperative. I still don't have a broad background about cooperatives and this work is kind of hard for me. The problem is, the CDA had confirmed to me that the legal issue i'm supposed to work on is true. And now I'm seemed to have gotten drawn into this. I want to know more. I have a whole year to work on this thesis and I want it to be good. I just want to get some advice if I should pursue working on this topic or work on something else (if you could kindly recommend a current more important legal issue regarding cooperatives on which I can make a study or research). I hope you could somehow enlighten me. Thank you.

Toti said...

There are so many topics on cooperative issues you can research on sample are the following existing and very debatable ones:
1. The tax exemption of the cooperatives.
a. What provisions of the coop code is the coop exempt? Sec 61 on the old code but the new coop code signed recently Feb 17 2009?
b. What are the provisions of law exempting the coop in the new coop code?
c. How is the BIR still taxing the coops income?
d. Why are coops special in the civil code? What does it provides?
e.
2. The MORR – Manual of Rules and Regulation
a. You may get a copy on the signed and approved MORR in the CDA website.
b. Comment on it, and look for flaws
c. What is the purpose of the MORR if it has provision that it is optional?!
d. Will it serve its benefits if it’s optional?
e. Why are cooperators, vehemently oppose the MORR?
3. The Holding Cooperative
a. Cooperatives especially credit coops are getting bigger and bigger with billions of assets
b. The cooperative code even the new coop code does not provide anything about a holding cooperative.
c. The services of the cooperative are getting diverse as it aims to serve a total member care.
d. Insurance – Mutual Benefit Association – Credit & Lending – coop banks – Funeral Coop
e. You might ask if its possible? Well this system already exists.
4. Building of the Integrated Cooperative Financial System
a. How the cooperatives unite to create an Integrated Cooperative Financial System.

Anonymous said...

Thank you very much Mr. Toti! This is such a big help for me. Thank you again!!

Anonymous said...

Our group is starting for our research paper and cooperative is our chosen topic. Can you give us some suggestions what are some possible topic that we can pursue??

Agasemthat said...

The prior comments was dated feb. 2009, it's already 2013. whoa. i am so thankful to you sir! This is a real help for my synthesis. thank you very much!

Toti Patrimonio said...

I am glad to be of help. this site has been inactive for quiet sometime, ill try to update it whenever I can. Your story inspire me to go on. Thank you

Anonymous said...

I am planning to choose this topic for my thesis "cost minimization of cooperatives". Can you help me collect information about this?

Anonymous said...

I am planning to choose this topic for my thesis "cost minimization of cooperatives". Can you help me collect information about this?

Toti P said...

I can help you. give me more details of what information you would like to have.

Anonymous said...

hi Sir Toti,

I am going to write about the " sustainability of cooperatives " as a topic, can you give me your insight about the topic

thanks

glenn said...

Hi Sir, I am planning to write about the "sustainability of cooperatives ", can you give me your insight about my plan. thanks