Business Practicesof

Cooperatives

Capital Formation  Starting a new cooperative can create a need for

substantial capital. 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

profits) c) by assessment based on units of products sold or

purchased.

Cash TradingThis is business done on a cash and carry basis.

Selling at market price Cooperatives offer goods and services at prevailing

market prices

Cooperatives can avoid destructive competition Fostering constructive competition among

cooperatives will safeguard the interests of consumers

Constant expansion As organizations, cooperatives have to grow for

community services.

Quality standardized goods Cooperatives are intended to develop communities

through the production of high quality goods and provision of better services

Cooperative wholesale business or interlending (cooperative bank)

Cooperatives can be organized with enough people and capital

The benefits from the wholesale are considerable Members can market and acquire the goods and

services at the right price and quality.

Minimize expenditures  A significant factor favoring the growth of cooperative

is its being a community project

TYPES OF

COOPERATIVES

CreditConsumersProducersMarketingServiceMultipurposeAdvocacyAgrarian ReformCooperative BankDairyEducationElectricFinancial ServiceFishermenWorkersHousingHealth ServicesTransportWater ServiceInsurance

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Credit Cooperative It promotes and undertakes

savings and lending services among its members, mobilizes funds in order to grant loans for productive and providential purposes, and engage in other related services to enable its member benefit from such loans.

They promote the habit of saving through the various kinds of deposits a member can have in the cooperative, the most common are :

FIXED DEPOSITA must for all members because this

represents their investment or capital contribution to the cooperative.

SAVINGS DEPOSITIt is similar to the savings deposit a

person makes with banks. It is withdrawable anytime and periodically earns interest for the depositor regardless of the net surplus from business operations of the cooperatives.

TIME DEPOSITThis deposit is withdrawal upon

maturity or after a given period of time indicated in the Certificate of Time Deposit.

Consumers Cooperative

• Provides or sells goods or commodities to end consumers (members or non-members) at reasonable prices.

• Found most viable and useful in the more remote rural areas where supply for basic commodities are not readily accessible to the community people.

• It functions as price stabilizer by ensuring adequate and steady supply of basic commodities in the market.

Producers Cooperative

• Engages in joint or collective production, whether agricultural or industrial.

• It is formed for the purpose of producing and processing raw materials and finished products.– Production is important in strengthening the

Philippine economy because it create more jobs and supply more goods in the market.

• It has a task to promote a more balance and sustainable economics in the cities and the countryside.

Marketing Cooperative

•One that engages in the supply of production inputs to members and markets their products

•Serves as intermediary channel of goods between production and end consumption.

•Its main purpose is to provide more benefits to both the producers and the consumers.

Service Cooperative

•Engages in medical and dental care, hospitalization, transportation, insurance, housing, labor, electric light and power, communication, professional and other services.

Multipurpose Cooperative

• Operates or combines two or more types of cooperative businesses defined by the law.

Advocacy Cooperative

• Primary cooperative that promotes and advocates cooperativism among its members and the public through socially-oriented projects, research, communication, information, education, training and similar activities to reach out to the indeed beneficiaries.

Agrarian Reform Cooperative

• It aims to establish appropriate system of land tenure for the farmer members as well as land development, land consolidation and management in areas covered by the land reform program.

Cooperative Bank

• Organized for the purpose of providing a wide range of financial services to the cooperatives and other members.

Dairy Cooperative

• Type of cooperative whose members are engaged in the production of fresh milk which may be processed and/or marketed as dairy products.

Education Cooperative

• Organized for the primary purpose of owning and operating licensed educational institutions notwithstanding the provisions of Republic Act No. 9155, otherwise known as the Governance of Basic Education Act of 2001

Electric Cooperative

• Has a primary purpose of generation and distribution of power to members’ households.

Financial Service Cooperative

• Organized for the primary purpose of engaging in savings and credit services and other financial services.

Fishermen Cooperative

• Organized by marginalized fishermen in localities whose products are marketed either as fresh or processed products

Health Services Cooperative

• Provides medical, dental and other health services.

Housing Cooperative

• Organized to assist 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.

Insurance Cooperative

• Engaged in the business of insuring life and property of cooperatives and their members.

Transport Cooperative

• It includes land and sea transportation, limited to small vessels, as defined or classified under the Philippine maritime laws, organized under the provisions of RA9520.

Water Service Cooperative

• Organized to enable its members to own, operate and manage water systems for the provision and distribution of potable water for its members and its households

Workers Cooperative

• Organized by workers, including the self-employed, who are at the same time the members and owners of the enterprise.

• Its purpose is to provide employment and business opportunities to its members and manage it in accordance with cooperative principles.

CategoriesOf

Cooperatives

In terms of membership Primary

the members of which are natural persons.Secondary

the members of which are primaries.Tertiary

the members of which are secondary cooperatives.

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.