Assignment 1

1. If you are given a chance to join a cooperative, what type of cooperative would you
like to join? What are your considerations in choosing the type of cooperative?

I will choose Business and employment cooperative because BECs are a subset
of worker cooperatives that represent a new approach to providing support to the
creation of new businesses.

Like other business creation support schemes, BEC's enable budding entrepreneurs
to experiment with their business idea while benefiting from a secure income. The
innovation BECs introduce is that once the businesses are established, the
entrepreneurs are not forced to leave and set up independently, but can stay and
become full members of the cooperative.

2. From the 12 causes of failure of early cooperatives in the Philippines we have

discussed last Saturday, choose at least 3 and discuss further.

a. Lack of proper understanding of the principles and purposes of cooperative

associations.
- Cooperative principles play an integral role in the development of co-ops and
give clear guidance as to how cooperatives should operate. These principles
ensure the replication of this promising model to garner social and economic
benefits for all. With cooperatives facing the ever-increasing problem of low
member engagement, turning back to these principles can help resolve this
issue. Extensive research and multiple success stories show that the cooperative
principle of open and voluntary membership is best able to address the problem.
Through the successful application of this principle, and thereby the creation of
association among members, cooperative leaders can increase member
engagement, leading to increased cooperative success.

b. Improper use of credits by the borrowers who, instead of using money borrowed for
production, spent it for fiestas or luxuries.

- Cooperatives goal and purpose is to provide for immediate financial needs as

well as capital for the entrepreneurial activities of their members. Necessarily if
every member/borrower misused the money they borrowed from the
cooperatives there is a slim chance of paying back their credits and therefore the
cooperative will lose its fund and this will cause its failure. The reason why we
borrow money in a cooperative is to finance our business and eventually, gain
profit. If a creditor use his borrowed money in luxury, then his capital will be gone
and so as his assumed profit, and if this happen, he will not be able to pay his
debt.

c. Political interference particularly in the collection of overdue accounts

 - The interference of politicians in any business has a great impact on its success
and failure. One major cause of this has been government interference and
control. A feeble equity base of virtually all cooperatives is one fundamental
problem that has jeopardized their viability and development potential. The
dependence on commission from the government, rather than a market based
trading margin, on its main activity of maize marketing, has been a major
contributing factor. This dependency and weak economic base has contributed
to the low level of motivation for cooperative membership and participation
among small scale farmers, and a low quality process for electing cooperative
leaders.

3. What do you mean by the following cooperative classification?

3.1. Cooperatives by Primary Business Activity

Cooperatives are often categorized as production, marketing, purchasing,
consumer, or service. Each of these broad groups includes more refined
categories that reflect the wide variety of products handled and functions
performed by cooperatives.
a. Production – producers and community members share responsibility for
their production. Members are shareholders who pay an annual fee to cover
the cost of production for the upcoming season. In return, members will
receive a portion of produce each week throughout the growing season. This
system can provide the members more equitable return for their labor and
investment while relieving some of the burdens and uncertainties associated
with conventional marketing.
b. Marketing – the primary function is to market the products of the members.
Also, grade, process, package, label, store, distribute, and merchandise
products.
c. Purchasing – provide members with dependable supplies at competitive
price.
d. Consumer – serves as retail store to members and non-members.
e. Service – use cooperatives to obtain a wide variety of specialized services. In
some cases, these services maybe provided as a division or subsidiary of
marketing and purchasing cooperatives. Other types of service cooperatives
are finance, electric, telephone, internet, housing and health care
cooperatives.

3.2. Cooperatives by Market Area

Cooperatives can be classified by the size of their market area: local, super-
local, regional, national or international.
a. Local cooperatives – operated in small geographic areas (members – 10 to
30 miles or within a single country).
b. Interregional and national cooperatives – large cooperatives serving one
or more region of the country.
c. International cooperatives – serve members and operate in more than one
country.
3.3. Cooperatives by Ownership Structure
There are six identified cooperative ownerships:
i. Centralized – owned directly by the members and are typically local
with a single branch.

ii. Federated – is a cooperative owned and control by other cooperative.

iii. Hybrid – have both centralized and federated cooperatives features.

Both individuals and autonomous cooperatives are direct members.

iv. New generations Coop – also referred as new wave or value-added

cooperatives. Membership shares to delivery rights, they purchase
shares that give them right the right and obligation to sell a certain
quantity of product to the cooperative. NGC has a limited or closed
membership. Through the sale of delivery rights, the cooperative limits
the number of members and the quantity of product it receives from
members.

v. The new “Wyoming cooperatives” – it legalized the creation of a limited

liability company (LLC). It allows two classes of members; the patron
members who used the cooperatives and investment members are
those who do not use the cooperatives but invest equity capital.

vi. Worker-owned co-ops. – owned by the employees and operate in the

processing and service sectors. Profits and losses from the business
are allocated to the members based on their individual labor
contributions rather than their patronage.